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FAR Practice Note - Is voor DGA-ondernemingen de interne waarde van de externe controle groter dan voor organisaties van openbaar belang? (Dutch)
Prof. dr. Jeroen Suijs Dr. Robin Litjens RA Dr. Mahmoud Gad
15-07-2019
Details
 

Het onderzoek van Gad, Litjens en Suijs sluit aan op de vraag vanuit de Foundation for Auditing Research of er behoefte bestaat aan ‘different audits for different purposes’. Moet en kan de audit voor een organisatie van openbaar belang (OOB) anders worden aangepakt dan bijvoorbeeld voor een onderneming die door een DGA wordt geleid?

Authors

Prof. dr. Jeroen Suijs

Professor of Financial Accounting at Erasmus University Rotterdam

Dr. Robin Litjens RA

Assistant Professor of Accounting at Tilburg University

Dr. Mahmoud Gad

Lecturer, Lancaster University 

FAR Literature Review - do private firm audits serve a different purpose?
Prof. dr. Jeroen Suijs Dr. Robin Litjens RA Dr. Mahmoud Gad
Literature Reviews
15-07-2019
Details
 

The Dutch market for mandatory audit services is heterogenous and includes publicly listed and private firms. While private firms dominate the market, existing audit research focusses primarily on listed firms where audit demand originates from external stakeholders such as shareholders assisting them in the monitoring of management. This is surprising as private firms represent a significant portion of the economy in most countries.

Private firms generally face different incentives in terms of accounting and auditing demand. For example, private firms that are not run by owner-manager may have agency conflicts that drives the demand for audit. However, in private owner-managed firms external audit demand can arise from other, more internal, factors that are difficult to observe and less well understood, such as compensation for lacking internal controls. Legislators across the world seem to acknowledge this variation and mandate audits to a varying degree, for instance dependent on private firm size. Yet, institutional heterogeneity is large, varying from mandating audits for very few (e.g., United States) to all (e.g., Sweden) private firms.

Furthering our understanding of internal value factors of private firm external audits and their effect on audit pricing, audit effort and audit quality is therefore relevant. It can assist regulators in determining the scope (which private firms) and features of a private firm audit (e.g. independence regulation, exclusion of certain non-audit services). Understanding internal value factors can assist auditors and audit firms in how to price and ‘produce’ private firm audits and the effects of these decisions on audit quality.

Authors

Prof. dr. Jeroen Suijs

Professor of Financial Accounting at Erasmus University Rotterdam

Dr. Robin Litjens RA

Assistant Professor of Accounting at Tilburg University

Dr. Mahmoud Gad

Lecturer, Lancaster University 

FAR Practice Note - How is auditor commercialism related to audit quality?
Prof. William Ciconte PhD Dr. Justin Leiby Prof. dr. Marleen Willekens
Practice Notes Audit quality
01-07-2019
Details
 

It is taken for granted that a fundamental conflict exists between auditors’ professional responsibilities and their commercial interests. While there is no direct evidence to support this widely held belief, it nonetheless fuels extensive, costly regulatory and standard-setting activities. We propose to examine whether auditors’ commercial and professional motivations actually conflict. Moreover, we argue that quality control mechanisms in audit firms—e.g., performance evaluation and technical consultation procedures—create conditions in which the two sets of motivations are likely mutually reinforcing.

Authors

Prof. William Ciconte PhD

Assistant Professor of Accountancy University of Illinois

Dr. Justin Leiby

Associate Professor of Accountancy and Professor Ken Perry Faculty Fellow University of Illinois

Prof. dr. Marleen Willekens

Full Professor of Accounting and Auditing at KU Leuven

FAR Literature Review - How is auditor commercialism related to audit quality and efficiency?
Prof. William Ciconte PhD Dr. Justin Leiby Prof. dr. Marleen Willekens
Literature Reviews Audit quality
01-07-2019
Details
 

Authors

Prof. William Ciconte PhD

Assistant Professor of Accountancy University of Illinois

Dr. Justin Leiby

Associate Professor of Accountancy and Professor Ken Perry Faculty Fellow University of Illinois

