The Impact of Extended Audit Tenure on Auditor Independence: A Case of Robin Pvt Ltd

The impact of extended audit tenure on auditor independence

Authors

  • Newman Wadesango University of Limpopo
  • Raymond T. Muradzikwa Midlands State University
  • Ongayi Wadesango University of Limpopo
  • Lovemore Sitsha Midlands State University

Keywords:

Auditor independence, audit tenure, audit quality and auditor rotation

Abstract

The independence of an auditor has not exclusively been seen as a moral issue inside the examining proficient bodies, yet additionally it is the bedrock whereupon a fruitful review is based. The partners require the auditors to remain consistent with the primary confidence of the calling as a free external outsider to offer an input on the valid and reasonable perspective on the budget reports introduced by the board. The fundamental purpose of this exploration is to analyze whether stretched out review tenures can prompt the development of threats to auditor independence which will weaken the auditor independence at the auditee – Robin PvT Ltd. The reactions gotten were investigated utilizing a quantitative strategy, autonomous examples test measurements in SPSS, which analyzed comparable circumstances in both short and stretched out review tenures to uncover if there could be any relationship of auditor independence to broadened review tenures. The results uncoverd solid connection between the non-review administrations, review expenses and the effect expanded review tenures on auditor independence since tthey achieved threats to independence explicitly fmiiriarity threat, self-survey threat and personal responsibility threat. All in all, our outcomes show a relationship of auditor independence to broadened review tenures.

