International Journal of Nonlinear Analysis and Applications

The effect of the Coronavirus on the auditing profession

Document Type : Research Paper

Authors

1 Department Of Accounting, Qeshm Branch, Islamic Azad University, Qeshm, Iran

2 Department of Accounting and Finance, Faculty of Humanities, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran

3 Department of Accounting, Damavand Branch, Islamic Azad University, Damavand, Iran

4 Department of Accounting and Finance, Faculty of Humanities, Qeshm, Branch, Islamic Azad University, Qeshm, Iran

Abstract

This study investigates the effect of the Coronavirus on the auditing profession to find out to what extent the Coronavirus affect the audit fees, continuity of activity, audit quality, human capital, salaries, and wages of employees in audit institutions. This research is applied in terms of the purpose and is a descriptive survey concerning the method. The statistical population includes all Iranian audit institutions’ partners, supervisors, and managers. A total of 222 questionnaires were completed and analyzed. The random sampling method is employed. The PLS tests were used to investigate the effect of independent variables on the dependent variable. The research hypotheses were tested, and the results indicated that the Coronavirus affects audit fees, continuity of activity, audit quality, human capital, salaries, and the salaries of auditing institutions’ employees. In addition, the results indicate the extent to which the Coronavirus affects the auditing profession.

Keywords

[1] M. Abate, P. Christidis, and A.J. Purwanto, Government support to airlines in the aftermath of the covid-19 pandemic, J. Air Transport Manag. 89 (2020), 101931.
[2] AICPA, Consequences of covid-19 potential auditing challenges, Center for Plain English Accounting. AICPA’S National A&A Resource Center, Special Report, 2020.
[3] N. Akrimi, The impact of coronavirus pandemic on audit quality: The perceptions of Saudi auditors, Acad. Account. Financ. Stud. J. 25 (2021), no. 1, 1–7.
[4] Kh. Albitar, A.M. Gerged, H. Kikhia, and Kh. Hussainey, Auditing in times of social distancing: The effect of COVID-19 on auditing quality, Int. J. Account. Inf. Manag. 29 (2020), no. 1, 169–178.
[5] Kh. Albitar, Kh. Hussainey, N. Kolade, and A.M. Gerged, ESG disclosure and firm performance before and after IR: The moderating role of governance mechanisms, Int. J. Account. Inf. Manag. 28 (2020), no. 3, 429–444.
[6] G.R. Aldhizer, J.R. Miller, and J.F. Moraglio, Common attributes of quality audits, J. Account. 179 (1995), no. 1, 61.
[7] I. Alexeyeva and T. Svanstr¨om, The impact of the global financial crisis on audit and non-audit fees: Evidence from Sweden, Manag. Audit. J. 30 (2015), no. 4/5, 302–323.
[8] A. Almohaimeed, J. Einbeck, N. Qarmalah, and H. Alkhidhr, Using random effect models to produce robust estimates of death rates in covid-19 data, Int. J. Envir. Res. Public Health 19 (2022), no. 22, 14960.
[9] N. Arthur, Q. Tang, and Zh.S. Lin, Corporate accruals quality during the 2008–2010 global financial crisis, J. Int. Account. Audit. Tax. 25 (2015), 1–15.
[10] B.N. Ashraf, Economic impact of government interventions during the covid-19 pandemic: International evidence from financial markets, J. Behav. Exper. Finance 27 (2020), 100371.
[11] E.R. Babbie, The Practice of Social Research, Cengage AU, 2020.
[12] A.B. Bayoumy, C.C.A.F.M. Veugen, L.B. van Rijssen, J.W.M. Bok, and J. Borgstein, Self-monitoring of the tympanic membrane: an opportunity for telemedicine during times of covid-19 and beyond, J. Otol. 16 (2021), no. 2, 120–122.
[13] P.A. Bianchi, N. Carrera, and M. Trombetta, The effects of auditor social and human capital on auditor compensation: Evidence from the Italian small audit firm market, Eur. Account. Rev. 29 (2020), no. 4, 693–721.
