IDEAS home Printed from https://ideas.repec.org/a/rfh/bbejor/v13y2024i2p848-856.html
   My bibliography  Save this article

Various Factor Affecting External and Internal Auditor Performance: Analytical Perspectives of Employees Working in Karachi Audit Firm and Companies

Author

Listed:
  • Ayesha Hameed

    (Institute of Business Management, Karachi, Pakistan)

  • Mazhar Ali Alyani

    (University of Sindh, Jamshoro)

  • Muhammad Sijawal Alyani

    (Deputy Hostel Provost, Liaquat University of Medical & Health Sciences, Jamshoro)

  • Ghulam Hussain

    (University of Sindh, Jamshoro)

  • Abdul Manan Channa

    (University of Sindh, Jamshoro)

Abstract

Giving an independent opinion on the financial statement is one the key jobs of an auditor. Issue of auditor’s independence increases everywhere in the world. We have focus on the factors that compromise auditor’s independence. For this purpose, we have chosen four factors to understand how it effect on auditor independence. Factors are audit fee, audit tenure, audit market competition, Non-Auditing services. We have asses’ relationship between auditor independence and the four factors which can compromise auditor’s independence. For this research we have developed questionnaire and distribute among internal & external auditors and also distribute among accounts and finance managers who are working in audit firms and in corporate sector of Karachi. To determine how four factors compromise auditor’s independence, we use “Five Likert scale “. First we have collected the data and then analyzed by using correlation and regression analysis. Finding of our research suggest that audit tenure has significant and positive relationship with auditor independence. Other factors also influence on auditor’s independence but not as audit tenure. From this study we know that audit tenure increases the level of independence. So the regulators and policy makers need to increase the year of audit rotation and reconsider their policy.

Suggested Citation

  • Ayesha Hameed & Mazhar Ali Alyani & Muhammad Sijawal Alyani & Ghulam Hussain & Abdul Manan Channa, 2024. "Various Factor Affecting External and Internal Auditor Performance: Analytical Perspectives of Employees Working in Karachi Audit Firm and Companies," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(2), pages 848-856.
    • Handle: RePEc:rfh:bbejor:v:13:y:2024:i:2:p:848-856
    DOI: https://doi.org/10.61506/01.00400
    as

