Large accounting firms have been structuring their audit divisions along industry lines for some years. Industry specialisation is seen as a means of differentiation between otherwise similar accounting firms. At the individual level industry specialists are identified as being so designated within their firm. They spend a substantial amount of their time auditing clients in that industry. The purpose of this study is to determine what industry specialist auditors do that is different and similar when working on industry-based tasks, one of which they specialise in. Behavioural decision theory is used to investigate the differences and similarities in the decision-making processes of industry specialist and other auditors. It is known that industry specialists perform better on tasks set in their industry. The purpose of this study is to learn why. To that end, the pre-information search, information search and decision processing phases of the decision-making process are examined. It is expected that industry specialists are more efficient and effective at each stage of the decision-making process when completing a case set in the industry they specialise in. Two controlled experiments were conducted in the offices of each of the Big 4 international accounting firms. Participants included manufacturing and superannuation industry specialists from each firm. Each participant was invited to take part in both experiments, which were conducted consecutively via the internet. The first experiment comprised two cases, one set in each industry setting (manufacturing and superannuation). Participants completed both cases. The purpose of the first experiment was to conduct a within-subject examination unveiling similarities and differences between industry specialists and other auditors during the pre-information search, information search and decision processing phases of the decision-making process. Their performance on each case was also monitored and measured. Significant results were found for information search and performance. Moderate results were found for one proxy each of the pre-information search and the decision processing phases. The relationship between efficiency at each stage of the decision-making process and performance was also measured. A significant relationship was found for the pre-information search and decision processing phases. The second experiment comprised two strategic business risk tasks set in each industry setting (manufacturing and superannuation). Participants completed both sets of tasks. The purpose of the second experiment was to examine effectiveness during the pre-information search (listing key strategic business risks), information search (listing key inputs) and decision processing (listing key processes) phases of the decision-making process and their ability to identify and list key outputs (accounts and assertions) for an identified risk (technological change for the manufacturing industry task and solvency due to insufficient funding for the superannuation industry task) within each industry setting. The results were very significant overall. Industry specialist auditors were able list more key strategic business risks, inputs, processes and outputs when the task was set in the industry in which they specialise. The relationship between effectiveness at each stage of the decision-making process and performance was also measured. A significant relationship was found between effectiveness in listing key inputs and effectiveness in listing key outputs (accounts).

I conduct experiments to investigate how episodic knowledge obtained from prior experience as an auditor or a manager affects audit committee members' judgment in supporting the auditor in a disagreement with management. This paper sheds light on the advantage of first-hand accounting-related experience in the important oversight task. It also brings to bear the potential benefit from direct manager experience as claimed by researchers and regulators. I find that the episodic knowledge obtained from prior experience as an auditor, especially the experience of having been a diligent auditor, strengthens the degree of auditor support of participants in the role of an audit committee member. By contrast, the effect of episodic knowledge from first-hand experience as a manager on the likelihood of auditor support varies with the manager type. While the episodic knowledge acquired from direct experience as an aggressive manager augments the level of auditor support, such knowledge attained by prior experience as a conservative manager has no significant effect.

Thesis (Ph.D.)--York University, 2003. Graduate Programme in Administration. / Typescript. Includes bibliographical references (180-193). Also available on the Internet. MODE OF ACCESS via web browser by entering the following URL: http://wwwlib.umi.com/cr/yorku/fullcit?pNQ99259

