scholarly journals The Effects of Internal Control Quality and Its Changes on Audit Fees

2018 ◽  
Author(s):  
Hong-juan JI
Keyword(s):  
Internal Control ◽  
Audit Fees ◽  
Control Quality

The relationship between managerial ability, earnings management and internal control quality on audit fees in Iran

2019 ◽  
Vol 69 (4) ◽  
pp. 685-703 ◽  
Author(s):  
Mahdi Salehi ◽  
Mahmoud Mousavi Shiri ◽  
Seyedeh Zahra Hossini
Keyword(s):  
Earnings Management ◽  
Internal Control ◽  
Significant Relationship ◽  
Stock Exchange ◽  
Audit Fees ◽  
Real Earnings Management ◽  
Managerial Ability ◽  
Content Type ◽  
Control Quality ◽  
The Relationship

Purpose The purpose of this paper is to emphasize the relationship between managerial ability, earnings management, internal control quality and audit fees to establish whether or not there is a significant relationship between the variables of managerial ability, earnings management, internal control quality and the audit fees. Design/methodology/approach The study sample includes 190 listed companies on the Tehran Stock Exchange during 2009–2016. Research hypotheses were tested using the statistical methods of multivariable linear regression and data envelopment analysis pattern. Findings The obtained results indicate that there is a significant and direct relationship between managerial ability and internal control quality as well as real earnings management and internal control quality. Based on the results obtained from the second hypothesis, the authors could claim that there is an inverse and significant relationship managerial ability and audit fees. The third hypothesis also revealed that in companies with lower audit fees, there is a stronger relationship between managerial ability and internal control quality. The results of related tests show no significant relationship between accrual-based earnings management and internal control quality. Originality/value This paper is the first study in Iran whose main focus is on the relationship between managerial ability, earnings management, internal control quality and audit fees.

scholarly journals The Effect of Audit Committee and Board of Directors Characteristics' on Audit Fees and Internal Control Quality in Iran // El efecto de las características del Comité de Auditoría y de la Junta Directiva sobre los honorarios de auditoría y la calidad del

2019 ◽  
Vol 28 ◽  
pp. 23-42
Author(s):  
Mahdi Salehi ◽  
Noman Rashidi Soorestani
Keyword(s):  
Regression Model ◽  
Board Of Directors ◽  
Internal Control ◽  
Significant Relationship ◽  
Audit Committee ◽  
Stock Exchange ◽  
Audit Fees ◽  
Board Independence ◽  
Panel Regression ◽  
Control Quality

This study investigates the effect of characteristics of board of directors and audit committee strength on audit fees internal control quality. In this study, 84 companies listed on the Tehran Stock Exchange were evaluated from 2014 to 2016. Panel regression model and panel logistic regression model were used for testing hypotheses related to audit fees and the weaknesses of internal control quality, respectively. Results showed that there is no significant relationship between the authority of board of directors and audit committee and the independence board and audit committee expertise and internal control quality weakness and also between the board power and audit fees. There is a significant relationship, however, between the board independence and audit committee authority, expertise, as well as the audit fees. Furthermore, results indicated that there is no significant relationship between board effort and audit fees and internal control quality weakness.

Abnormal Audit Fees and Restatements

2012 ◽  
Vol 31 (1) ◽  
pp. 79-96 ◽  
Author(s):  
Alan I. Blankley ◽  
David N. Hurtt ◽  
Jason E. MacGregor
Keyword(s):  
Internal Control ◽  
Financial Statements ◽  
Audit Fees ◽  
Financial Statement ◽  
Prior Work ◽  
Audit Risk ◽  
Negatively Associated ◽  
Control Quality ◽  
Sarbanes Oxley ◽  
The Relationship

SUMMARY We investigate the relationship between audit fees and subsequent financial statement restatements in the years following the Sarbanes-Oxley Act of 2002 (SOX). After controlling for internal control quality, we find that abnormal audit fees are negatively associated with the likelihood that financial statements are subsequently restated. This result conflicts with prior work that finds that audit fees are positively associated with future restatements. Overall, our evidence is consistent with the notion that restatements reflect low audit effort or underestimated audit risk in the periods leading up to the restatement year.

The Effects of Restatements for Misreporting on Auditor Scrutiny of Peer Firms

2017 ◽  
Vol 32 (1) ◽  
pp. 65-85 ◽  
Author(s):  
Feng Guo ◽  
Thomas R. Kubick ◽  
Adi Masli
Keyword(s):  
Internal Control ◽  
Spillover Effect ◽  
Investment Decisions ◽  
Audit Fees ◽  
Shareholder Wealth ◽  
Data Availability ◽  
Market Reactions ◽  
Control Quality ◽  
Peer Firms ◽  
Financial Misreporting

SYNOPSIS Prior research contends that financial misreporting has a spillover effect on the outcomes of peer firms within the same industry through investment decisions, information risk, and shareholder wealth. We predict and confirm a higher level of audit fees for peer firms when serious misreporting by other firms is announced in the industry. We find this effect is limited to peers that exhibit poor internal control quality. In addition, we observe higher audit fees for peers of industry prominent misreporting firms and for peers of firms announcing restatements with larger negative market reactions. Overall, our results suggest that financial misreporting in the industry has a spillover effect on audit fees of non-misreporting peer firms. Data Availability: All data are from public sources identified in the manuscript.

Internal Control Quality and Bank Risk-Taking and Performance

2020 ◽  
Author(s):  
Matthew Baugh ◽  
Matthew Ege ◽  
Christopher G. Yust
Keyword(s):  
Internal Control ◽  
Risk Taking ◽  
Downside Risk ◽  
Internal Controls ◽  
Bank Risk ◽  
Material Weakness ◽  
Control Quality ◽  
Interest Income ◽  
Upside Risk ◽  
And Performance

Using a sample of bank-years from 2005 to 2017, we examine the effect of internal control quality on future risk-taking and performance. We find that banks that disclose a material weakness in internal controls have higher risk-taking and worse performance in the future, including having a higher (lower) likelihood of experiencing large losses (gains). These findings suggest that weak controls increase (reduce) downside (upside) risk-taking or conversely that strong controls increase (reduce) upside (downside) risk-taking. Path analyses suggest that 22.3 to 43.7 percent of the effect of internal control quality on future performance is through risk-taking. Additionally, material weaknesses are negatively associated with total asset, loan, interest income, and non-interest income growth, suggesting that internal control quality affects both core and non-core activities of banks. Overall, results suggest that strong internal controls improve bank risk-taking, in part through asymmetrically reducing downside risk-taking while facilitating upside risk-taking, ultimately improving bank performance.

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