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The current study examines the effect of fraud training on auditors' ability to identify fraud risk factors. This is important because most auditors have little or no direct experience with fraud; thus, research that investigates the potential effect of indirect experience through training is vitally important to fraud detection and audit quality. A total of 369 experienced auditors completed a complex audit simulation task that involved 15 seeded fraud risk red flags. A total of 143 auditors participated in a 30-minute training session focused specifically on fraud risk, while the remaining 226 auditors learned about general internal control risk during this time block. The results indicate that auditors with fraud training identified significantly more red flags and obtained greater knowledge about fraud risk than auditors who did not receive the training. Considering that the fraud training consumed only 30 minutes out of a 64-hour training session, the findings suggest that even modest exposure to fraud training is quite effective.

This paper has two purposes. The first is to demonstrate that over time, and in a number of professional and academic places, the concept of auditor independence has been contested; that is, there have been different concepts of auditor independence within different time periods, and even when there appears to have been consensus on the meaning of auditor independence, there have been significant debates about auditor independence. The second purpose of the paper is to advocate a complete reconsideration of the concept of auditor independence; one which would move us towards the idea that auditors should be prohibited from acting as advocates in any way on behalf of their clients, and that client management should have no ability whatsoever to determine the audit fee or the scope of audit engagement. These are controversial ideas. They are meant to be so.

This study examines the effect of non-audit fees (NAF) provisions on interest payments classification shifting. In addition, we investigate to what extent the NAF economic bonding and interest payments classification shifting is contingent on internal governance and firm financial well-being.

This study employed probit regression using a sample of UK non-financial firms indexed in FT UK (500) over the period from 2009 to 2017.

We find evidence that the economic bonding of NAF between external auditors and their clients is more likely to encourage managers in UK firms to manipulate operating cash flows through interest payment classification shifting. In addition, and interestingly, our results evince that classification-shifting may be the less costly and soft choice of managers in firms with strong governance and charging higher NAF. Furthermore, we show that financially distressed firms associated with their auditors in purchasing non-audit services are more prone to attempting to manipulate and engage in interest payments classification-shifting. Our result did not provide a significant effect of external auditor tenure on the interest payments classification shifting.

Our findings are subject to the following limitations: First, this study uses a composite index to measure the quality of internal corporate governance. It focuses only on the board of directors, but this index does not reflect other internal governance mechanisms. Second, this study is subject to limited study time due to the implementation of key IFRS standards (IFRS 9 Financial Instruments and IFRS 15 Revenue from Contract with Customers) from 2018–2019.

This study was motivated by the UK’s Financial Reporting Council regulators' pressure on the Big 4 audit firms to move more audit time into main auditing activities, reduce cross-selling to audit clients and separate their audit practices by 2024. Overall, we provide new evidence that directs a close spotlight on the threats of NAF that are potentially useful to regulators, shareholders and investors.

It is motivated by the UK’s Financial Reporting Council regulators' pressure on the Big 4 to move more audit firm time into main auditing activities, reduce cross-selling to audit clients and separate their audit practices by 2024. Overall, we provide new evidence that directs a close spotlight on the threats of NAS that are potentially useful to regulators, shareholders and investors.

This study explores how auditors' emotions, specifically negative moods triggered by flight delays, impact auditing quality.

Utilizing flight delays during audit assignments as a mood indicator, weather conditions at departure airports serve as an instrumental variable to provide a robustness check between flight delays and audit outcomes, employing a two-stage least squares model.

The findings suggest that such negative moods improve auditing effort and quality, as evidenced by reduced future accounting restatements and increased audit fees. The positive effect of flight delays on auditing quality is consistent across different tests and measures.

This study highlights the significance of auditors' emotional states on their professional performance, indicating a unique angle on auditing quality research by focusing on the emotional well-being of auditors as influenced by external factors such as flight delays.

The purpose of this study is to explore the impact of remote auditing on audit quality in non-Big 4 firms in Jordan. It also examines the role of auditors’ capabilities in this relationship, emphasizing their importance in implementing this technology effectively.