Made available in DSpace on 2016-03-15T19:32:31Z (GMT). No. of bitstreams: 1 Sandra Regina Siqueira de Sena.pdf: 1581417 bytes, checksum: 429ca69c5f05c2e3fb347fdd71aa9f91 (MD5) Previous issue date: 2011-11-04 / Fundo Mackenzie de Pesquisa / The primary goal of this study is to verify whether there have been any changes in the reports issued by independent auditors after the adoption of Act Number 11638/2007. The sample is composed of non-financial listed companies whose shares are traded on the Bovespa (São Paulo Stock Exchange) with released Financial Statements in the period between 2006 and 2009, totaling 449 companies with 1.796 observations, whose data was extracted from the database of the CVM (Brazilian Securities and Exchange Commission). The auditors reports were analyzed as divided among the Big Four auditing firms, i.e., Deloitte Touche Tohmatsu;Ernst & Young; PricewaterhouseCoopers and KPMG, and the Non Big Four representing the other auditing firms. The conclusion was that the contents of the auditors reports maintained the same standards along the four fiscal years considering the following types of reports:unqualified; qualified; disclaimer of opinion and adverse opinion. Particular attention was given to the utilization of emphasis paragraphs which may be found in unqualified and qualified reports pointing out that the observations therein contained referred several times to uncertainties which would not have had any impact on the financial statements. It was also identified that the majority of the open capital companies chose to hire the Big Four during the period analyzed, moreover, the Non Big Four appeared to be more conservative, because they presented a significantly higher level of observations as compared with the Big Four.The collected data suggested that the Non Big Four have greater independence in the development of their auditing work, expressing their opinion in a more forceful manner, even if unfavorable to the audited company. However, we must question whether the Big Four issue almost all their opinions as unqualified because the companies hiring them are large corporations and, consequently, have more strict requirements through their audit committees with the necessary internal controls, or if the Big Four are, apparently, more dependent on their contracting companies thus suffering pressure to issue unqualified opinion reports due to agency conflicts, since the hiring company is responsible for the fees paid to the audit firms. / O presente estudo teve como objetivo principal verificar se houve alteração nos pareceres emitidos pelas auditorias independentes após adoção da Lei 11.638/2007. A amostra foi composta por companhias abertas, não financeiras, com ações negociadas na Bovespa, as quais apresentaram Demonstrações Contábeis no período de 2006 a 2009, totalizando 449 empresas geradoras de 1.796 observações, cujos dados foram extraídos do banco de dados da CVM Comissão de Valores Mobiliários. Foi realizada uma análise de conteúdo nos pareceres de auditoria, segregados entre firmas de auditoria Big Four, ou seja, Deloitte Touche Tohmatsu; Ernst & Young; PricewaterhouseCoopers e KPMG, e Non Big Four, que representaram as outras empresas de auditoria. Constatou-se que o conteúdo dos pareceres de auditoria manteve o mesmo padrão ao longo dos quatro exercícios analisados, considerando os tipos de pareceres: sem ressalvas; com ressalvas; com abstenção de opinião e com parecer adverso. Observou-se vasta utilização dos parágrafos de ênfase, que podem constar em pareceres com, ou sem ressalvas, destacando que as observações neles contidas se referiam muitas vezes a incertezas que não trariam impacto nas demonstrações contábeis. Identificouse,também, que a maioria das companhias abertas optou pela contratação das Big Four durante o período analisado, e, ainda, que as firmas de auditoria Non Big Four se mostraram mais conservadoras, pois apresentaram um nível de observações em seus pareceres, significativamente, superior as das Big Four. Os dados sugerem que as Non Big Four têm mais independência na realização do trabalho de auditoria, pois expressaram sua opinião de forma mais contundente ainda que desfavorável à companhia auditada. No entanto,vale questionar se as Big Four emitem quase a totalidade de seus pareceres sem ressalva,porque as companhias que as contratam são grandes corporações e, consequentemente,possuem um regime de governança mais rigoroso através da existência de comitê de auditoria com os devidos controles internos, ou se as Big Four têm, aparentemente, maior dependência das companhias que as contratam e sofrem pressão para que seus pareceres sejam emitidos sem ressalvas devido ao conflito de agência, já que a companhia contratante é responsável pelos honorários das firmas de auditoria.

