scholarly journals Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on International Auditing and Assurance Standards Board Exposure Draft, Proposed International Standard on Auditing 315 (Revised): Identifying and Assessing the Risks of Material Misstatement and Proposed Consequential and Conforming Amendments to Other ISAs

2018 ◽  
Vol 13 (1) ◽  
pp. C1-C9 ◽  
Author(s):  
Veena Looknanan Brown ◽  
Paul J. Coram ◽  
Sean A. Dennis ◽  
Denise Dickins ◽  
Christine E. Earley ◽  
...  
Keyword(s):  
Information Technology ◽  
Financial Reporting ◽  
Data Availability ◽  
Professional Skepticism ◽  
International Standard ◽  
Auditing Standards ◽  
Explicit Recognition ◽  
Automated Tools ◽  
Tools And Techniques

SUMMARY On July 16, 2018, the International Auditing and Assurance Standards Board (the Board or IAASB) issued a request for comment on its Exposure Draft, Proposed International Standard on Auditing 315 (Revised): Identifying and Assessing the Risks of Material Misstatement and Proposed Consequential and Conforming Amendments to Other ISAs (ED-315). Major enhancements proposed include explicit recognition of the auditor's use of automated tools and techniques, requiring an understanding of an auditee's use of information technology relevant to financial reporting, acknowledging the influence of an entity's complexity on the audit plan, and increasing the emphasis on the need for professional skepticism. The comment period ended on November 2, 2018. This commentary summarizes the participating committee members' views on selected questions posed by the IAASB. Data Availability: ED-315, including questions for respondents, is available at: https://www.ifac.org/publications-resources/exposure-draft-isa-315-revised-identifying-and-assessing-risks-material.

Repairing Organizational Legitimacy Following Information Technology (IT) Material Weaknesses: Executive Turnover, IT Expertise, and IT System Upgrades

2015 ◽  
Vol 30 (1) ◽  
pp. 41-70 ◽  
Author(s):  
Jacob Z. Haislip ◽  
Adi Masli ◽  
Vernon J. Richardson ◽  
Juan Manuel Sanchez
Keyword(s):  
Information Technology ◽  
Financial Reporting ◽  
Data Availability ◽  
Organizational Legitimacy ◽  
Executive Turnover ◽  
Material Weakness ◽  
Material Weaknesses ◽  
Monitoring Mechanism ◽  
Timely Fashion ◽  
System Upgrades

ABSTRACT Since Information Technology (IT)-based internal controls are pivotal in providing access to, and security of, financial records, we argue that an IT-related material weakness (ITMW) is a significant threat to organizational legitimacy. Prior research suggests that firms work to repair legitimacy by disassociation with executives blamed for the deficiency and the establishment of a monitoring mechanism to ensure the problem is addressed (Suchman 1995). As a test of disassociation, we find that, relative to a propensity-score-matched sample of non-ITMW firms, ITMW firms experience higher CEO, CFO, and director turnover. As a test of the establishment of a monitoring mechanism to repair organizational legitimacy, we find that ITMW firms hire CEOs, CFOs, and directors with higher levels of IT expertise, and make significant IT system upgrades. We find evidence that ITMW firms remediate deficiencies in a more timely fashion when they appoint a new CFO with IT expertise or upgrade their financial reporting system. Collectively, our results suggest that firms make significant monitoring changes to re-establish organizational legitimacy after receiving an ITMW. Data Availability: The data used are publicly available from the sources cited in the text.

scholarly journals Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on International Standard on Auditing (ISA) 720 (Revised), The Auditor's Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor's Report Thereon

2013 ◽  
Vol 7 (2) ◽  
pp. C1-C6 ◽  
Author(s):  
Nancy Chun Feng ◽  
Mikhail Pevzner ◽  
Jesse Robertson ◽  
Massood Yahya-Zadeh
Keyword(s):  
Financial Statements ◽  
Data Availability ◽  
International Standard ◽  
Related Information ◽  
Auditing Standards ◽  
Other Information

