The External Auditor Mandatory Changes Impact on Improving the Quality of the Auditing Process
This study identifies the effect of mandatory rotation of the external auditor in improving the quality of auditing and to confirm his objectivity and independence. A questionnaire has been designed and distributed to a sample of 185 external auditors and managers of corporation at Gaza. The study introduces many results; e. i, there is a relationship of applying the mandatory and its effect on the quality, cost and audit fees, and to improve the quality of auditing and to confirm his objectivity and independence. The study introduces many recommendations; e. g., applying the professional specialization strategy in the client's industry.
Ayah Jarallah El-Khozondar,
The External Auditor Mandatory Changes Impact on Improving the Quality of the Auditing Process, Journal of Finance and Accounting.
Vol. 2, No. 6,
2014, pp. 129-133.
W. Zhang, Three Essays in Audit Quality. Desertation, University of Alberta, 2011.
Sarbenes and Oxley, Corporation corrupt in the United States, 2011.
R. Bricker, “Transparency, independence, technology and the CPA scope of services: New challenges to profession,” The Ohio CPA Journal, vol. 4, pp. 48-50, 2002.
K. Harris, Mandatory audit rotation: an international investigation, Dissertation, UMI 3510857, 2012.
V. Johnson, I. K. Khurana and J.K. Reynolds, “Audit-firm tenure and the quality of financial reports.” Contemporary Accounting Research, vol. 19, pp. 637-660, 2002.
M. Geiger, and K. Raghunandan, “Auditor tenure and audit quality. Auditing,” A Journal of Practice and Theory, vol. 21, pp. 187-196, 2002.
J. N. Myers, L. A. Myers, and T. C. Omer, “Exploring the term of the auditor-client relationship and the quality of earnings: A case for mandatory auditor rotation? ” The accounting Review, vol. 78, pp. 779-800, 2003.
W. R. Knechel, and A. Vanstraelen, “The relationship between auditor tenure and audit quality implied by going concern opinions,” Auditing: A Journal of Practice and Theory, vol. 26, pp. 113-131, 2007.
J. N. Myers, L. A. Myers, Z. Palmrose, S. Scholz, “Mandatory Auditor Rotation: Evidence from Restatements,” University of Illinois at Urbana-Champaign, 2013.
M. Schelker, “Auditors and corporate governance: Evidence from the public sector,” Kyklos, vol. 66, pp. 275–300, 2013.
V. Mande and M. Son, “Do Financial Restatements Lead to Auditor Changes?” Auditing: A Journal of Practice & Theory, vol. 32, pp. 119-145, 2012.
J. Stanley, T. Dezoort, “Audit firm tenure and financial restatements, an analysis of industry specialization and fee effects,” Journal of Accounting and Public Policy, vol. 26, pp. 131–159, 2007.
S. R. Al Koni, “The conditions of the auditing profession in Palestine: the current realities and change requirements, ” Research Report Series, No. 21, Center for Private Sector Development-Palestinian Businessmen Association-Jerusalem, 2004, http://blogs.najah.edu/staff/saed-koni/article/article.
A. Ghosh, and D. Moon, “Does auditor tenure impair audit quality,” Working Paper. Office of Economic Analysis, 2003.
A. Ghosh, and D. Moon, “Auditor tenure and perceptions of audit quality,” The Accounting Review, vol. 80, pp. 585-612, 2005.
S. A. Mansi, W. F. Maxwell, and D. P. Miller, “Does auditor quality and tenure matter to investors? Evidence from the bond market,” Journal of accounting Research, vol. 42, pp. 755-793, 2004.
J. V. Carcello, and A. L. Nagy, “Client size, auditor specialization and fraudulent financial reporting,” Managerial Auditing Journal, vol. 19, pp. 651-668, 2004.
D. Manry, T. Mock, and J. Turner, “Does increased audit partner tenure reduce audit quality?” Journal of Accounting, Auditing and Finance, vol. 23, pp. 553-572, 2008.
G. Bae, S. Kallapur, J. Rho, “Departing and Incoming Auditor Incentives, and Auditor-Client Misalignment under Mandatory Auditor Rotation: Evidence from Korea,” Available at SSRN 2281127, 2013.
R. L. Davis, B. Soo and G. “Trompeter, Auditor tenure and the ability to meet or beat earnings forecasts.” Contemporary Accounting Research, vol. 26, pp. 517-548, 2009.
P. Carey, R. Simnett, “Audit partner tenure and audit quality,” The Accounting Review, vol. 81, pp. 653-676, 2006.
F, Gul, B. Jaggi, G. Krishnan, “Auditor independence, evidence on the joint effects of auditor tenure and non-audit fees,” Auditing: A Journal of Practice and Theory, vol. 26, pp. 117-142, 2007.
Palestinian accountants and auditors manual, Second Edition, Prepared by: Office of the Commission Accounting and Auditing, Association of Palestinian Accountants and Auditors
Report by Abdallah Abo Roada, Ministry of national economy
T. Yamen, Statistics: An introductory analysis, 2nd ed., New York: Harper and Raw, 1967.
A. J. Al-Khozondar, The impact of the mandatory changes for the external auditor in improving the quality of the review process and strengthen the objectivity and independence. Unpublished thesis. Islamic University of Gaza, 2008.