External Auditor Selection Choice: A Multinomial Logistic Regression Approach (original) (raw)
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Audit is no doubt a consequence of information asymmetry, brought about by the management of entities being better informed than the owners. The Report of the Committee on Basic Auditing Concepts, published in 1973 by the American Accounting Association (AAA) defines auditing as 'a systematic process of objectively obtaining and evaluating evidences regarding assertion about economic actions and events to ascertain the degree of correspondence between those assertion and established criteria and communicating the result to intended users". However, because managers are responsible for reporting to the owners who cannot observe and possibly caution on the actions of the managers, the reports so prepared and presented by them may contain errors, material misstatements and even fraud; hence, the need for an audit. There is