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Interpreting recent changes in audit modification rates with the change in client risk and audit environment : evidence from Australia

Please use this identifier to cite or link to this item: http://hdl.handle.net/1959.14/46238

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Title: Interpreting recent changes in audit modification rates with the change in client risk and audit environment : evidence from Australia
Related: Accounting Association of Australia and New Zealand Conference (2 - 4 July 2006 : Wellington, New Zealand)
Related: Stewart, Jenny and Hay, David. 2006 AFAANZ conference : papers
Related: http://www.afaanz.org/research/AFAANZ%200668.pdf
Publisher: Accounting and Finance Association of New Zealand
Date: 2006
FoR/RFCD Code(s): 150102 Auditing and Accountability
Author/Creator: Fargher, Neil
Author/Creator: Jiang, Liwei
Description: With the high-profile corporate collapses in the period 2000 to 2002, the demise of Arthur Andersen, and the intense legislative and media scrutiny that followed, we expect auditors were more likely to issue going-concern audit opinions in the subsequent period. The convergence of these events potentially impacts both the client’s risk and the auditor’s reporting decision. We find that after controlling for the probability that clients are likely to receive a going-concern opinion, auditors are more likely to issue a going-concern audit opinion in 2003 than in 1999. The results suggest that the increase in going-concern modification rates is due to the increase in the auditors’ propensity to issue a going-concern opinion rather than the changes in client risk. We also examine non-audit service fees paid to the incumbent auditors and the results do not support the view that the provision of non-audit services per se has compromised auditors’ independence.
Description: 44 page(s)
Subject Keyword: 150102 Auditing and Accountability
Subject Keyword: going-concern
Subject Keyword: modified audit opinions
Subject Keyword: non-audit services
Subject Keyword: auditor independence
Resource Type: conference paper
Organisation: Macquarie University. Dept. of Accounting and Finance

Identifier: http://hdl.handle.net/1959.14/46238
Identifier: mq-rm-2006002364
Language: eng

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