Understanding Auditors’ Sense of Responsibility for Detecting Fraud Within Organizations

The objective of this study is to evaluate auditors’ perceived responsibility for fraud detection. Auditors play a critical role in managing fraud risk within organizations. Although professional standards and guidance prescribe responsibility in the area, little is known about auditors’ sense of responsibility for fraud detection, the factors affecting perceived responsibility, and how responsibility affects auditor performance. We use the triangle model of responsibility as a theoretical basis for examining responsibility and the effects of accountability, fraud type, and auditor type on auditors’ perceived fraud detection responsibility. We also test how perceived responsibility affects auditor brainstorming performance given the importance of brainstorming in audits. A sample of 878 auditors (241 external auditors and 637 internal auditors) participated in an experiment with accountability pressure and fraud type manipulated randomly between subjects. As predicted, accountable auditors report higher detection responsibility than anonymous auditors. We also find a significant fraud type × auditor type interaction with external auditors perceiving the most detection responsibility for financial statement fraud, while internal auditors report similar detection responsibility for all fraud types. Analysis of the triangle model’s formative links reveals that professional obligation and personal control are significantly related to responsibility, while task clarity is not. Finally, the results indicate that perceived responsibility positively affects the number of detection procedures brainstormed and partially mediates the significant accountability–brainstorming relation.     

Busy Auditors,Ethical Behavior,and Discretionary Accruals Quality in Malaysia

The required professional and ethical pronouncements of accountants mean that auditors need to be competent and exercise due care and skill in the performance of their audits. In this study, we examine what happens when auditors take on more clients than they should, thus raising doubts about their ability to maintain competence and audit quality. Using 2803 observations of Malaysian companies from 2010 to 2013, we find that auditors with multiple clients are associated with lower earnings quality, proxied by total accruals and discretionary accruals. Our results demonstrate that associating client firms’ reported discretionary accruals with individual auditors, rather than their firms or offices, is important in determining audit quality. Moreover, we demonstrate that the disclosure of auditors’ signatures on their reports is useful for assessing auditor quality at the individual level, thus contributing to the debate on the usefulness of having auditor identities on reports.     

How and why auditors’ social exchange relationships influence their attitudes and behaviors: Implications for audit quality

External auditors regularly interact with various parties at work, such as their accounting firms, engagement team members, and clients. These interactions can help shape the nature of auditors’ social exchange relationships with these entities, which in turn may influence their behavior toward these targets. This installment of Accounting Matters draws from recently published research by Herda and colleagues to (1) explain how constructive auditor-target connections can develop and lead to beneficial outcomes like reduced auditor burnout and turnover intentions, as well as more citizenship behavior, and (2) discuss how these upshots might ultimately affect audit quality. This topic is important because audit quality translates into improved financial reporting, which helps stakeholders who rely on audited financial statements to make informed business decisions. Specifically, we underscore the key role auditors’ perceptions of fair treatment from a relationship partner play in fostering a strong psychological bond with the target via perceived support. We further consider how auditors’ consequent commitment to the target can result in favorable organizational outcomes, including enhanced audit and financial reporting quality. We also discuss practical implications for accounting firms.     

审计师变更与内部控制审计意见购买

管理层有可能与审计师合谋以获得虚假的内部控制审计意见.本文基于我国A股上市公司发布的2013~2015年年度内部控制审计报告,采用修正的Lennox(2000)审计意见购买模型以实证检验我国上市公司是否存在内部控制审计意见购买行为.研究结论表明:上市公司内部控制被出具非标准审计意见后,促使其管理层更换审计师,且上市公司更换审计师后降低了其获得非标准内部控制审计意见的概率,即我国上市公司存在内部控制审计意见购买行为,故我国政府监管部门应加强内部控制审计的规范以监督管理层与内部控制审计师的合谋,从而真正发挥内部控制审计职能.     