Prof. dr. Marleen Willekens

Full Professor of Accounting and Auditing at KU Leuven

FAR Literature Review - Internal Controls
Prof. dr. Jean Bédard Prof. dr. Mieke Jans Dr. Annelies Renders Dr. Caren Schelleman Dr. Mathijs van Peteghem Nadine Glaudemans MSc Drs. Lei Zou
Literature Reviews
01-07-2019
Details
 

The importance of internal control over financial reporting (ICOFR) has increased over the past few decades. All over the world, governments are reinforcing regulations related to internal controls, forcing firms as well as their auditors to direct more attention to the quality of internal controls in place. Along with the growing importance of ICOFR, researchers have conducted studies examining different aspects relating to internal controls.To provide a broad overview of the current understanding of internal control systems, in this literature review we provide a summary and synthesis of studies conducted.

Authors

Prof. dr. Jean Bédard

Professor in Accounting, Laval University | ULAVAL · School of Accounting

Jean Bédard is professor at Laval University in Québec City. His research covers various audit subject matters and research methods; spanning, for example, auditor expertise, audit committees and corporate governance, internal control systems, professional ethics, regulation of the accounting profession, auditor judgment, and auditor report, employing experimentation, interviewing, field work, and empirical archival methods. He received the Haim Falk Award for Distinguished Contribution to Accounting Thought from the Canadian Academic Accounting Association in 2014. His research has been published in academic as well as professional journals, including in the last five years: Contemporary Accounting Research, Auditing: A Journal of Practice and theory, and Accounting Horizon. He has served as editor for Contemporary Accounting Research and Auditing: A Journal of Practice and theory. He is quite involved in valorization and with the audit profession. He contributes to the training of corporate directors and has is a member of the Auditing and Assurance Standards Oversight Council of Canada, of the Auditing and Assurance Standards Board of Canada and of the Internal Auditing Standards Board.

Prof. dr. Mieke Jans

Assistent Professor at Hasselt University

Dr. Annelies Renders

Associate Professor Accounting & Information Management, School of Business and Economics

Dr. Caren Schelleman
Caren Schelleman is an assistant professor at the Department of Accounting and Information Management at Maastricht University School of Business and Economics. She has also been a visiting professor at the University of Auckland, New Zealand. Caren coordinates and teaches courses on internal control and auditing at both undergraduate and graduate levels. She has presented papers at Annual Congresses of the European Accounting Association, Midyear Meetings of the Audit Section of the American Accounting Association, the International Symposium on Audit Research, conferences of the European Auditing Research Network, and at several workshops and seminars in Europe and the US. Her research interests include auditing, assurance services, internal control, and corporate governance, both from an economic and a behavioral point of view.


Dr. Mathijs van Peteghem

Assistant Professor at Maastricht University & Doctoral researcher KU Leuven

Nadine Glaudemans MSc

Ph.D. Candidate Accounting & Information Management, School of Business and Economics, Maastricht University

Drs. Lei Zou

Ph.D. Candidate Acounting & Information Management, School of Business and Economics, Maastricht University

FAR Practice Note - Internal controls
Prof. dr. Jean Bédard Dr. Annelies Renders Prof. dr. Mieke Jans Dr. Caren Schelleman Nadine Glaudemans MSc Dr. Mathijs van Peteghem Drs. Lei Zou
Practice Notes
01-07-2019
Details
 

Authors

Prof. dr. Jean Bédard

Professor in Accounting, Laval University | ULAVAL · School of Accounting

Jean Bédard is professor at Laval University in Québec City. His research covers various audit subject matters and research methods; spanning, for example, auditor expertise, audit committees and corporate governance, internal control systems, professional ethics, regulation of the accounting profession, auditor judgment, and auditor report, employing experimentation, interviewing, field work, and empirical archival methods. He received the Haim Falk Award for Distinguished Contribution to Accounting Thought from the Canadian Academic Accounting Association in 2014. His research has been published in academic as well as professional journals, including in the last five years: Contemporary Accounting Research, Auditing: A Journal of Practice and theory, and Accounting Horizon. He has served as editor for Contemporary Accounting Research and Auditing: A Journal of Practice and theory. He is quite involved in valorization and with the audit profession. He contributes to the training of corporate directors and has is a member of the Auditing and Assurance Standards Oversight Council of Canada, of the Auditing and Assurance Standards Board of Canada and of the Internal Auditing Standards Board.