    Download full text from publisher

    File URL: https://bbejournal.com/BBE/article/view/915/948
    Download Restriction: no
    File URL: https://bbejournal.com/BBE/article/view/915
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.61506/01.00400?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Domenico Campa & Ray Donnelly, 2016. "Non-audit services provided to audit clients, independence of mind and independence in appearance: latest evidence from large UK listed companies," Accounting and Business Research, Taylor & Francis Journals, vol. 46(4), pages 422-449, June.
    2. Mara Cameran & Annalisa Prencipe & Marco Trombetta, 2016. "Mandatory Audit Firm Rotation and Audit Quality," European Accounting Review, Taylor & Francis Journals, vol. 25(1), pages 35-58, May.
    3. Yudi Irmawan & Mohammad Hudaib & Roszaini Haniffa, 2013. "Exploring the perceptions of auditor independence in Indonesia," Journal of Islamic Accounting and Business Research, Emerald Group Publishing Limited, vol. 4(2), pages 173-202, September.
    4. Desmond C.Y. Yuen & Philip K.F. Law & Chan Lu & Jie Qi Guan, 2013. "Dysfunctional auditing behaviour: empirical evidence on auditors' behaviour in Macau," International Journal of Accounting & Information Management, Emerald Group Publishing Limited, vol. 21(3), pages 209-226, July.
    5. Le Doan Minh Duc & Nguyen Thi Hoang Yen & Vo Hoang Ngoc Thuy & Nguyen Hoang Tien & Dinh Ba Hung Anh, 2019. "Enhancing auditors’ independence in auditing enterprises in Vietnam," Cogent Economics & Finance, Taylor & Francis Journals, vol. 7(1), pages 1602240-160, January.
    6. Nicholas Dopuch & Ronald R. King & Rachel Schwartz, 2003. "Independence in Appearance and in Fact: An Experimental Investigation," Contemporary Accounting Research, John Wiley & Sons, vol. 20(1), pages 79-114, March.
    7. Si Wen (Stacey) WANG & David HAY, 2013. "Auditor Independence in New Zealand: Further Evidence on the Role of Non-Audit Services," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 12(2), pages 235-262, June.
    8. David Hay & Robert Knechel & Vivian Li, 2006. "Non‐audit Services and Auditor Independence: New Zealand Evidence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(5‐6), pages 715-734, June.
    9. Craswell, Allen & Stokes, Donald J. & Laughton, Janet, 2002. "Auditor independence and fee dependence," Journal of Accounting and Economics, Elsevier, vol. 33(2), pages 253-275, June.
    10. Yu (Elli) Zhang & David Hay & Claus Holm, 2016. "Non-audit services and auditor independence: Norwegian evidence," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1215223-121, December.
    11. Ghosh, Aloke (Al) & Kallapur, Sanjay & Moon, Doocheol, 2009. "Audit and non-audit fees and capital market perceptions of auditor independence," Journal of Accounting and Public Policy, Elsevier, vol. 28(5), pages 369-385, September.
    12. Meuwissen, Roger & Quick, Reiner, 2019. "The effects of non-audit services on auditor independence: An experimental investigation of supervisory board members’ perceptions," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    13. Kaplan, Steven E. & Mauldin, Elaine G., 2008. "Auditor rotation and the appearance of independence: Evidence from non-professional investors," Journal of Accounting and Public Policy, Elsevier, vol. 27(2), pages 177-192.
    14. Dart, Eleanor, 2011. "UK investors’ perceptions of auditor independence," The British Accounting Review, Elsevier, vol. 43(3), pages 173-185.
    15. Jasim Al‐Ajmi & Shahrokh Saudagaran, 2011. "Perceptions of auditors and financial‐statement users regarding auditor independence in Bahrain," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 26(2), pages 130-160, January.
    16. Philip Law, 2010. "The influence of the types of NAS provisions and gifts hospitality on auditor independence," International Journal of Accounting & Information Management, Emerald Group Publishing Limited, vol. 18(2), pages 105-117, June.
    17. John M. Thornton & Michael K. Shaub, 2013. "Tax services, consequence severity, and jurors' assessment of auditor liability," Managerial Auditing Journal, Emerald Group Publishing, vol. 29(1), pages 50-75, December.
    18. William R. Kinney & Zoe‐Vonna Palmrose & Susan Scholz, 2004. "Auditor Independence, Non‐Audit Services, and Restatements: Was the U.S. Government Right?," Journal of Accounting Research, Wiley Blackwell, vol. 42(3), pages 561-588, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Domenico Campa & Ray Donnelly, 2016. "Non-audit services provided to audit clients, independence of mind and independence in appearance: latest evidence from large UK listed companies," Accounting and Business Research, Taylor & Francis Journals, vol. 46(4), pages 422-449, June.
