Audit Decisions: The Impact of Interactive Reviews with Group Support System on Information Ambiguity (original) (raw)

Role and Authority: An Empirical Study on Internal Auditors in Malaysia

One important relationship between members of the internal audit profession and others in the work world is that of authority because it has the most pervasive direct and indirect influence upon the clarity of the internal auditors' role. Internal auditors have varying roles among which are control oversight, decision support and risk management. We noted that the lack of authority will affect the internal auditors' role clarity and hence its effectiveness. The main objective of this paper is to identify the relationship between the roles of the internal auditors and authority. The extent to which the internal auditors enjoy role clarity is determined by how they perceive their roles. This paper provides empirical evidence on the association between internal auditor roles and other aspects of a profession such as audit charter existence and employment type. The results show that although management intimidation is dominant in explaining the variance in authority, this construct only explains 13.7 per cent variance in authority. The results support the need for the regulators, the professional body which is the Institute of Internal Auditors (IIA) and the persons charged with governance (board of directors) to provide internal auditors with clear authority to identify appropriately their roles and responsibilities. From a practical standpoint, internal auditors may re-evaluate their actual roles, and from the various roles that they have undertaken, clarify the confusion that might have occurred concerning their roles. The results provide clear action directives for organisations concerned with the enhancement of the internal audit profession. This paper contributes towards the decision making of boards of directors, audit committees and other regulatory bodies, to augment the profession of internal auditors.

Auditing Fair Value Estimates in Developing Countries: The Case of Jordan

Manuscript type: Research paper Research aims: This study explores the main issues faced by external auditors in Jordan when auditing fair value estimates, and examines the reasons causing these issues, and their effects on the conduct of auditing. Design/Methodology/ Approach: This study employs a qualitative approach, using semi-structured interviews with a sample comprising of experienced Jordanian auditors from the Big Four audit firms, other internationally-affiliated audit firms, and local Jordanian audit firms. Research findings: The findings of this study show that fair value estimates have been aggressively used by some companies to overvalue their assets, especially in the areas of asset impairment and business combinations. Factors facilitating this include the lack of reliable fair value information and the weak corporate governance system. Auditors face extensive pressure from clients to accept questionable fair value estimates in an environment of low demand for high-quality audits, low audit fees, and the fear of losing clients. Auditors are also under the pressure of regulatory authorities to improve the quality of their work. Theoretical contributions/ Originality: The auditing of fair value estimates is an empirically under-researched area in developing countries. The introduction of International Financial Reporting that an estimate of fair value has to be reported when needed, regardless of the level of available information or market activity. Conducting a study in a developing country with an environment that is characterised by inactive markets, limited available information on fair values, and low demand for high-quality audits, can further contribute to knowledge on how fair value estimates are audited under different circumstances to those of developed countries. Practitioner/ Policy implications: The findings of this study show that there is a need for regulatory authorities to put in more efforts to scrutinise the behaviour of auditors and audit clients when dealing with fair value estimates. The regulatory authorities also need to improve the conditions auditors face when auditing these estimates. Such improvements could include increasing the monitoring of fair value specialist evaluators, revising audit fee levels, and revising corporate governance regulations. Research limitations/ Implications: This study focuses on the Jordanian environment. By expanding the research to other developing countries, and by focusing in detail on some of the issues studied in developed countries (such as how auditors assess management’s assumptions regarding fair value estimates, and how they develop their own independent estimates), a better understanding of these issues in the developing country contexts can be gained, benefitting the audit profession and contributing to literature at the same time.