Search results

1 – 6 of 6
Per page
102050
Citations:
Loading...
Access Restricted. View access options
Article
Publication date: 9 January 2007

Albert L. Nagy and William J. Cenker

This paper seeks to discuss the effect that the Sarbanes‐Oxley Act (SOA) had on both the nature of the external audit function and overall audit quality. Additionally, it aims to…

2306

Abstract

Purpose

This paper seeks to discuss the effect that the Sarbanes‐Oxley Act (SOA) had on both the nature of the external audit function and overall audit quality. Additionally, it aims to discuss how audit firms maneuvered through the newly regulated environment, and what their strategic actions are for the future.

Design/methodology/approach

This discussion is based on interviews conducted with auditors from nine public accounting firms located in Northeast Ohio, United States of America. The sample consisted of five national and four regional firms, and the interviewees included mostly partners and a few senior managers.

Findings

The increased oversight and workload resulting from the SOA requirements has changed the nature of the external audit function to more compliance type work, and the environment has created much anxiety for the auditors. The new reform has significantly impacted the audit environment in terms of: scope of services; client assessment procedures; management and audit committee relationships with the external auditor; audit firm personnel management; and the long‐term outlook of the profession. The details of these impacts are discussed throughout the paper.

Research limitations/implications

This paper provides detailed insight as to how the SOA impacted the audit profession. Hopefully, such an understanding will benefit future research in measuring the costs and benefits of the new reform. Lastly, a future research showed further examine the effect that the SOA has had on overall audit quality.

Originality/value

This paper summarizes the insightful comments obtained in structured interviews with several leading audit professionals. The sample was judged to be highly knowledgeable of the changing audit environment caused by the SOA. With an improved understanding of its impacts, regulators, practitioners, and academics can better assess the effectiveness of the SOA.

Details

Managerial Auditing Journal, vol. 22 no. 2
Type: Research Article
ISSN: 0268-6902

Keywords

Access Restricted. View access options
Article
Publication date: 1 December 2004

William J. Cenker and Albert L. Nagy

Section 404 of the Sarbanes‐Oxley Act requires management to include in the annual report a report on the effectiveness of the company's internal control over financial reporting…

1370

Abstract

Section 404 of the Sarbanes‐Oxley Act requires management to include in the annual report a report on the effectiveness of the company's internal control over financial reporting. This assessment must be supported by evidential matter, including documentation, regarding both the design of internal controls and the testing process. Understandably, many executives are seeking the assistance from their internal auditors in satisfying the Section 404 requirements, leaving internal auditors with the important task of ensuring that the corporation's internal control system is properly documented and tested. This paper discusses how nine leading internal auditors of large publicly listed corporations are assisting their respective companies in implementing the Section 404 requirements. Further discusses some of the significant issues that these auditors are addressing and their prediction on the expected future impact of Section 404.

Details

Managerial Auditing Journal, vol. 19 no. 9
Type: Research Article
ISSN: 0268-6902

Keywords

Access Restricted. View access options
Article
Publication date: 1 April 2002

Albert L. Nagy and William J. Cenker

The new definition of internal auditing defines the function as an independent, objective assurance and consulting activity designed to add value and improve an organization’s…

8521

Abstract

The new definition of internal auditing defines the function as an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. The purpose of this paper is to summarize an assessment of this new definition obtained through structured interviews from 11 internal audit directors of large publicly traded companies. The responses from the directors indicate that there are wide differences in viewpoints and objectives; but a definite shift has occurred in the overall scope of internal audit towards operational activities. While most of the interviewees are in conceptual agreement with the new internal audit definition, an underlying warning is vocalized: “Don’t throw out the franchise”. That is, the traditional role of the internal auditor should not be completely abandoned. These, along with other responses pertaining to related issues and suggestions for future research, are summarized throughout the paper.

Details

Managerial Auditing Journal, vol. 17 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Access Restricted. View access options
Article
Publication date: 24 April 2007

Lawrence P. Kalbers and William J. Cenker

The purpose of this paper is to examine organizational commitment within the context of important antecedents, correlates, and consequences for auditors in public accounting…

3586

Abstract

Purpose

The purpose of this paper is to examine organizational commitment within the context of important antecedents, correlates, and consequences for auditors in public accounting. Specifically, to explore the relationships among the constructs of experience, role ambiguity, organizational commitment (affective and continuance), job satisfaction, and turnover intentions.

Design/methodology/approach

An integrated model is developed and tested using structural equation modeling techniques. A sample of 334 auditors working for international and regional public accounting firms in a major metropolitan area of the USA is used to test the model.