Ethical Issues Related to the Provision of Audit and Non-Audit Services: Evidence from Academic Research

Audit standards require auditors to conduct audits being independent in mental attitude from their clients. Regulators and financial statement users are concerned that auditors compromise their independence by allowing clients that contract for consulting services, i.e., non-audit services, more financial statement discretion relative to clients that demand relatively little non-audit services from their auditor. This paper begins by discussing the role of auditing in the capital markets and the various stakeholders that rely on audited financial information in making their capital allocation decisions. The paper continues by explaining the ethical dilemma inherent in audit contracts in general, and more specifically, how the provision of non-audit services threatens auditor independence. The paper concludes by summarizing research studies that report conflicting evidence that there is a violation of auditor independence due to the provision of non-audit services to audit clients.     

事务所的任期、会计师轮换与审计独立性——来自中国A股市场的证据

近年来审计任期与审计独立性的问题日益受到人们的关注。我国也出台了有关签字会计师轮换的相关规定。本文以来自中国A股证券市场的数据,检验了事务所任期和签字会计师轮换与审计独立性之间的关系。我们发现,审计独立性将随着事务所审计任期的延长而下降,但是,轮换签字会计师并不能够有效地改变这种趋势。该项政策实施的有效性值得进一步研究。     

Antecedents and Consequences of Employer Branding

This study reviewed and analysed the phenomenon of employer branding. We began with a review of recent research in employer branding. Next, drawing the theoretical knowledge from OB, HRM, and marketing, a framework is developed depicting the antecedents of employer branding and its impact on the company performance. For this, primary data were collected administering a questionnaire survey on 347 top-level executives in 209 companies in India, and secondary data were collected on financial performance. The results revealed that realistic job previews, perceived organizational support, equity in reward administration, perceived organizational prestige, organizational trust, leadership of top management, psychological contract obligations, and corporate social responsibility influence employer branding, which in turn impact non-financial and financial performance of companies. Furthermore, leadership of top management is the most potent predictor of employer branding. Greater deviation of the existing state from the ideal state of antecedents adversely affects employer branding. Management can use this framework for developing strategy towards implementation of employer branding.     

The perceived effectiveness of democratic management,job performance,and citizenship behavior: evidence from a large Chinese state-owned petrochemical company

Democratic management, a unique union-based form of employee participation in China, is seldom studied in the employee participation literature. This paper investigates the associations between employees’ perceived democratic management effectiveness, employee job performance and organizational citizenship behavior (OCB), using 988 matching surveys of both workers and their supervisors in a state-owned petrochemical firm from the central region of China. We find that our measure of an employee’s perception of democratic management effectiveness is positively associated with an employee’s job performance and organizational citizenship behavior. However, the association between perceived democratic management effectiveness and employee performance is negative if the employee is a dispatch worker. Our interpretation of the findings suggests that an employee’s perception of democratic management effectiveness is a source of employee performance.     

The perceived effectiveness of democratic management,job performance,and citizenship behavior: evidence from a large Chinese state-owned petrochemical company

Democratic management, a unique union-based form of employee participation in China, is seldom studied in the employee participation literature. This paper investigates the associations between employees’ perceived democratic management effectiveness, employee job performance and organizational citizenship behavior (OCB), using 988 matching surveys of both workers and their supervisors in a state-owned petrochemical firm from the central region of China. We find that our measure of an employee’s perception of democratic management effectiveness is positively associated with an employee’s job performance and organizational citizenship behavior. However, the association between perceived democratic management effectiveness and employee performance is negative if the employee is a dispatch worker. Our interpretation of the findings suggests that an employee’s perception of democratic management effectiveness is a source of employee performance.     

Linking strategic HRM,performance management and organizational effectiveness: perceptions of managers in Singapore

Strategic human resource management (SHRM) theory is predicated on the assumption that effective human resource management (HRM) processes have the capacity to contribute significantly to organizational effectiveness, expressed in terms of productivity, flexibility, effectiveness, efficiency, return on investment, competitiveness, and ultimately, profitability. Earlier research studies have explored the overall value-adding potential of HRM processes as a whole. Few have focused on the links between strategic HRM, performance management systems and organizational effectiveness, and even fewer have examined these relationships in Southeast Asia. This paper addresses this gap in the literature by examining the perceptions of a split sample of senior managers in Singapore. It reveals an interesting gap between their rhetoric and the realities of their performance management systems, and suggests future research directions.     

