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Root cause analysis (RCA) provides audit firms, regulators, policy makers and practitioners the opportunity to learn from past adverse events and prevent them from reoccurring in the future, leading to better audit quality. Recently approved regulations (ISQM1) make RCA mandatory for certain adverse events, making it essential to learn how to properly conduct an RCA. Building on the findings and recommendations from the RCA literature from other industries where RCA practice is more established such as the aviation and healthcare industries, audit firms can implement an adequate and effective RCA process. Based on the RCA literature, I argue that audit firms would benefit from a systems-based approach and establishing a no-blame culture.

The efficiency of the audit firm's workforce management depends on its reputation and therefore its competitiveness. In order to identify modern approaches to managing the staff of audit firms, we have examined internal policies and reports on the transparency of Ukraine's largest audit firms. In the course of the research, analytical procedures were proposed to evaluate the effectiveness of the HRM methods of audit firms that we propose to group into the following groups: assessment of the effectiveness of lifelong learning; evaluation of results from auditors' rotation; evaluating the results of auditors' independence policies and avoiding conflicts of interest. Determination of the methodological provisions of the economic analysis of the effectiveness of human resources management allowed to form such components as, the total cost of continuing education, the assessment of economic benefits from continuing education, the assessment of losses of the audit firm from the competence of the auditor, the assessment of the effectiveness of methods of human resources management auditing . As the results of the auditors' work are revenues generated by the audit firm, we analyzed the revenues of international audit firms from their activities in the domestic audit services market. Based on the results of the analysis, the features of the activity of the largest audit firms in Ukraine, which are branches or representative offices of international audit firms, were identified. In turn, an assessment was made of the efficiency of the use of staffing capacity of audit firms. As a result of the conducted research, a complex of methodological support for economic analysis was developed, which will allow to evaluate both qualitative and cost indicators of human resources potential.

Research purpose: The purpose of this study is to examine the corporate governance practices disclosed by large- and medium-sized audit firms in South Africa, with a particular focus on transparency reports. Audit firms serve the public interest. Motivation for the study: This study was motivated by recent corporate failures in South Africa, such KPMG, VBS Bank, and Steinhoff, to mention a few. Research approach/design and method: The research approach followed for this study consists of a mixed method approach. Qualitative secondary data were obtained from publicly accessible information published on the websites of the audit firms. The data, which consisted of the firms’ transparency reports, were analysed through content analysis. The results were then converted into quantitative data. Main findings: The main findings reveal that audit firms in South Africa do not disclose sufficient corporate governance information in their transparency reports. There are inconsistencies between audit firms. Practical/managerial implications: In South Africa, audit firms do not have a corporate governance code for audit firms, and thus audit firms are not disclosing the relevant corporate governance information to their stakeholders. Contribution/value-add: This article contributes to the limited literature available on audit firm governance. Based on the findings, the study proposes best practice recommendations and regulatory and statutory recommendations regarding audit firm governance.

The purpose of this paper is to research a possible relationship between corporate tax avoidance with corporate governance characteristics such as board independence, the type of auditing company and the concentration of ownership, and a range of selected financial indicators such as return on capital employed, liquidity, leverage, and company size. For this reason, the analysis was based on quantitative and qualitative data derived from the annual financial reports from a sample of 56 companies listed on the Athens Stock Exchange covering the period 2011 to 2015. As a measure of tax avoidance, the cash effective tax rate was used, while a linear regression model using the random effect method was estimated in order to examine the factors that affect it. The results of the study show that the cash effective tax rate has a statistically significant positive relationship with company size and a significant negative relationship with return on capital employed. All in all, the research shows that Greek large-sized companies show less tax avoidance, whereas in companies with a high return on capital employed the extent of tax avoidance is higher. There was no statistically significant impact of corporate governance variables on tax avoidance. Corporate Ownership & Control