The perspectives of non-Big 4 audit firms regarding the influence of remote auditing on audit quality were gathered through the administration of a comprehensive questionnaire.

This study demonstrates that remote auditing can enhance audit quality in non-Big 4 firms. The strength of this effect is bolstered by the auditor’s technical knowledge, communication skills and professional skepticism.

Remote auditing is a promising alternative to traditional methods for non-Big 4 firms, with significant implications. Effective remote audits require technical knowledge, communication skills and professional skepticism. To succeed, firms must invest in training programs that equip auditors with the necessary remote auditing techniques.

This groundbreaking study investigates the effects of remote auditing on audit quality in Jordanian non-Big 4 firms and examines the influence of auditors’ capabilities. Results show that auditors’ capabilities enhance the positive impact of remote auditing on audit quality.

This study aims to examine how auditors' perfectionism types and time budget pressure (TBP) influence fraud detection in Egypt.

We utilize a mixed-methods approach, combining questionnaires with an experimental case study in a within-subjects quasi-experimental design. Based on Almost Perfect Scale-Revised (APS-R), perfectionism traits were categorized using cluster analysis into adaptive, maladaptive, and non-perfectionism. Auditors from Egyptian firms performed fraud-related tasks with TBP manipulated.

Auditors' perfectionism types significantly influence fraud detection capabilities. Adaptive perfectionists demonstrated higher relevance in identifying fraud factors and excelled in accurately assessing fraud risks and audit procedures planning. Conversely, maladaptive perfectionists identified more but less relevant factors. TBP notably impacted maladaptive and non-perfectionist auditors' planning quality, unlike adaptive perfectionists, who showed resilience.

Findings provide insights to audit firms to bolster audit quality through team formations and task assignments, harnessing the strengths of adaptive and maladaptive perfectionists. Regulatory entities are positioned to integrate safeguards that recognize auditor capabilities and vulnerabilities, particularly under TBP. Considering psychological assessments in auditor selection and development assures alignment of traits with audit tasks, enhancing audit quality.

This study breaks new ground in the effects of auditor perfectionism on fraud detection, considering situational factors like TBP in emerging markets. Through a mixed-methods approach and cluster analysis, it reveals how different perfectionism traits influence audit effectiveness, offering insights not previously considered in auditing literature and suggesting practical applications for enhancing fraud detection in similar contexts.

This paper aims to examine how a firm’s exposure to economic policy uncertainty affects the auditors’ perceptions of financial reporting risk. Firms that are more sensitive to policy uncertainty are predicted to engage in more earnings management because these firms are more likely to experience greater uncertainty in future operations. Audit fees will reflect this reporting risk. On the other hand, auditors might feel more fee pressure from policy-sensitive firms because firms are more inclined to reduce spending in the face of uncertainty and subsequently charge lower fees.

The author tests my hypothesis using U.S. data on audit fees and client characteristics of public companies between the years 2001 and 2021. The author estimates a standard audit fee model based on the audit fee literature (Hay et al., 2006) while also including the two policy sensitivity measures. This study uses panel data methods that allow time-series analyses, providing a powerful setting to test dynamic audit fee adjustment to improve the understanding of the audit market.

The results suggest that audit fee is higher for policy-sensitive firms than for policy-neutral firms. These results are robust to various proxies of policy sensitivity and various specifications designed to mitigate the endogeneity concerns. The study provides assurance that on average, auditor pricing reflects client risk adequately, mitigating the concern that auditors give in to fee pressure and compromise audit quality as a result.

While the findings from this study should be of value to regulators and academics seeking to understand audit activities amid escalating macroeconomic uncertainty, when interpreting these results, several limitations must be considered. The study does not examine how external auditors evaluate risks tied to policy uncertainty. A comprehensive understanding of how and why external auditors respond to heightened policy uncertainty faced by firms could be better achieved through interviews with external auditors and audit committee members. In addition, while this study posits that auditors adjust their approach in response to changes in policy uncertainty, largely due to potential shifts in the risks of material misstatement, there might be additional factors at play that warrant higher audit fees post a change in policy uncertainty. For instance, specific policy changes may give rise to new risks or modify existing ones, thereby precipitating increased scrutiny of records and procedures as company directors’ demand. These aspects offer potential avenues for future research.