Dr. Annelies Renders

Associate Professor Accounting & Information Management, School of Business and Economics

Prof. dr. Mieke Jans

Assistent Professor at Hasselt University

Dr. Caren Schelleman
Caren Schelleman is an assistant professor at the Department of Accounting and Information Management at Maastricht University School of Business and Economics. She has also been a visiting professor at the University of Auckland, New Zealand. Caren coordinates and teaches courses on internal control and auditing at both undergraduate and graduate levels. She has presented papers at Annual Congresses of the European Accounting Association, Midyear Meetings of the Audit Section of the American Accounting Association, the International Symposium on Audit Research, conferences of the European Auditing Research Network, and at several workshops and seminars in Europe and the US. Her research interests include auditing, assurance services, internal control, and corporate governance, both from an economic and a behavioral point of view.


Nadine Glaudemans MSc

Ph.D. Candidate Accounting & Information Management, School of Business and Economics, Maastricht University

Dr. Mathijs van Peteghem

Assistant Professor at Maastricht University & Doctoral researcher KU Leuven

Drs. Lei Zou

Ph.D. Candidate Acounting & Information Management, School of Business and Economics, Maastricht University

FAR Practice Note - Interne beheersingssystemen
Prof. dr. Jean Bédard Dr. Annelies Renders Prof. dr. Mieke Jans Dr. Caren Schelleman Nadine Glaudemans MSc Dr. Mathijs van Peteghem Drs. Lei Zou
Practice Notes
01-07-2019
Details
 

Authors

Prof. dr. Jean Bédard

Professor in Accounting, Laval University | ULAVAL · School of Accounting

Jean Bédard is professor at Laval University in Québec City. His research covers various audit subject matters and research methods; spanning, for example, auditor expertise, audit committees and corporate governance, internal control systems, professional ethics, regulation of the accounting profession, auditor judgment, and auditor report, employing experimentation, interviewing, field work, and empirical archival methods. He received the Haim Falk Award for Distinguished Contribution to Accounting Thought from the Canadian Academic Accounting Association in 2014. His research has been published in academic as well as professional journals, including in the last five years: Contemporary Accounting Research, Auditing: A Journal of Practice and theory, and Accounting Horizon. He has served as editor for Contemporary Accounting Research and Auditing: A Journal of Practice and theory. He is quite involved in valorization and with the audit profession. He contributes to the training of corporate directors and has is a member of the Auditing and Assurance Standards Oversight Council of Canada, of the Auditing and Assurance Standards Board of Canada and of the Internal Auditing Standards Board.

Dr. Annelies Renders

Associate Professor Accounting & Information Management, School of Business and Economics

Prof. dr. Mieke Jans

Assistent Professor at Hasselt University

Dr. Caren Schelleman
Caren Schelleman is an assistant professor at the Department of Accounting and Information Management at Maastricht University School of Business and Economics. She has also been a visiting professor at the University of Auckland, New Zealand. Caren coordinates and teaches courses on internal control and auditing at both undergraduate and graduate levels. She has presented papers at Annual Congresses of the European Accounting Association, Midyear Meetings of the Audit Section of the American Accounting Association, the International Symposium on Audit Research, conferences of the European Auditing Research Network, and at several workshops and seminars in Europe and the US. Her research interests include auditing, assurance services, internal control, and corporate governance, both from an economic and a behavioral point of view.