Findings

The findings support nearly all of the hypothesized relationships. Auditors with more experience have less role ambiguity, have more affection for their organization, and are less inclined to leave their organization. Continuance commitment plays a less important role in the integrated model. However, the study lends support to the notion that the two dimensions of continuance commitment, high sacrifice and low alternatives, are distinct and have different patterns of relationships with other important variables.

Research limitations/implications

The sample was taken from one geographic area of the US and may not be representative of all auditors. Auditors from the regional public accounting firms may not be representative of other regional firms.

Practical implications

Despite the fact that auditors with higher levels of affective organizational commitment and job satisfaction are less likely to leave their organizations, the findings also indicate a direct link with more experience and the desire to leave the firm. Role ambiguity and continuance commitment do not have direct links to turnover intentions, but deserve consideration for their indirect influence on important job outcomes.

Originality/value

This study contributes to the study of organizational commitment by using auditors from all job levels and from public accounting firms from varying sizes. Few studies have examined the sub‐dimensions of continuance commitment for auditors.

Details

Managerial Auditing Journal, vol. 22 no. 4
Type: Research Article
ISSN: 0268-6902

Keywords

Access Restricted. View access options
Article
Publication date: 16 September 2021

Leslie H. Blix, Marc Ortegren, Kate Sorensen and Brandon Vagner

The purpose of this paper is to examine the effect of auditor alternative work arrangement (AWA) participants’ and non-participants’ perceptions of procedural and distributive…

585

Abstract

Purpose

The purpose of this paper is to examine the effect of auditor alternative work arrangement (AWA) participants’ and non-participants’ perceptions of procedural and distributive justice on organizational commitment.

Design/methodology/approach

Using survey data from 110 auditors in the USA, this study uses a regression model to explore how AWA participants’ and non-participants’ perceptions of procedural and distributive justice affect organizational commitment.

Findings

As predicted, results show both participants’ and non-participants’ perceptions of procedural justice significantly affect organizational commitment. However, neither groups’ perceptions of distributive justice significantly affect their organizational commitment.

Originality/value

Organizational justice literature has shown that procedural and distributive justice influence organizational commitment. However, no study has controlled for AWA participation. The authors extend research by investigating the effects of procedural and distributive justice perceptions on organizational commitment for both participants and non-participants. The authors also extend accounting research that has narrowly examined AWA benefits and drawbacks, support, viability and perceptions of subordinate career success. Furthermore, there is limited AWA auditing research and this study offers a view prior to the COVID-19 pandemic.

Details

Managerial Auditing Journal, vol. 36 no. 8
Type: Research Article
ISSN: 0268-6902

Keywords

Access Restricted. View access options
Article
Publication date: 7 March 2018

Yu-Chun Lin

This study aims to examine the consequences when audit committees have different economic incentives (i.e. incentive-based compensation) to switch auditors.

1667

Abstract

Purpose

This study aims to examine the consequences when audit committees have different economic incentives (i.e. incentive-based compensation) to switch auditors.

Design/methodology/approach

The author focuses on companies experiencing an auditor switching event (client-initiated dismissals) and uses Heckman’s (1997) two-stage estimation procedure to control endogenous bias. Audit committee quality is measured by the level of incentive-based compensation. Accrual quality and abnormal audit fees are examined over the periods of auditor switches.

Findings

Using 1,087 US companies between 2006 and 2014, the author found that audit committees’ incentive-based compensation is negatively (positively) associated with accruals quality (abnormal audit fees) only when companies switch from Big 4 to non-Big 4 auditors or switch within non-Big 4 auditors. For companies that switch from non-Big 4 to Big 4 auditors, she found no evidence.

Research limitations/implications

This study provides a detailed discussion of the consequences of audit committee quality. The findings also contribute to the literature by concluding that economic incentives are associated with ineffective oversight, particularly after auditor switches.

Practical implications

Sarbanes–Oxley Act and its associated regulations significantly expanded the oversight role of audit committees. However, regulators bypassed restrictions on audit committee compensation. Accordingly, the author suggests that regulators focus on the issue of economic incentives to improve audit committee quality.

Originality/value

Minimal research has been conducted on the role of audit committees when companies switch to a new external auditor. The author shows that when companies switch auditors, incentive-based compensation significantly affects the monitoring quality of audit committees.

Details

Managerial Auditing Journal, vol. 33 no. 2
Type: Research Article
ISSN: 0268-6902

Keywords

1 – 6 of 6
Per page
102050