Submitted by Filipe dos Santos (fsantos@pucsp.br) on 2017-04-27T12:40:23Z No. of bitstreams: 1 Roberto Tommasetti.pdf: 1079252 bytes, checksum: 94210b2551128c425449d78fe524e727 (MD5) / Made available in DSpace on 2017-04-27T12:40:23Z (GMT). No. of bitstreams: 1 Roberto Tommasetti.pdf: 1079252 bytes, checksum: 94210b2551128c425449d78fe524e727 (MD5) Previous issue date: 2017-04-17 / Coordenação de Aperfeiçoamento de Pessoal de Nível Superior - CAPES / Recent financial scandals focus public opinion on the concept of earning management and the importance of corporate governance tools, first of all audit and its main output: the audit opinion. The new auditing standard ISA 701, by introducing the KAMs (Key Communication Matters) into the audit opinion from December 2016 for listed company, underlines the need for a deeper communication between auditing and market, throught the audit report. This paper examines: (H1) the relationship between abnormal accruals, as proxi of earning management practices, and auditor size (AS) and (H2) wheather the presence of earnings management (EM) triggers the issuance of qualified or modified audit opinion (MAO), in order to gain a better understanding on the reliability of audit opinion in Brazil. Sample selection consists of a balanced Brazilian listed firms panel (financial sector excluded) during the period 2012-2015 for a total of 1,132 firms-years observations. First, we estimated earnings management through cross-sectional modified Jones model, as reviewed by Karniz first (1999) and Kothari after (2005). Then, we performed: (H1) a linear regression where absolute discretionary accruals variable (ADA) is the dependent and the auditor size the main independent and (H2) a logistic regression model in order to analyze the relation between audit qualification (binary dependent) and earnings management measure. As result from the first hypothesis, the (negative) relationship between ADA and AS, even statistically insignificant, would probably means that Big 4 auditor somehow inhibits the level of discretionary accruals. The main control variables strongly influencing the depedent are the leverage level (positively) and return on asset values (negatively). As result from the second hypothesis, there is a positive relationship between audit qualification and ADA. This means that when the company practices EM, auditor is more likely to render a qualified opinion. We tested this hypothesis under two modified opinion scenarios: in the first (MAO1), emphasis paragraph is considered as a qualification (lato sensu) while in the second (MAO2), only exeptions and adverse opinions are considered as a qualification (stricto sensu) / Escândalos financeiros recentes obrigam a opinião pública a focar a atenção sobre o conceito de gerenciamento de resultados e as ferramentas de governança corporativa, em primeiro lugar o trabalho da auditoria e o seu principal produto: o relatório de auditoria. A recente introdução do ISA 701, que vigora a partir do exercício contábil de 2016, inclui a comunicação das KAMs (“Key Audit Matters” - questões chaves de auditoria), confirmando a necessidade de uma comunicação mais abrangente entre a empresa e o usuário das demonstrações contábeis, através do relatório de auditoria. Nesta dissertação é analisada: H1, a relação entre provisões (ou apropriações) discricionárias (ou anormais), como proxi de gerenciamento de resultado, e o tamanho da firma de auditoria (AS) e, H2, se a presença de gerenciamento de resultados (GR ou EM = Earnings Management) implica uma emissão de um parecer de auditoria qualificado ou modificado (MAO), a fim de obter uma melhor compreensão sobre a confiabilidade do trabalho de auditoria no Brasil. A seleção da amostra é constituída por um painel balanceado de empresas brasileiras listadas (excluindo o setor financeiro) na Bovespa durante o período 2012-2015, por um total de 1.132 observações. Pré-requisito deste trabalho é o cálculo do gerenciamento de resultados através do modelo de Jones modificado, como revisto primeiro por Karniz (1999) e por Kothari depois (2005). Em seguida, foi realizada: (H1) uma regressão linear múltipla onde a variável “acumulações discricionárias absolutas” (ADA) é a dependente enquanto o tamanho da firma de auditoria o principal regressor; e (H2) um modelo de regressão logística, a fim de analisar a relação entre o relatório de auditoria qualificado (ou não, variável dependente dicotômica) e a presença de gerenciamento de resultado. Como resultado da primeira hipótese, a relação (negativa) entre a ADA e AS, mesmo estatisticamente insignificante, denotaria que a presença de uma Big 4 de alguma forma inibe o nível de acumulações discricionárias. As principais variáveis de controle que influenciam a dependente são o nível de alavancagem (positivamente) e retorno sobre o ativo (negativamente). Como resultado da segunda hipótese, existe uma relação positiva entre a qualificação de auditoria e ADA. Isto significa que, quando há indícios de práticas de EM, o auditor é mais propenso a apresentar um parecer qualificado. Essa hipótese é testada em dois cenários de opiniões modificadas: no primeiro (MAO1), o parágrafo de ênfase é considerado como uma qualificação (lato sensu), enquanto que no segundo (MAO2), apenas opiniões adversas (ou com ressalva) são consideradas como uma qualificação (stricto sensu)

Many external parties such as investors, creditors, and regulatory agencies, use a company’s financial statements in their decision-making. In doing so, they rely on audit opinions on whether financial statements are fairly stated. However, evidence suggests that there are factors in the audit environment that influence auditor judgments. For example, nondiagnostic client information dilutes auditor judgments when compared to judgments based on diagnostic information alone, especially for less experienced auditors (Hackenbrack 1992; Hoffman and Patton 1997; Glover 1994; Shelton 1999). High time pressure conditions mitigate this effect by refocusing auditor attention toward relevant client information, therefore reducing the impact of nondiagnostic information (Glover 1994, 1997). This research study examines other common audit environment factors to determine if they too influence audit judgment results. An online questionnaire of 149 auditors, CPAs and other accounting professionals indicate that the inclusion of nondiagnostic client information results in a significant change in auditor judgments. The direction of this change follows a theorized pattern; risk assessments that were initially high are reduced, while those that were initially low are increased. Significance was not consistently found for a workload and PCAOB effect on auditor judgment. However, a comparison of the absolute value of dilution effect means across conditions reveals some trending for the proposed unwanted effect of high workload, and the beneficial effect of PCAOB guidance. These results have important implications for auditing research and practice. It extends previous archival research on workload effects and uses a unique questionnaire design to reexamine workload pressures in a behavioral setting. The results of hypothesis testing on workload pressure and PCAOB guidance, although lacking consistent statistical significance; exhibit trends that agree with proposed theoretical relationships. Tests on the effects of nondiagnostic information show strong statistical support for previous studies in the area of psychology and audit. This study’s greatest contribution suggests that audit pressures do not produce equivalent effects on auditor judgment; time pressure improves audit judgment, while workload pressure does not (Glover 1994, 1997). These results can be explained by examining the relationship between stress and audit judgment performance (Choo 1995, Yerkes and Dodson 1908). Different types and different degrees of audit pressures may correspond to different levels of audit pressure. Low to moderate levels of audit pressure, such as the level of time pressure used in Glover’s (1994, 1997) study improve audit performance. Higher audit pressures, such as high workload during an auditor’s busy season, may lower audit performance.