    2. Bugeja, Martin, 2011. "Takeover premiums and the perception of auditor independence and reputation," The British Accounting Review, Elsevier, vol. 43(4), pages 278-293.
    3. Geiger, Marshall A. & Basioudis, Ilias G. & DeLange, Paul, 2022. "The effect of non-audit fees and industry specialization on the prevalence and accuracy of auditor’s going-concern reporting decisions," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 47(C).
    4. Chen, Anthony & Duong, Hong & Ngo, Anh, 2019. "Types of nonaudit service fees and earnings response coefficients in the post-sarbanes-oxley era," Advances in accounting, Elsevier, vol. 44(C), pages 132-147.
    5. Maria Ishaque, 2021. "Managing Conflict of Interests in Professional Accounting Firms: A Research Synthesis," Journal of Business Ethics, Springer, vol. 169(3), pages 537-555, March.
    6. Marco Angelo Marinoni & Anna Maria Fellegara & Andrea Lippi, 2022. "Potential Threats to Audit Firm Independence: Evidence from Italy on Audit Quality," International Business Research, Canadian Center of Science and Education, vol. 15(6), pages 1-88, June.
    7. Daniela Hohenfels & Reiner Quick, 2020. "Non-audit services and audit quality: evidence from Germany," Review of Managerial Science, Springer, vol. 14(5), pages 959-1007, October.
    8. Roger Meuwissen & Reiner Quick, 2009. "Abschlussprüfung und Beratung - Eine experimentelle Analyse der Auswirkungen auf Unabhängigkeitswahrnehmungen deutscher Aufsichtsräte," Schmalenbach Journal of Business Research, Springer, vol. 61(4), pages 382-415, June.
    9. Yi-Hsing Liao & Pih-Shuw Chen & Teng-Sheng Sang & Chia-Hsuan Tseng, 2020. "Does Client Importance Matter to Book-Tax Differences?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(5), pages 1-17.
    10. Yu (Elli) Zhang & David Hay & Claus Holm, 2016. "Non-audit services and auditor independence: Norwegian evidence," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1215223-121, December.
    11. Elizabeth Carson & Neil Fargher & Yuyu Zhang, 2016. "Trends in Auditor Reporting in Australia: A Synthesis and Opportunities for Research," Australian Accounting Review, CPA Australia, vol. 26(3), pages 226-242, September.
    12. Quick, Reiner & Schmidt, Florian, 2018. "Do audit firm rotation, auditor retention, and joint audits matter? – An experimental investigation of bank directors' and institutional investors' perceptions," Journal of Accounting Literature, Elsevier, vol. 41(C), pages 1-21.
    13. Meuwissen, Roger & Quick, Reiner, 2019. "The effects of non-audit services on auditor independence: An experimental investigation of supervisory board members’ perceptions," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    14. Garcia-Blandon, Josep & Argiles-Bosch, Josep Maria & Castillo-Merino, David & Martinez-Blasco, Monica, 2017. "An Assessment of the Provisions of Regulation (EU) No 537/2014 on Non-audit Services and Audit Firm Tenure: Evidence from Spain," The International Journal of Accounting, Elsevier, vol. 52(3), pages 251-261.
    15. Mary Kehinde Salawu, 2017. "Factors Influencing Auditor Independence among Listed Companies in Nigeria: Generalized Method of Moments (GMM) Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(8), pages 191-203, August.
    16. Hwang, Seokyoun & Sarath, Bharat & Han, Seung-youb, 2022. "Auditor independence: The effect of auditors’ quality control efforts and corporate governance," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 47(C).
    17. Paul A. Griffin & David H. Lont & Yuan Sun, 2009. "Governance regulatory changes, International Financial Reporting Standards adoption, and New Zealand audit and non‐audit fees: empirical evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(4), pages 697-724, December.
    18. Sophie Audousset-Coulier, 2009. "L'utilisation des honoraires d'audit pour mesurer la qualité de l'audit : théorie et évidence," Post-Print halshs-00460230, HAL.
    19. Jean Bédard & Suzanne M. Paquette, 2021. "Audit Committee Financial Expertise, Litigation Risk, and Auditor‐Provided Tax Services†," Accounting Perspectives, John Wiley & Sons, vol. 20(1), pages 7-48, March.
    20. Barabás, Tünde, 2013. "On the Independence of Auditors, with Special Regard to the Financial Sector," Public Finance Quarterly, Corvinus University of Budapest, vol. 58(2), pages 184-198.

    More about this item

    Keywords

    Audit; Karachi; Performance;
    All these keywords.

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfh:bbejor:v:13:y:2024:i:2:p:848-856. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Muhammad Irfan Chani (email available below). General contact details of provider: https://edirc.repec.org/data/rffhlpk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.