References

Articles and Books American Accounting Association (1973).Committee on basic auditing concepts.A statementof basic auditing concepts. Sarasota, FL: American Accounting Association.
Antle, R., Gordon, E., Narayanamoorthy, A. G., & Zhou, L. (2012). The joint determination of audit fees, non-audit fees, and abnormal accruals. Working Paper, June: 1-34.Arruñada, B., & Paz-Ares, C. (1997). Mandatory rotation of company auditors: a critical examination. International Review of Law and Economics,17: 31-61.
Bamber, E. M., &Iyer, V. M. (2017). Auditors identification with their clients and Its effect on auditors objectivity. Auditing, 26(2): 1-24. Beattie, V., Brandt, R., &Fearnley, S. (1999). Perceptions of auditor independence: U.K.evidence. Journal of international Accounting, Auditing & Taxation, 8(1): 67-107.
Becker, C. L., DeFond, M. L., Jiambalvo, J., &Subramanyam, K. R. (1998). The effect of audit quality on earnings management. Contemporary Accounting Research, 15(1): 1-24.
Boritz, J. E. (1992). Expert and novice problem-solving behavior in audit planning.Auditing: A Journal of Practice & Theory, 11: 21-32.
Bryman, A., &s Bell, E. (2017).Business research methods.2nd edition. New York: Oxford University Press Inc.
Burrowes, A., &Persson, M. (2010). The swedish management audit: a predecent for performance and value for money audits’. Managerial Auditing Journal, 15(3): 85-96.
Canning, M., & Gwilliam, D. (1999). Non-audit services and auditor independence: some evidence from Ireland. European Accounting Review, 8(3): 401-419.
Carcello, V. J., & Nagy, A. L. (2014).Audit firm tenure and fraudulent financial reporting. Auditing: A Journal of Theory and Practice, 23(2): 55-69.
DeAngelo, L. (1981). Auditor independence, “low-balling”, and disclosure regulation. Journal of Accounting and Economics, 3: 113–17.
Dillman, D. A. (2017). Mail and Internet surveys: The Tailored Design Method. 2nd edition. New Jersey: John Wiley & Sons Inc.
Dye, R. (1991).Informationally motivated auditor replacement. Journal of Accounting and Economics, 14:347-374.
Eilifsen, A., Messier Jr., W. F., Glover, S. M., &Prawitt, D. F. (2016).Auditing and Assurance Services.International Edition. Glasgow: McGraw Hill Education.
Ejlertsson, G. (2015). Enkäten i Praktiken: En Handbok i Enkätmetodik. 2nd edition. Lund: Studenlitteratur.
Geiger, M. A., & Raghunandan, K. (2012).Auditor tenure and audit reporting failures. Auditing: A Journal of Practice and Theory, 21(1): 67-78.
Ghosh, A., & Moon, D. (2015).Auditor tenure and perceptions of audit quality. The Accounting Review, 80 (2): 585-612.
Gratton, C., & Jones, I. (2019).Research Methods for Sports Studies.2nd Edition. New York: Routledge.
Graziano, A. M., &Raulin, M. L. (2013). Research methods: a process of inquiry. 5th edition. Boston: Pearson Education.
Grout, P., Jewitt, I., Pong, C., & Whittington, G. (1994). Auditor professional judgment: implications for regulation and the law. Economic Policy, October: 308-351.
Goldman, A. & B. Barlev (1974). The auditor-firm conflict of interests: its implications for independence. The Accounting Review, October: 707-718.
Gorard, S. (2013).Quantitive methods in social science: The role of the numbers made easy. London: Continum.
Gul, A. F., Jaggi, B. L., & Krishnan, G. V. (2017). Auditor independence: evidence on the joint effects of auditor tenure and non-audit fees. Auditing: A Journal of Practice and Theory, 26(2): 117-142.
Gwilliam, D. R. (1987).A survey of auditing research. London: Prentice-Hall/ Institute of Chartered Accountants in England and Wales.
Hayes, R., Dassen, R., Schilder, A., &Wallage, P. (2014). Principles of auditing: an introduction to international standards on auditing. 2nd edition. London: PrenticeHall/Financial Times.
Hillison, W. &Kennelley, M. (1988).The economics of non-audit services.Accounting Horizons, 2(3): 32-40.
Jeppesen, K. K. (1998). Reinventing auditing, redefining consulting and independence European Accounting Review, 7(3): 517–39.
Johnson, E. V., Khurana, I. K., & Reynolds, J. K. (2012).Audit firm tenure and the quality of financial report. Contemporary Accounting Research, 19(4): 637-660.
Johnson, W.B., Lys, T. (1990). The market for audit services: evidence from voluntary auditor changes. Journal of Accounting and Economics, 12: 281-308.
Kent, R. (2017). Marketing research: approaches, methods and applications in Europe. London: Thomson learning.
Kinney Jr., R. W., Palmrose, Z.-V., &Scholz, S. (2014). Auditor independence, non- audit services, and restatements: was the U.S. government right? Journal of Accounting Research, 42(3): 561-588.
Knechel, R. W., & Vanstraelen, A. (2017).The relationship between auditor tenure and audit quality implied by going concern opinions. Auditing: A Journal ofPractice and Theory, 26(1): 113-131.
Myers, N. J., Myers, L. A., & Omer, T. C. (2013). Exploring the term of client-audit relationship and the quality of earnings: a case for mandatory auditor rotation? The Accounting Review, 78(3): 779-799.
Nasser, A. T. A., Wahid, E. A., Nazri, S. N. F. S. M., &Hudaib, M. (2016). Auditorclient relationship: the case of audit tenure and auditor switching in Malaysia. Managerial Auditing Journal, 21(7): 724-737.
Wolf, F. R., Tackett, J. A., & Claypool, G. A. (2019). Audit disaster futures: antidotes for the expectations gap? Managerial Auditing Journal 14 (9): 468–478.
Websites and e-books Auditing Practice Board (2014) ES1vprint12004.pdf. Auditing Practice Board home page,<http://www.frc.org.uk/documents/pagemanager/apb/ES1vprint12004.pdf> [Retrieved 2021-07-24].
Auditing Practice Board (2014) ES3-v5 clean.pdf.Auditing Practice Board home page, <http://www.frc.org.uk/images/uploaded/documents/ES3%20%20v5%20clean.pdf> [Retrieved 2021-07-24].
Bryce, I. (2014). Questionnaire design. [e-book]. London: Kogan Page Limited. Available via: Umeå University Library/Databases/Ebrary<http://proxy.ub.umu.se:2055/lib/UMEAUB/docDetail.action?docID=10084461> [Retrieved: 2021-07-25].
FAR hompage (2010) ISA-volymen2010 <http://www.farforlag.se/E-handel/Bocker-2010/ISA-volymen-2010/> [Retrieved 2021-07-14].

Downloads

Published

2022-02-09

Issue

Section

Articles