M42 - AuditingReturn

The study reveals that unlike SAIs from more affluent countries, the majority of SAIs from poorer countries opt to include in their audits more frequently also elements of the international comparison. The paper also brings attention to the fact that about half of the examined SAIs adopted indicators taken over from the audited entities less frequently, since the audited entities usually did not monitor or evaluate the given area. Half of the examined SAIs also provide no independent assurance that the performance indicators published by the audited entities are reliable. In addition, only a minority of the performance audits that assess the economy and effectiveness also get about to address – at least in general terms – the level of efficiency. The authorial recommendation leans towards boosting the SAIs’ transparency concerning the review and publication of the implementation of their recommendations, focusing especially on the implementation side that relates to key audit recommendations. From the methodology perspective, the study makes use the questionnaire survey, the governed structured interview, content analysis of documents and comparison as the research methods.

The effect of International Financial Reporting Standards (IFRS) adoption on the level of financial statements comparability was investigated for Russia in the current article. Canada was chosen for comparison due to the close time frame of IFRS adoption, which also allowed comparing the influence of IFRS adoption for both types of economies – well developed and emerging. Initial sample selection had been created from 23 companies that are presented on the stock exchange markets of the particular countries. Each sample contains semi-annual data for four years of the pre-adoption period (2008 to 2011 for Russia, 2007 to 2010 for Canada) in which companies use their home country accounting standards and four years of the post-adoption period (2012 to 2015 for Russia, 2011 to 2014 for Canada) in which companies use IFRS standards. The research was performed on the country level and industry level for both countries. Two measures had been used for the research: earnings-return regression and earnings-cash flow regression. The overall result of the study shows that the application of IFRS improved information comparability between companies only in Canada, while the same was not the case for Russian companies and the cross-country comparability. However, the study confirms an increase in the comparability level in the post-adoption period in such industries as Energy and Basic materials not only between companies inside of the given country but on the cross-country level as well.

National standard setters and external accounting observers continue to express concerns over a principles-based developed IFRS taxonomy. Considering the anticipated but unexpected SEC decision on March 3rd 2017 to adopt the IFRS taxonomy for electronic filings for Foreign Private Issuers by 2018 and the announcement of ESMA on December 22nd 2016 to base electronic filings in Europe on the IFRS taxonomy by 2020 signal that national regulators, external accounting observers and international regulators have a dissent. This paper reflects the expressed concerns by national standard setters. Applying a scientific approach, a comprehensive literature review is performed. The research question is if the rules-based IFRS taxonomy implies a conceptual conflict with the principles-based IFRS. This paper concludes considering the academic literature although there is conceptual conflict between a principles-based accounting standard and the template-based taxonomy, from a normative perspective the IFRS taxonomy improves comparability and transparency supporting true and fair view. Our study also contributes to the principles-based vs. rule-based debate in the academic literature. The new aspect is the role of IT with structured electronic reporting, which requires detailed and specific requirements, for which rule-based accounting has advantages over principles-based accounting.

In the modern process of globalization, IFRS standards are widely used in the financial world, Russian Federation is one of these examples. The application of IFRS in Russian Federation first began in the early 90-ies of the twentieth century. During IFRS adoption many companies were involved in this process. Nowadays, a big part of all Russian companies obligatory use IFRS standards to prepare their statements. The purpose of this article is to analyse current practices of financial reporting procedures, its compliance with the rules of the IAS 1 as well as identifying the dependencies between the auditor selection and the quality of reporting. For this paper, a special Questionnaire was developed and for each selected organization a special profile, which included analysis of all financial statements for the period of the 2015 year was created. The study shows that the financial reports quality of the largest Russian companies on a high level. However, many companies face the problem of RAS and IFRS differences during reports transformation that directly influences its quality. During the study process it becomes clear, that auditor has a direct impact on the financial statements quality.

Productivity incentives have lately been driving auditors to introduce and utilize various computer-based tools to assist their work. The aim of this study is to understand how and why productivity incentives may disturb interpersonal interaction and relations between auditors at different ranks, in the context of assurance service. A case study was carried out with auditors affiliated with Danish subsidiaries of Big 4 audit firms to inspect the implementation and utilization of global audit methodology (GAM), which is the ICT-based platform that guides subordinate auditors through the audit process. The results highlight that superior auditors tend to experience prevalent trust in ICT tool over subordinate auditors, where such conditions reduce the opportunity for experiencing comfort by subordinates, while superiors still perceive comfort due to being comfortable with procedures that are administered by the tool. Finally, this mechanism further creates conditions under which the necessity for establishing interactions and relations between auditors of different ranks become diminished.