Nadine Glaudemans MSc

Ph.D. Candidate Accounting & Information Management, School of Business and Economics, Maastricht University

Dr. Mathijs van Peteghem

Assistant Professor at Maastricht University & Doctoral researcher KU Leuven

Drs. Lei Zou

Ph.D. Candidate Acounting & Information Management, School of Business and Economics, Maastricht University

FAR Masterclass Report - 29 March 2019: Masterclass by Anna Gold on Judgment Biases in Auditing
Prof. dr. Anna Gold
23-06-2019
Details
 

Although auditors are well-educated professionals, they are also human beings. This means that they are susceptible to judgment biases. Departing from psychological theories, four judgment biases were discussed during Anna Gold’s well-attended masterclass: 

  • Availability bias: the tendency to consider information that is easily retrievable from memory as being more likely, more relevant, and more important for a judgment.
  • Anchoring bias: the tendency to insufficiently adjust away from an initial anchor.
  • Overconfidence bias: the tendency to be overconfident in our judgment abilities.
  • Confirmation bias: the tendency to seek and overweight confirming evidence. 

It cannot be stressed enough: awareness of the existence of these judgment biases is an important first step in reducing their negative effects

Authors

Prof. dr. Anna Gold

Anna Gold obtained her Ph.D. from the University of Amsterdam in 2004, worked as an assistant professor at Rotterdam School of Management, Erasmus University for six years and is currently professor at the Vrije Universiteit Amsterdam where she teaches Auditing at the BSc and MSc level, as well as PhD courses in Auditing and Experimental Methods. Anna’s research interests are in the judgment and decision-making area, primarily applied to the field of Auditing. Her research has focused on the impact of regulatory changes, on judgments and decisions of auditors and financial statement users. Her recent work focuses on how auditors and audit firms handle errors and whether varying the error management climate affects auditors’ error reporting willingness and audit firm learning. Anna’s work and her publications have appeared in a number of prestigious journals such as The Accounting Review, Accounting Horizons, Journal of Business Ethics, and International Journal of Auditing.

FAR Practice Note - Ten considerations for conducting Root Cause Analysis in auditing
Prof. dr. Olof Bik RA
Practice Notes Root cause analysis Organizational learning Audit quality
20-05-2019
Details
 

Root cause analysis is an established process in a number of industries and is a developing area in the audit profession. This practice note speaks to the question of what constitutes root cause analysis specific to the auditing profession (as varying root cause analysis methods may potentially be more or less effective within the auditing context). For audit firms (large and small) wanting to apply root cause analyses as part of their quality assurance systems, the following ten considerations are discussed that are relevant for effectively and efficiently producing root cause findings and recommendations concerning the improvement of audit quality:

  • Root cause analysis, when done properly, can be a powerful tool for collective team-based learning, designed to avoid blame and strengthen continuous improvement.
  • Root cause analysis is about understanding human behavior and judgement and decision making: things that go wrong, often happen in the same way as things that go right.
  • There is not one single root cause to “fix” in the complex organizational context of auditing: incidents may happen that are reasonably beyond management control.
  • Root cause analysis findings and recommendations are not always interventions: it is up to management to weigh recommendations and decide on their “organizational fit”
  • Root cause analyses should be rigorous enough to allow for “evidence-based-change” only: formulating effective actions is more difficult than finding problems.
  • Strong recommendations rely less on a change in human behavior, but are practical, sensible, achievable, and actually measurable as far as what can be implemented.
  • Root cause analysis is a collaborative and dialogic process requiring time, human behavior expertise, and communication skills across professional and social boundaries.
  • Interviewing audit staff that depend on personal performance and professional accountability in their career development is a specifically daunting task.
  • Next to audit deficiencies as ‘triggering events”, good quality analyses and analyzing ‘near misses’ result in richer and stronger root cause analyses.
  • Next to engagement level root cause analysis, more holistic thematic and audit firm level analyses most likely deliver deeper insight and better results.

Authors

Prof. dr. Olof Bik RA

Olof Bik is professor Behavioral Research in Auditing at Nyenrode Business University. He is also a member of the daily board of the Foundation for Auditing Research (FAR). Bik worked in accounting practice for 18 years, since 2002 always in combination with a university appointment. He obtained his PhD at the University of Groningen with a dissertation on the effects of culture on accountant behavior.

