Hello Sunday

Hope all is well. Let me take this opportunity to tell you that CSR in Sub-Saharan Africa in a book which is current in the press. I am not able to send the book out to anyone, you can recommend to your University Library to buy a copy of the book when it comes out in March 2016.

Best wishes

Sam

Hi SAM

Thank you for the information.

Cheers

Hi Okaro,

you have posed a very interesting question. Although larger audit firms are expected to perform better audit engagements (Francis, 2004), the empirical evidence seems to produce sometimes opposite results, with smaller audit firms to show a lower number of errors (Lennox and Pittman, 2010). Below you find the two articles I cited, you may find some interesting deeper thoughts about this issues.

Bye, Fabio.

Francis, J.R. (2004), “What do we know about audit quality?” The British Accounting Review, Vol. 36 No. 4, pp. 345–368.  

Lennox, C. and Pittman, J. (2010), “Auditing the auditors: evidence on the recent reforms to the external monitoring of audit firms”, Journal of Accounting and Economics, Vol. 49 No. (1–2), pp. 84–103.

Hi Okaro,

Big 4 also named as Fat 4 do provide good quality but not as many people think. From my experience with some of the big 4, I can say that the quality they provide based on the quality of people they deal with in any organizations.

In one of the organization that I worked with, I noticed that our audit firm, one of the big 4, did not provide the limit of service they should do according to the agreement they signed, and that was because of the quality of people we had at that time. I immediately raised this to management and we signed with another firm under our conditions and requirements. we signed with another firm, not because they were not qualified, but because they should not get advantage of people in my previous work and did not due professional care.

I believe that it is our responsibility as finance people to follow up and supervise the big 4 quality of work, because some of them, if they feel that no one will ask them about there work, they will not provide proper service.

Regards,

Sameeh

Hi Okaro,

The Big 4 are no better than the indigenous audit firms. In Nigeria, banks indicted for contravention of corporate governance rules and banking regulations were audited by the Big 4.

Audit firms ought to specialize in specific industries so that such auditors could be used as proxy of audit quality. I would advise that when conducting a study that requires you to control or suspend audit quality, you should include 'audit quality as a control variable' to detect the effect, as measured by whatever metric you choose and temper your conclusion accordingly.

In any case, test of audit quality should be based on the contents of the audit working papers as they relate to firms, not some adaptation based on templates. I think audit working papers should be filed at a public place for inspection at a fee.   Private information, however, should be excluded and this requires the intervention of the law.

Regards,

Avwokeni

I would like to share my own  experience working with juniors.

Meanwhile in SMEs audit firms, senior auditors take juniors and train them, this is juniors are able to see the whole audit process, in big enterprises juniors are located to one area of the financial statements (e.g. trade receivables, suppliers, etc.) loosing the whole picture. Analytical review and risk analysis are absolutely topics not covered by juniors. At the same time senior auditors working in big companies may not have enough time to train them, relying on the juniors´work that may be mistaken and losing important areas of risk. Regards, Ane

Let me also add from my experience that some of the big 4 audit firms apply risk based approach in performing their audit in an inappropriate way under which they can ignore auditing some of the financial statements accounts based on the notion that no risks possibly exist in those accounts which in some circumstances may not be true. Thus, some of the auditing firms with international affiliation (other than the big 4) may provide a better audit quality for their engagements. Also, I am currently supervising a PHD thesis where I used as a proxy assessment of internal control, detection of fraud and audit evidence to evaluate the quality of audit in light of some of the elements of audit quality as prescribed in ISA using an experimental study.

Like any industry, there are ups and downs in the audit quality of the big 4, and in the accounting and audit profession as a whole. However, it is worth-mentioning that the big 4, among other audit firms, contribute positively, to a certain extent, to the profession and to the financial standards setting.

I have seen that many researchers offer different views on what and how audit quality can be determined. So, whenever I have to speak about it, I always use the following expression: "perceived audit quality". As you have pointed out, there have been audit failures on both Big-4 and non-Big-4 auditors.

It is also worth noting that due to the subjective judgment embedded in the audit process there will continue to be different points of view concerning how we can define the quality of the audit work. Academics will continue to use the content of the ISA on quality control as proxies for such quality. On the other hand practitioners will defend their definitions of the quality represented in the type of the auditor report, sufficiency of the evidence, the reputation of the firm which they see as a very positive and strong element to reflect the satisfaction of the clients about the assurance services provided by the CPA as well as the competency of the CPA staff