LOGISTICS PERFORMANCE: EFFICIENCY,EFFECTIVENESS, AND DIFFERENTIATION

This research examines the nature of logistics performance and the contribution of logistics to the firm by empirically investigating the impact of logistics performance on organizational performance. Logistics performance is tested as a second‐order formative construct comprised of three dimensions: logistics efficiency; logistics effectiveness; and logistics differentiation. Results indicate that logistics performance positively impacts organizational performance. Theoretical and empirical support is also provided for measuring logistics performance as a second‐order formative construct, indicating that efficiency, effectiveness, and differentiation are not necessarily trade‐offs, but rather are complementary. Importantly, perceptual measures for organizational performance collected from managerial respondents were strongly correlated with secondary financial data for participating organizations obtained from Compustat, lending empirical credence to the logistics performance–organizational performance relationship.     

Drivers of Adoption and Continued Use of E-Procurement Systems: Empirical Evidence from China

ABSTRACT

This article develops and empirically tests a research framework that models the role of technological, organizational, and environmental factors in organizational intention toward using e-procurement systems. The partial least square analysis of survey data from 211 firms in China demonstrates that technological factors including perceived efficiency benefits and perceived ease, organizational factors including business to business commerce expertise, information sharing culture, and top management support, and an environmental factor, business partner pressure, shape in different ways organizational intention to adopt and to continue with e-procurement. The findings of the study not only offer valuable insights for stimulating the diffusion of e-procurement systems but also provide important guidance to systems vendors in strategizing their marketing campaigns and focusing limited resources on relevant strategic components.     

Auditor realignment,voluntary SOX 404 adoption,and internal control material weakness remediation: Further evidence from U.S.-listed foreign firms

This study examines whether auditor realignments and voluntary Sarbanes-Oxley (SOX) Section 404 adoption are associated with the remediation of internal control material weaknesses (ICMWs) in the case of U.S.-listed foreign companies. Furthermore, we investigate whether the results are driven by the home country’s legal systems. Using a sample of 266 U.S.-listed foreign firm-year observations reporting ICMWs, we found that firms engaging new auditors are more likely to remediate their ICMWs effectively in the subsequent year. Furthermore, we found that firms in the voluntary adoption period are less likely to solve internal control problems and that ICMW remediation significantly improved earnings quality. However, our results hold only for firms from common-law countries. This study provides evidence to academics that auditor realignment can serve as a functional change by which U.S.-listed foreign companies can remediate their ICMWs. Furthermore, this paper extends earlier cross-country research and suggests that country institutional differences affect the internal control reporting behavior of auditors and the effect of ICMW remediation on earnings quality.     

Linking organizational culture, structure, strategy, and organizational effectiveness: Mediating role of knowledge management

Practices of knowledge management are context-specific and they can influence organizational effectiveness. This study examines the possible mediating role of knowledge management in the relationship between organizational culture, structure, strategy, and organizational effectiveness. A survey was conducted of 301 organizations. The results suggest that knowledge management fully mediates the impact of organizational culture on organizational effectiveness, and partially mediates the impact of organizational structure and strategy on organizational effectiveness. The findings carry theoretical implications for knowledge management literature as they extend the scope of research on knowledge management from examining a set of independent management practices to examining a system-wide mechanism that connects internal resources and competitive advantage.     

Professionalism, Ethical Codes and the Internal Auditor: A Moral Argument

This paper examines the case of the internal auditor from a sociological and ethical perspective. Is it appropriate to extend the designation of professional to internal auditors? The discussion includes criteria from the sociology literature on professionalism. Further, professional ethical codes are compared. Internal auditors' code of ethics is found to have a strong moral approach, contrasting to the more instrumental approach of certified professional accountants. Internal auditors are noted as using their code of ethics to help resolve professional ethical dilemmas.     