FAR Masterclass Report - 6 February 2019: Masterclass by Reggy Hooghiemstra and Dennis Veltrop on Multiple Team Membership
Prof. dr. Reggy Hooghiemstra Dr. Dennis Veltrop
01-03-2019
Details
 

Working in multiple teams: (how) does that work?

According to estimates, between 65 and 90 percent of the professionals work in multiple teams simultaneously. This, for example, holds for professionals in health care, in research teams at universities and for knowledge workers in general. This way of working is also common practice within audit firms. But how does simultaneously working in several audit teams affect audit quality? And what factors increase or reduce audit quality?

Authors

Prof. dr. Reggy Hooghiemstra

Reggy Hooghiemstra is a professor at the University of Groningen. He has published on a wide variety of topics including board processes, corporate governance, the role of culture in auditing and accounting, and impression management. His papers have appeared in both management (e.g., Journal of Management, Journal of Business Ethics) and accounting journals (e.g., Auditing: Journal of Practice and Theory, European Accounting Review). 

Dr. Dennis Veltrop

Dennis Veltrop is an assistant professor at the University of Groningen and holds a position as an economist at the research department at De Nederlandsche Bank. He is also co-founder of BoardResearch.org. His research focuses on corporate governance and board behavior in particular. His papers have appeared in corporate governance and management journals (e.g., Journal of Management, Journal of Management Studies, CorporateGovernance).

Artikel FD: Het risico dat de accountant loopt is hoog!
Prof. dr. Jan Bouwens
Other Publications
22-01-2019
Details
 

In zijn bijdrage 'Accountancy: hoge opbrengsten, laag risico' zet Marcel Pheijffer mogelijk de lezer op het verkeerde been. Accountants lopen wel degelijk risico.

Authors

Prof. dr. Jan Bouwens

Academic board member and managing director FAR

FAR Practice note: "What do we already know about…”: The Effects of Expert Status on the Audit of Complex Estimates
Prof. dr. Anna Gold Prof. dr. Kathryn Kadous Dr. Justin Leiby
Practice Notes
31-12-2019
Details
 

Authors

Prof. dr. Anna Gold

Anna Gold obtained her Ph.D. from the University of Amsterdam in 2004, worked as an assistant professor at Rotterdam School of Management, Erasmus University for six years and is currently professor at the Vrije Universiteit Amsterdam where she teaches Auditing at the BSc and MSc level, as well as PhD courses in Auditing and Experimental Methods. Anna’s research interests are in the judgment and decision-making area, primarily applied to the field of Auditing. Her research has focused on the impact of regulatory changes, on judgments and decisions of auditors and financial statement users. Her recent work focuses on how auditors and audit firms handle errors and whether varying the error management climate affects auditors’ error reporting willingness and audit firm learning. Anna’s work and her publications have appeared in a number of prestigious journals such as The Accounting Review, Accounting Horizons, Journal of Business Ethics, and International Journal of Auditing.

Prof. dr. Kathryn Kadous

Kathryn Kadous is the Schaefer Chaired Professor of Accounting and the Director and Associate Dean of the Ph.D. Program at Emory University's Goizueta Business School. She earned a PhD from the University of Illinois. Prior to that, she worked as an auditor and controller. Professor Kadous' research considers judgment and decision-making issues in auditing and accounting. Her current research is focused primarily on using psychology theory to improve auditor decision making and on identifying the antecedents of auditor skepticism. Professor Kadous' research has been published in The Accounting Review, Contemporary Accounting Research, Journal of Accounting Research, Organizational Behavior and Human Decision Processes, The Journal of Behavioral Finance, and Auditing: A Journal of Practice and Theory. 

Professor Kadous has served two terms as an editor for The Accounting Review and two terms as an editor for Auditing: A Journal of Practice & Theory. She serves on several editorial boards and has served on various research and publications related committees and tasks forces for the American Accounting Association (AAA) and the Auditing and Accounting, Behavior, and Organizations Sections of the AAA. She is currently Vice-President (Academic) of the Auditing Section of the American Accounting Association.

Dr. Justin Leiby

Associate Professor of Accountancy and Professor Ken Perry Faculty Fellow University of Illinois