Many European countries have been carried out a modernization projects in public sector financial reporting since the last two decades. Consequence of a stronger demand for complex, reliable and relevant economic information on government is governments' efforts towards better accountability. IPSAS standards, a full accrual national financial reporting standards closed to, or national standards with clear reference to IPSAS, are often considered as the best tool for that. This article aims to identify key challenges and milestones - four key aspects of these public sector financial reporting modernization projects. It offers a comparison amongst several European countries comparing the ways these countries decided to deal with those challenges and milestones.

The paper examines the extent which risk management committee and corporate governance committee predict audit fees in Nigeria. We employed random panel data (unbalance) regression analysis to establish whether risk management committee and corporate governance committee affect audit fees. We obtained the data used for this study from the annual reports of public listed companies on the Nigerian Stock Exchange for the periods 2008-2013. Our results indicate a positive relationship between establishment of risk management committee and audit fees while the establishment of corporate governance committee has an insignificant relationship with audit fees. The findings provide evidence to inform policy makers and corporation in Nigeria on how their governance structure affects audit fees. Firms with a strong governance structure have the incentive to improve the quality of their financial report. Therefore, such firms will increase the scope of auditor's work. This result has implication for policy makers because it suggests that corporate governance mechanisms are important in ensuring a quality audit. The paper contributes to literature on audit pricing in the context of the Nigerian audit market that is currently under-researched. The study provides additional theoretical insights by investigating the impact of risk management committee and corporate governance committee on audit fees, which to the best of the researcher's knowledge, have not been tested in the audit fees model.

The article considers the operational management system of machine-building enterprises in Ukraine under the conditions of interpenetration of accounting and control functions and their deep integration due to shift of the control centres with the centres of operational decision-making. It has been proved that control timely influences behaviour and conditions of economic objects using target indicators, norms and regulations, estimates and the data of operational accounting, thus it takes active part in shaping the final results of running the enterprise. This explains its importance in the operational management system. It has been considered that the conditions of economic activity of industrial enterprises are changing intensively under the influence of internal and external factors, which determines the requirement to obtain operational information about the enterprise performance and the achieved results of each department. This is possible due to operational accounting, which must be systemic and cover all business processes, since it influences the functioning of the whole system as the information base for monitoring, and its results constitute the basis for timely decision-making in management. It is proved that well organized system of the accounting and control allows not only to detect in due time shortcomings of the industrial enterprise activity, but also to carry their expeditious elimination out and to prevent their manifestations in the future.

This article looks at the complex and judgmental area of auditing income taxes in the environment of financial reporting in accordance with International Financial Reporting Standards as adopted by EU (IFRS) in the Czech Republic. In the first section, the main regulations that apply to entities preparing IFRS financial statements and their influence on income tax base are outlined. The second section summarizes the key steps in addressing risk of income tax misstatements when auditing financial statements. The third section discusses the specifics of auditing income taxes in the Czech environment and the alternative approaches the entities may adopt with respect to determining the profit before tax for tax purposes and challenges it represents for the auditor. This section also briefly notes some other aspects of income tax auditing such as challenges connected with the deferred tax, effective tax rate testing or using the auditor's expert for the audit procedures. The conclusion suggests more detailed rules to be provided by the tax legislation with respect to ambiguities which current situation brings to both entities and their auditors.

The aim of the paper is to evaluate the regulation and organization of accounting in Ukraine under the changes in the national economic system development and impact of IFRS implementation. The system of legal regulation of accounting in Ukraine is presented by five levels, each comprised of a number of corresponding subjects of regulation and documents. Typical Chart of Accounts is evidence of the continental accounting model in Ukraine. The accounting standards provide freedom of choice as for the specific accounting methods, and as a result the significance of accountants' training and their role in professional judgment is intensified. Harmonization of national accounting standards with IFRS requires intensification of accounting organizations' activity. At the present several professional accounting organizations operate in Ukraine, however, they are not given the rights on accounting regulation, but rather have an advisory function. Taking into consideration the historical background, the efficiency of public regulation of the professional accountants' activity in Ukraine is rather limited. Special influence is being done on the accounting purpose and methodology as a tool of applying the values that are considered by users according to their functions at the different levels of management.