SUMMARY On November 14, 2012, the International Auditing and Assurance Standards Board (IAASB) solicited public comments on its exposure draft of the document entitled International Standard on Auditing (ISA) 720 (Revised), The Auditor's Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor's Report Thereon. The four-month comment period ended on March 14, 2013. This commentary summarizes the contributors' views on this exposure draft. Data Availability: The exposure draft and other related information are available at http://www.ifac.org/publications-resources/international-standard-auditing-isa-720-revised-auditor-s-responsibilities-re

scholarly journals Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Rulemaking Docket Matter No. 37: PCAOB Release No. 2011-006, Concept Release on Auditor Independence and Audit Firm Rotation

2012 ◽  
Vol 6 (1) ◽  
pp. C15-C27 ◽  
Author(s):  
Keith L. Jones ◽  
Jagadison K. Aier ◽  
Duane M. Brandon ◽  
Tina D. Carpenter ◽  
Lisa M. Gaynor ◽  
...  
Keyword(s):  
Exposure Period ◽  
Auditor Independence ◽  
Data Availability ◽  
Professional Skepticism ◽  
Audit Firm ◽  
The Public ◽  
Public Comment ◽  
Public Company ◽  
Auditing Standards ◽  
Mandatory Audit Firm Rotation

SUMMARY In August 2011, the Public Company Accounting Oversight Board (PCAOB or Board) issued a concept release to solicit public comment on the potential direction of a proposed standard-setting project on means to enhance auditor independence, objectivity, and professional skepticism. The Concept Release sought comments on and explores in detail the possibility of mandatory audit firm rotation. The PCAOB provided for a 121-day exposure period (from August 16 to December 14, 2011) for interested parties to examine and provide comments on the concept release. The Auditing Standards Committee of the Auditing Section of the American Accounting Association provided the comments in the letter below (dated December 13, 2011) to the PCAOB on PCAOB Rulemaking Docket Matter No. 37: PCAOB Release No. 2011-006, Concept Release on Auditor Independence and Audit Firm Rotation. Data Availability: Information about and access to the release are available at: http://pcaobus.org/Rules/Rulemaking/Docket037/Release_2011-006.pdf

The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting

2019 ◽  
Vol 95 (5) ◽  
pp. 23-56 ◽  
Author(s):  
Musaib Ashraf ◽  
Paul N. Michas ◽  
Dan Russomanno
Keyword(s):  
Information Technology ◽  
Financial Reporting ◽  
Fixed Effects ◽  
Audit Committee ◽  
Data Availability ◽  
Audit Committees ◽  
Material Weaknesses ◽  
Other Information ◽  
High Quality Information ◽  
The Impact

ABSTRACT We examine whether information technology expertise on audit committees impacts the reliability and timeliness of financial reporting. We find a reduction in the likelihood of material restatement, a reduction in the likelihood of information technology-related material weaknesses (which account for 55 percent of all reported material weaknesses), and more timely earnings announcements at firms with audit committee information technology expertise. These findings are robust to controlling for a firm's other information technology attributes, as well as when using entropy balanced samples, and we mitigate endogeneity concerns with evidence that our findings hold in a subsample of firms that all possess overall high-quality information technology. Finally, a difference-in-differences analysis, inclusion of firm fixed effects, and a falsification test largely support our assertion that the quality of financial reporting is significantly improved by the presence of an audit committee information technology expert. JEL Classifications: M41; M15. Data Availability: All data used in the study are publicly available.

scholarly journals Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on Proposed Statement on Auditing Standards (SAS), Audit Evidence

2019 ◽  
Vol 14 (1) ◽  
pp. C1-C9
Author(s):  
Veena Looknanan Brown ◽  
Denise Dickins ◽  
Dana R. Hermanson ◽  
Julia L. Higgs ◽  
J. Gregory Jenkins ◽  
...  
Keyword(s):  
Data Analytics ◽  
Information Sources ◽  
Data Availability ◽  
External Information ◽  
Certified Public Accountants ◽  
American Institute ◽  
Professional Skepticism ◽  
Audit Data ◽  
Audit Evidence ◽  
Auditing Standards