The European Commission recently reformed the statutory audit market in order to improve its competitiveness. We employ resource dependence theory to understand the position of audit firms with regard to the policy options considered. By using content analysis to examine consultation responses, we show that, despite the existing market segmentation, all sizes of firm adopt similar positions, except on the topic of audit consortia. The differences in firms’ access to resources, particularly with respect to human capital, help to explain these positions, which perpetuate supply concentration in the market., La Commission européenne a récemment mené une réforme de l’audit légal afin d’améliorer la compétitivité du marché. Nous mobilisons la théorie de la dépendance vis-à-vis des ressources afin de comprendre la position des cabinets d’audit au regard des options politiques envisagées. A partir d’une analyse de contenu des réponses à une consultation, les résultats montrent qu’en dépit d’une segmentation de marché existante, toutes les tailles de cabinet adoptent des positions similaires, excepté sur les consortiums d’audit. Les différences d’accès aux ressources entre types de cabinet, notamment en capital humain, permettent de comprendre ces positions qui pérennisent la concentration de l’offre., La Comisión Europea ha realizado recientemente una reforma en materia de auditoría legal con el fin de mejorar la competencia de ese mercado. Movilizamos la teoría de dependencia de recursos con el fin de entender la posición de las firmas de auditoría en relación con las opciones políticas consideradas. A partir de un análisis de contenido de respuestas a una consulta, los resultados muestran que, a pesar de una segmentación de mercado existente, los distintos tamaños de firmas adoptan posiciones similares, con excepción de la auditoría de consorcio. Las diferencias de acceso a los recursos entre las diferentes firmas, sobre todo en capital humano, permiten entender esas posiciones que sostienen la concentración de la oferta.

Under mandatory rotation, the switching cost may be the most influential factor to be considered for experienced mandatory audit rotations. This study attempts to explore the impacts of the mandatory rotation mechanism on company information disclosure and signaling strategies by examining the audit partner and audit firm switching activities of the mandatory rotation company. Are companies that experience mandatory audit rotation more likely to engage industry specialist auditors with better industry-specific knowledge and reputations to minimize the costs of mandatory rotations? Furthermore, in the case of being required to rotate audit partners, do companies rotate only audit partners, rather than changing both audit partners and audit firms at the same time, to minimize switching costs? To explore these problems, this study examined auditor rotations of listed companies in Taiwan from 2004 to 2016, and expected that, to minimize switching costs, mandatory rotation companies are more likely to select industry specialist auditors to be their successor auditors, and are less likely to rotate audit partners and audit firms at the same time. For the audit partner rotations, we find that, compared to voluntarily rotated companies, a higher percentage of companies choose industry specialist auditors to be their successor audit partners under mandatory rotation. Furthermore, the empirical results support our expectations that companies that experience mandatory audit partner rotation are significantly more likely to engage industry specialists to be their successor audit partners and are more likely to rotate only audit partners rather than rotating both audit partners and audit firms around mandatory audit rotation periods.

This study examines the association between professional training, higher academic qualifications (educational levels) and operating performance of audit firms in Taiwan. We particularly focus on the curvilinear effects of higher academic qualifications on operating performance. We group the total sample into three categories: national, regional and local audit firms. Based on the theoretical framework in industrial economics, we establish a cross-sectional multiple regression equation to test our hypotheses. Both higher academic qualifications and professional training are positively related to the operating performance of audit firms. Professional training moderates the relation between higher academic qualifications and operating performance. Higher academic qualifications exhibit a curvilinear effect on operating performance with a reverse U-shaped relation for the national audit firms and a U-shaped relation for both regional and local audit firms. Due to data unavailability, some factors affecting the audit quality and operating performance are not included in our analysis, such as auditor teamwork, internal control system, operating policies and auditing procedures of audit firms. The findings that higher academic qualifications are positively associated with the operating performance of audit firms justify the educational policy of establishing institutes or graduate schools in accounting over the past two decades. Furthermore, audit firms skillfully exploit employees with higher academic qualifications to improve their operating performance. We are the first to document the moderating effects of professional training and the curvilinear association between higher academic qualifications and operating performance, contributing knowledge to related literature.

The literature has long noted the ethical challenges related to auditors’ dual affiliations with both a profession and an organization that practices the profession. The notion of organizational/professional conflict, in particular, was introduced to capture the potential problems involved in this situation, such as when an auditor engages in behaviors aimed at pleasing the client rather than safeguarding the public interest. However, inconsistent findings leave open the debate about how auditors manage their dual affiliation and question the underlying mechanisms by which auditors structure their identity and experience their work life. To advance understanding of this issue, this research investigates the relationships between auditors’ organizational identification, professional identification, and emotions at work, using a questionnaire survey of 126 French Big 4 auditors and a two-step split-sampling design. The results show that the two forms of identification have a different relationship with emotions: positive for organizational identification but ambivalent for professional identification. These findings contribute to our understanding of professionals’ work experiences in large organizations.

