European Journal of Accounting, Auditing and Finance Research (EJAAFR)

EA Journals

Audit Firms

The Role of Standards and Audit Firms in Reducing the Expectation Gap: A Qualitative Approach (Published)

Audit expectation gap has generated quite a number of research papers. In this the author uses a qualitative approach to find out what audit firms and standard setters can do to reduce the audit expectation gap. The result of the study shows that improved stakeholder consultation, stakeholder education, setting clear and unambiguous standards, broadening scope of work are some of the things that standard setters and audit firms can do to reduce the audit expectation gap.


Keywords: Audit Firms, Standard-setters, expectation gap

Audit Quality and Earnings Manipulations in Nigeria: Beneish Model (Published)

The significance to prepare reliable information discloses the need to fall back on an external auditor and a quality auditing process that can caution against the management of earnings. In line with the business practice, auditing does not provide sufficient coverage for some earnings management (EM) activities that result in financial statement fraud. Over the years, capital markets around the globe have witnessed numerous corporate financial scandals largely because of financial and accounting figures’ manipulation. This has led to casting doubt on the quality of published financial reports and questioning the ability of the audit process. Against this background, this study examined the relationship between audit quality and real earnings management of listed manufacturing companies in Nigeria. Specifically, this study evaluated the effect of audit firm size, audit firm industry specialization, audit firm tenure, and audit firm independence on real earnings management. The study sampled 38 out of 55 listed manufacturing companies that cut-across different sectors from 2013 to 2020. From the multivariate analysis, the findings revealed a significant relationship between audit quality (audit firm size and audit firm independence) with a p-value of 0.014 and 0.003 respectively. It was concluded that firms audited by Big-4 firms with independence attract greater publicity and tighter scrutiny; hence, companies tend to desist from managing their earnings. The study, therefore, recommended that the management of manufacturing firms in Nigeria should persist in engaging experience audit firms with international affiliations, and they should work strictly with the CAMA, 2020 as amended by rotating audit firms after every three years as this will promote the reliability of financial statement prepared by management, and finally reduce manipulation of earnings.


Keywords: Audit Firms, Audit Quality, Earnings Management, firm independence, manipulations

Determinants of Auditor Switching in Bahraini’s Listed Companies – An Empirical Study (Published)

The study aims to investigate the crucial factors (determinants) for auditor switch among listed companies in Bahrain Bourse. Cronbach’s alpha measurement was used to examine the uniformity and reliability level of the data. T-test and multiple logistic regression techniques were used in the analysis. The results of the descriptive statistics indicate that the most important section of determinants is Section C (Competition among PAF) with the highest Mean = 3.84 and standard deviation = 0.42, followed by Section D (Size of Public Auditing Firm (PAF)) with Mean = 3.83 and standard deviation = 0.35, followed by Section B (Audit Fees) with mean of 3.51 and standard deviation = 1.30. The T- test results indicated that there are significant mean differences between auditor switching of the factors “Financial conditions of the client” (P-value < 0.005), “Audit Fees” (P-value < 0.005), “Change in management” (P-value < 0.005), and “Qualified audit opinion” (P-value = 0.039). It also shows that there is a positive relationship between the factors “Change in management” H1, “financial conditions of the client”, “audit fees H6” and to a certain extent to “competition among PAF, H4 and auditor switch”. However, there was no significant relationship between the factor “size of public auditing firm H3 and auditor switching. Multiple logistic regression analysis is employed to measure the association between a single dependent variable (auditor switch) and multiple independent variables. The results show that financial condition of client, size of public audit firm and change in management have negative relationships with auditor switch. Audit fees, competition among PAF and qualified audit opinion respectively have positive relationships with auditor switch as predicted.

Keywords: : Bahrain Bourse, Audit Firms, Auditor Switch, Determinants Factors., Financial Condition, Level of Competition, Size of Audit Firms

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