SUMMARY On June 20, 2019, the American Institute of Certified Public Accountants Auditing Standards Board (the Board or ASB) issued a request for comment on its Exposure Draft, Proposed Statement on Auditing Standards, Audit Evidence. Enhancements in the proposed SAS include the use of emerging technologies by both preparers and auditors, audit data analytics, the application of professional skepticism, and the expanding use of external information sources as audit evidence. The comment period ended on September 18, 2019. This commentary summarizes the participating committee members' views on selected questions posed by the ASB. Questions not addressed by the committee are listed at the end of this manuscript. Data Availability: Proposed Statement on Auditing Standards (SAS), Audit Evidence, including questions for respondents, is available at: https://www.aicpa.org/content/dam/aicpa/research/exposuredrafts/accountingandauditing/downloadabledocuments/20190620a/20190620a-ed-sas-audit-evidence.pdf

scholarly journals Determinants of Audit Sanctions Severity

2020 ◽  
Vol 11 (2) ◽  
pp. 28
Author(s):  
Stefano Azzali ◽  
Tatiana Mazza
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Accounting Standards ◽  
Fair Value ◽  
Investment Bank ◽  
Professional Skepticism ◽  
Material Weaknesses ◽  
Auditing Standards ◽  
Main Determinants ◽  
Value Measurement

This study investigates the effects of material weaknesses from auditing standards and of material misstatement from accounting standards on the audit sanctions severity. Using a unique database in the period 1983 – 2015, we find mixed results. Among the auditing standards, Internal Control Weaknesses lead to more severe audit sanctions than Quality Control, Other Auditors, Reporting and Audit Opinion Material Weaknesses Audit Sanctions, and to less severe audit sanctions than Professional Skepticism and Substantial Procedures. Among accounting standards, Fair Value misstatements are associated with more severe audit sanctions than Long-term investment, bank debts, and liquidity errors, and with lower severity of audit sanctions than Account receivables. Taken together, these findings suggest two main determinants of audit sanctions severity that auditors and accountants need to be aware: the area of internal control deficiencies and the area of fair value measurement. From these results, we learn that accounting and auditing standards errors have different likelihood of audit sanctions, and that auditors that aim to avoid sanctions need to invest mainly in the internal control assurance and in the fair value items of the financial reporting.

scholarly journals Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on International Auditing and Assurance Standards Board Exposure Draft, Proposed International Standard on Auditing 220 (Revised): Quality Management for an Audit of Financial Statements

2019 ◽  
Vol 13 (2) ◽  
pp. C10-C19 ◽  
Author(s):  
Veena L. Brown ◽  
Sean Dennis ◽  
Denise Dickins ◽  
Julia L. Higgs ◽  
Tammie J. Schaefer
Keyword(s):  
Quality Management ◽  
Financial Statements ◽  
Data Availability ◽  
Firm Level ◽  
Audit Firm ◽  
International Standard ◽  
Policies And Procedures ◽  
Auditing Standards ◽  
Draft International Standard

SUMMARY In February 2019, the International Auditing and Assurance Standards Board (the Board or IAASB) issued a request for comment on its Exposure Draft, Proposed International Standard on Auditing 220 (Revised): Quality Management for an Audit of Financial Statements (ED-220). ED-220 explicitly requires the engagement partner to demonstrate sufficient and appropriate involvement in all phases of the audit, it describes certain activities that must be performed by the audit engagement partner, and it explicitly acknowledges the role of audit firm-level policies and procedures and the changing complexity of audit engagement teams. The comment period ended on July 1, 2019. This commentary summarizes the participating committee members' views on selected questions posed by the IAASB. Data Availability: ED-220, including questions for respondents, is available at: https://www.ifac.org/publications-resources/exposure-draft-international-standard-auditing-220-revised-quality-management.

