Professional standards require the auditor to change the nature, extent, and timing of testing and/or use more skilled labor as the risk of misstatements increases. This study investigates whether auditors adjust audit programs (detection) and/or the thresholds to record and require correction of detected misstatements in response to increases in audit risk and client size. Prior research from several countries indicates that audit programs are too static and are not risk adjusted (Mock and Wright 1993; Quadackers et al. 1996; Mock and Wright 1999). In addition, a key concern is that economic dependence on the client may cause the audit firm to refrain from recording and requiring correction of detected misstatements for larger clients.
Archival records from 10 Chinese audit firms are examined to assess audit procedures, audit labor and the audit posting thresholds used. Results of the study indicate that when audit risk or client size increases, the audit firm does not change its audit procedures or use more skilled labor, nor does it detect audit differences in different types of accounts. The audit firm detects a larger number of audit differences for larger clients. The audit firm also uses lower thresholds to record and require correction of detected misstatements in response to increases in audit risk and client size. / Accounting
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:AEU.10048/1612 |
| Date | 06 1900 |
| Creators | Luo, Le |
| Contributors | Jamal, Karim (Accounting and Management Information Systems), Deephouse, David (Strategic Management and Organization), Gao, Yanmin (Accounting and Management Information Systems), Maier, Michael (Accounting and Management Information Systems), Zhang, Peng (Mathematical and Statistical Sciences), Boritz, Efrim (School of Accounting and Finance, University of Waterloo) |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Format | 1009268 bytes, application/pdf |
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