Over the last few decades service quality has been investigated by many managers, researchers and scholars due to its influence on business success, measured with growing profitability, customer satisfaction, loyalty towards service provider, etc. (Cronin, Taylor, 1992; Chang, Chen, 1998; Silvestro, Cross, 2000; Zeithaml, Bitner, 2003, et al.). Quality is crucial in order to increase an organization’s comparative advantage, achieve long-term positive image and increase sales (Ruževicius, 2006). The stressed importance of service quality has triggered a plentiful amount of research revealing different approaches and new concepts (Finn, Lamb, 1991; Kettinger, Lee, 1995). The results of the research imply that an analysis of service quality should be conducted in each service provider’s organization, choosing an appropriate quality research approach and methodology (Edvardsson, 1996). General rules and concepts should be adapted to a particular service’s specifics in order to increase efficiency of service quality management (Suuroja, 2003). Emerging new theoretical models, such as internet banking (Broderick, Vachirapornpuk, 2002) and information technologies-based services (Zhu et al., 2002) evince the development of the service quality concept in various services. The financial audit service can be seen as an inseparable part of the controlling system in each country with a modern economy (Lakis et al., 1992; Lakis, 2007; Mackevicius, 2009). Historical circumstances imply that when an audit’s functions become weaker, not meeting markets’ expectations, it is common to doubt whether the audit system is working effectively, as well as whether particular audit companies are carrying out their work in a quality way. These thoughts are justified when breaches of auditors’ work have been detected. The quality of the financial audit service (further – audit quality) has already been researched for three decades, however, as the Financial Reporting Council of Great Britain (Financial Reporting..., 2006) states, there is no single definition of audit quality. This point of view can be explained by audit service complexity: due to triangular relationships between auditors

Practical problems of modern economic development of the country are associated with unresolved major theoretical issues in the field of auditing. One of them, in our opinion, is to determine the status of the audit as a form of scientific knowledge. This, in turn, requires a clear definition of the subject of audit, missing not only in domestic but also foreign economic literature. Theoretical study of the content and scope of the audit showed that there are different interpretations of this concept in the countries with developed market economies (US, UK) and the Kazakhstan legislation. Analysis of multiple interpretations and definitions revealed a narrow view of the audit activities in Kazakhstan legislation. In order to improve the efficiency of the audit work is recommended management of large and medium-sized organizations use simulation methods, structural analysis and design based on the Conditional Split of the company business processes, sub-processes, procedures, functions, etc., which, ultimately, will allow Sort already performed the action and determine the need for the implementation of new procedures or functions aimed at improving the quality of the audit. Each audit organization yourself looking for ways to improve the quality of solutions using a variety of techniques, using the experience and creating in-house auditing standards, in particular, for the effective planning of the audit.

This chapter is about the reorganisation of the auditing firms in the Post-Sarbanes Oxley Era, in the light of quality concern. The chapter opens up with definitions of related concepts. The importance of audit quality is emphasised in the second section. Discussion on the factors associated with audit quality is the following part. The need for reorganisation of the audit firms follows and the chapter concludes with proposals section. The audit firms seem to be squeezed to catch up with both the national and international regulations. One of the ascertainments is that the audit firms all over the world need to cope with the standards; another is their obligation to provide high-quality audits. Globally speaking, the unwillingness of the profession to alter its habits and to sacrifice the profits historically earned is another obstacle to overcome. In the aftermath of the establishment of the Public Oversight Board in the late 2012, Turkish case follows with an almost 10-year gap.

In the audit industry, the reputation of the different players is of paramount importance, as customers tend to rely on ‘social proof’ of competence rather than attempting directly to assess the quality of audit work. The relevance of the topic is testified by the number of studies which have investigated the reputation audit firms enjoy among their clients, by analyzing features such as whether the Big audit firms are attributed audit fee premiums in comparison to non-big audit firms. This article differs from these studies in that it investigates audit firms’ reputation by collecting the judgments and opinions of client-firms. Contrary to the widespread assumption that the Big audit firms as a group enjoy a better reputation than the non-Big audit firms among their clients, we discovered that the Big Four are not necessarily perceived as superior in comparison to their smaller counterparts. Moreover, we found evidence of reputational differences even within the Big Four group.

This study explores the impact of corporate image and service quality on customer satisfaction in the professional service industries. Data were collected on audit firms, sending a questionnaire to financial executives of leading Italian companies. The results show that the most important variable explaining customer satisfaction was the apparent effectiveness of the audit firm. In relation to service quality, managers' satisfaction was primarily driven by their perception of audit firm's work as a useful value-adding service. The length of audit firm–auditee relation, the location of the auditor's office, and the financial executive's personal characteristics were also significant drivers of customer satisfaction.