Extreme Estimation Uncertainty in Fair Value Estimates: Implications for Audit Assurance

2012 ◽  
Vol 31 (1) ◽  
pp. 127-146 ◽  
Author(s):  
Brant E. Christensen ◽  
Steven M. Glover ◽  
David A. Wood
Keyword(s):  
Financial Reporting ◽  
Balance Sheet ◽  
Fair Value ◽  
Data Availability ◽  
Future Research ◽  
Net Income ◽  
Public Companies ◽  
Estimation Uncertainty ◽  
Income Statement ◽  
Auditing Standards

SUMMARY The overall complexity and estimation uncertainty inherent in financial statements have increased in recent decades; however, the related reports and services have changed very little, including the format of the balance sheet and income statement, the content in the auditor's report, and the level and nature of assurance provided on estimates. We examine estimates reported by public companies and find that fair value and other estimates based on management's subjective models and inputs contain estimation uncertainty or imprecision that is many times greater than materiality. Importantly, changes in the estimates often impact net income; consequently, the extreme estimation uncertainty also resides in measures such as earnings per share. We do not question the value audits provide to the marketplace, the importance of fair value reporting, or the ability of auditors to deploy up-to-date valuation and auditing techniques. Rather, we suggest that the convergence of relatively recent events is placing an increasingly difficult, and perhaps in some cases unrealistic, burden on auditors. We consider whether the convergence of events in regulation and standard setting may have outstripped auditors' ability to provide the level and nature of assurance currently required on estimates with extreme estimation uncertainty by auditing standards and regulators. We discuss potential changes to financial reporting and auditing standards that may improve the information provided to users and also address the concerns we raise. Finally, we suggest avenues for future research that may be fruitful in addressing how changes to standards would influence the behavior of preparers, auditors, and users. JEL Classifications: M4; M40; M41; M42. Data Availability: All data are publicly available.

scholarly journals The Auditing Standards Committee of the Auditing Section of the American Accounting Association's Response to the International Auditing and Assurance Standard's Board's Invitation to Comment: Enhancing Audit Quality in the Public Interest

2016 ◽  
Vol 11 (1) ◽  
pp. C1-C25 ◽  
Author(s):  
Christine E. Earley ◽  
Karen L. Hooks ◽  
Jenifer R. Joe ◽  
Paul W. Polinski ◽  
Zabihollah Rezaee ◽  
...  
Keyword(s):  
Quality Control ◽  
Public Interest ◽  
Audit Quality ◽  
Standard Setting ◽  
Data Availability ◽  
Professional Skepticism ◽  
The Public ◽  
Auditing Standards

SUMMARY: On December 17, 2015, the International Auditing and Assurance Standards Board (IAASB) issued an Invitation to Comment entitled Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism, Quality Control and Group Audits (hereafter, the ITC). The ITC highlights the IAASB's discussions regarding the three separate, but related, topics: professional skepticism, quality control, and group audits, in order to solicit feedback on these topics from various stakeholders. The ITC also discusses potential standard-setting activities the IAASB could participate in to enhance audit quality. The comment period ended on May 16, 2016. This commentary summarizes the contributors' views on selected questions posed in the ITC. Data Availability: The invitation to comment (as of May 23, 2016) is available at: https://www.ifac.org/system/files/publications/files/IAASB-Invitation-to-Comment-Enhancing-Audit-Quality.pdf

Pengaruh Kualitas Sumber Daya Manusia, Pemanfaatan Teknologi Informasi, Dan Sistem Pengendalian Intern Terhadap Ketepatwaktuan Pelaporan Keuangan Pemerintah Desa

2018 ◽  
Vol 26 (2) ◽  
pp. 131-143
Author(s):  
Marlinawati Marlinawati ◽  
Dewi Kusuma Wardani
Keyword(s):  
Information Technology ◽  
Control System ◽  
Human Resources ◽  
Financial Reporting ◽  
Internal Control ◽  
Positive Influence ◽  
Internal Control System ◽  
Speed Up ◽  
Village Government

The purpose of this research is to know the influence between the Quality of Human Resources, Utilization of Information Technology and Internal Control System Against Timeliness of Village Government Financial Reporting at Gunungkidul Regency. This research is causative research. The population is the village government in Gunungkidul Regency, especially in Gedangsari subdistrict. Criteria of respondents in the study were to village and village apparatus. We use questionnaire to collect data. We use multiple regression with SPSS program version 16.0 to analyze data. We find that quality of human resources and internal control system have a positive influence on the timeliness of village government financial reporting. On the other hand, utilization of information technology does not influence the timeliness of village government financial reporting. These imply that the quality of human resources and internal control system can speed up the preparation of village government financial reporting.

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