Multinational Corporate Power,Influence and Responsibility in Global Supply Chains

This study examines the influence of underwriter–auditor relationship (UAR) on pre-initial public offering (IPO) earnings management. Using a sample of Chinese to-be-listed firms, we find that a close UAR, as reflected in repeated collaborations between an underwriter and an audit firm in IPOs, is positively associated with pre-IPO earnings management. This association is more pronounced for firms with politically connected auditors/underwriters, firms with less reputable auditors/underwriters, firms located in provinces with weak legal environment, firms to-be-listed on boards with lax listing requirements, and firms whose auditors are with low industry specialization, and legal liability exposures. We provide further evidence that UAR is associated with greater likelihood of irregular activities in post-IPO period and poorer post-IPO financial performance. To the extent that we control for alternative explanations and potential endogeneity, our results suggest that the collusion incentive is likely to drive repeated collaborations between underwriters and auditors in the Chinese IPO market. Our findings provide interesting implications for auditors, investors, and regulators seeking to understand the Chinese IPO market.     

Auditor switching, earnings manipulation and auditor independence: Evidence from A-share listed companies in China

Based on data from Chinese A-share listed companies between 1999 and 2004, this paper examines the causes of auditor switching and its effects on the independence of successive auditors from the perspective of earnings manipulation. Results show that: (1) listed companies manipulate their earnings through replacing their auditor and the successive auditor fails to exercise necessary prudence; (2) for companies reporting profit in the year of auditor change, the formerly low discretionary accruals usually increase significantly after the switch mostly resulting from assets devaluation and adjustments to non-recurring items; (3) In contrast, for companies reporting losses in the year of auditor change, they take a “big bath” to adjust lower earnings of the same year. These findings indicate that auditor change is related to the conservatism of predecessor auditors and it damages the independence of successive auditors.      

The Impact of Human Resource Management on Environmental Performance: An Employee-Level Study

This field study investigated the relationship between strategic human resource management, internal environmental concern, organizational citizenship behavior for the environment, and environmental performance. The originality of the present research was to link human resource management and environmental management in the Chinese context. Data consisted of 151 matched questionnaires from top management team members, chief executive officers, and frontline workers. The main results indicate that organizational citizenship behavior for the environment fully mediates the relationship between strategic human resource management and environmental performance, and that internal environmental concern moderates the effect of strategic human resource management on organizational citizenship behavior for the environment.     

签字会计师繁忙度与审计质量——来自中国上市公司的经验证据

本文以我国2007~2014年的上市公司为样本,实证研究签字会计师繁忙度对审计质量的影响.结果显示,在其他条件相同的情况下,签字会计师繁忙度越高,审计质量越低,支持了"压力效应".进一步研究发现,在发生两名签字会计师轮换的样本中,由于继任签字会计师缺乏客户层面的审计经验,签字会计师繁忙度对审计质量的消极影响更加显著;其次,在大客户中,签字会计师繁忙度对审计质量的消极影响被显著削弱,表明繁忙的签字会计师会对大客户保持更多的关注度和职业谨慎,并投入更多时间和精力,从而保障更高的审计质量.最后,区分了签字会计师角色后,发现只有复核签字会计师繁忙才会导致审计质量下降,而项目签字会计师繁忙度与审计质量无关.     

The Effect of Guanxi on Audit Quality in China

Two types of guanxi have a close association with auditor independence in China: firm-level connections derived from state ownership and personal connections developed through management affiliations with external auditors. This article examines the effects of these two types of connection and their joint effect on audit quality. We find that state ownership and management affiliations with the external auditor both increase the probability of receiving a clean audit opinion in China. Furthermore, the probability increment brought by management affiliations for non-state-owned enterprises (NSOEs) is greater than that for state-owned enterprises (SOEs). These results suggest that state ownership and management affiliations are two important types of connection that impair auditor independence, and that management affiliations are of greater importance to private-sector firms than to SOEs.