This study underscores the significant role of policy sensitivity in determining audit fees and audit quality. Policy-sensitive firms present unique complexities and potential risks that require additional effort and vigilance from auditors. Auditors must develop a specialized understanding of sectors prone to policy fluctuations to navigate these unique challenges effectively. In addition, the role of professional standards boards and regulators in establishing guidelines for auditing policy-sensitive firms cannot be understated. Such guidelines could lead to more consistent audit practices and improved audit quality. Finally, by recognizing and effectively responding to the policy sensitivity of client firms, audit firms can mitigate their own risks, strengthen public trust and enhance the reliability of financial reports.

First, this study adds to an emerging stream of auditing literature that focuses on how audit fees interact with a firm’s external environment by providing evidence of an unexplored implication, a firm-specific policy sensitivity. Second, my main construct, policy sensitivity, provides two distinct advantages over other variables used in prior studies that explore the relationship between audit fees and external firm environments. Third, this study answers the calls for research by De Villiers et al. (2013, p. 3), who identified the cost behavior of audit fees, especially over time, as an area not well understood.

The purpose of this study is to explore how the risk of management motives for fraud can be assessed in external audits.

Semi-structured interviews were conducted with 26 experienced external auditors to explore their perspectives on the methods they employ to assess the risk of management motives for fraud.

The study identifies six methods external auditors can use to assess management motives for fraud. It emphasises that assessing management motives requires auditors to go beyond understanding these motives and necessitates a sceptical and analytical mindset. Auditors need to identify the accounts most vulnerable to management manipulations, observe management attitudes and assess the credibility of management assertions. The auditors in this study highlight specific accounts frequently manipulated by management. Still, manual year-end journal entries are the most vulnerable to management manipulations as they are subject to fewer controls. They recommend increasing the sample size to 100% and assigning more experienced staff, particularly, those with qualifications in fraud examination or anti-fraud training, to audit these vulnerable accounts thoroughly. They also provided examples of how auditors can identify management motives for fraud, observe management attitudes and assess the credibility of management assertions.

Audit standards (e.g. ISA 240, SAS99) lack explicit guidance on assessing management motives for fraud, but auditors are required to consider it in fraud risk assessment. This study proposes guidance recommendations to improve auditors' ability to assess this risk, which could be integrated into professional audit standards and training materials to improve auditors' professional scepticism, ability to challenge management and skills in fraud risk assessment.

Assessing the risk of management motives for fraud in external audits has received limited attention in the literature. To the best of the authors’ knowledge, this study is the first to address this knowledge gap.

The role of internal auditors is changing from a traditional audit approach to a more proactive value‐added approach where internal auditors are taking up partnerships with management. The debate of internal auditors needing to expand their repertoire has been around for many decades, though now, the evidence of more internal auditors changing their practices has began to emerge and examples are visible. Internal auditors are seen to be accepting change to keep up with the demands of the market place and are doing so in order to provide a service of value to the organisation that employs them. Southcorp, Qantas and KMPG Consulting are a few providing their internal auditors with opportunities to undertake assurance based services and are finding this new branch of practice to be most valuable in assisting their managers to execute the objectives of the organisation

This paper analyses the internal auditor's role from a perspective which emphasises the pluralist nature of organisational life. The internal auditor operates in organisational contexts where norms and values are at best only partially shared, and where the auditor's formal concern for improved efficiency and control of resource use may be viewed with varying degrees of favour. The pluralist nature of organisational life reflects itself in day‐to‐day strains, tensions and conflicts between internal auditors and auditees, which cannot be eliminated through traditional “Human Relations” approaches to organisational problems. There are inherent conflicts between audit and other organisational roles, and also insofar as its modern conception is concerned, within the internal auditor's role itself.