[14] R. Bozec and Mo. Dia, Monitoring function of the board and audit fees: Contingent upon ownership concentration, Inte. J. Account. Inf. Manag. 25 (2017), no. 1, 70–90.
[15] P. Castka, C. Searcy, and S. Fischer, Technology-enhanced auditing in voluntary sustainability standards: The impact of covid-19, Sustainability 12 (2020), no. 11, 4740.
[16] I.C.C. Chan, J. Ma, H. Ye, and R. Law, A comparison of hotel guest experience before and during pandemic: Evidence from online reviews, Inf. Commun. Technol. Tourism, Proc. ENTER 2021 eTourism Conf., Springer, 2021, pp. 549–556.
[17] H. Chen, Sh. Hua, Z. Liu, and M. Zhang, Audit fees, perceived audit risk, and the financial crisis of 2008, Asian Rev. Account. 27 (2019), no. 1, 97–111.
[18] L. Chen, G.V. Krishnan, and W. Yu, The relation between audit fee cuts during the global financial crisis and earnings quality and audit quality, Adv. Account. 43 (2018), 14–31.
[19] Y.Sh. Chen, B.G. Chang, and Ch.-Ch. Lee, The association between continuing professional education and financial performance of public accounting firms, Int. J. Human Resource Manag. 19 (2008), no. 9, 1720–1737.
[20] Y.Sh. Cheng, Y.-P. Liu, and Ch.-Y. Chien, The association between auditor quality and human capital, Manag. Audit. J. 24 (2009), no. 6, 523–541.
[21] Financial Reporting Council, Guidance on audit issues arising from the covid-19 (coronavirus) pandemic, Hentet fra https://www. frc. org. uk/news/march-2020-(1)/guidance-on-audit-issues-arising-from-the-covid-19 (2020).
[22] D. De Vaus, Surveys in Social Research, Routledge, 2013.
[23] A.M. Deloitte, COVID-19: Managing Cash Flow During a Period of Ccrisis, Insight Publication, Canada, 2020.
[24] A.M. Deloitte, Potential implications of COVID-19 for the insurance sector, Retrieved from: www.deloitte. com/uk/en/insights/economy/covid-19/impact-of-covid-19 on insurancers. htm (2020).
[25] J.R. Francis, A framework for understanding and researching audit quality, Audit.: J. Practice Theory 30 (2011), no. 2, 125–152.
[26] A.M. Gerged, B.B. Mahamat, and I.K. Elmghaamez, Did corporate governance compliance have an impact on auditor selection and quality? Evidence from FTSE 350, Int. J. Disclos. Govern. 17 (2020), 51–60.
[27] A. Ghosh and R. Pawlewicz, The impact of regulation on auditor fees: Evidence from the sarbanes-oxley act, Audit.: J. Practice Theory 28 (2009), no. 2, 171–197.
[28] J.W. Goodell, COVID-19 and finance: Agendas for future research, Finance Res. Lett. 35 (2020), 101512.
[29] N. Gupta, S. Dhamija, J. Patil, and B. Chaudhari, Impact of COVID-19 pandemic on healthcare workers, Ind. Psych. J. 30 (2021), no. 1, 282–284.
[30] S.A. Hazaea, M.I. Tabash, A. Aziz Abdul Rahman, S.F.A. Khatib, J. Zhu, and H.G. Chong, Impact of the COVID-19 pandemic on audit quality: Lessons and opportunities, Emerg. Sci. J. 6 (2022), no. February, 71–86.
[31] S.A. Hazaea, J. Zhu, S.F.A. Khatib, A.H. Bazhair, and A.A. Elamer, Sustainability assurance practices: A systematic review and future research agenda, Environ. Sci.Poll. Res. 29 (2022), no. 4, 4843–4864.
[32] J.L. Hoopes, K.J. Merkley, J. Pacelli, and J.H. Schroeder, Audit personnel salaries and audit quality, Rev. Account. Stud. 23 (2018), 1096–1136.
[33] K. Kadous, S.D. Krische, and L.M. Sedor, Using counter-explanation to limit analysts’ forecast optimism, Account. Rev. 81 (2006), no. 2, 377–397.
[34] S.F.A. Khatib, D. Fariha Abdullah, A. Elamer, and S. A Hazaea, The development of corporate governance literature in Malaysia: A systematic literature review and research agenda, Corporate Governance: Int. J. Bus. Soc. 22 (2022), no. 5, 1026–1053.
[35] S.F.A. Khatib and A. Nour, The impact of corporate governance on firm performance during the covid-19 pandemic:
Evidence from Malaysia, J. Asian Finance Econ. Busi. 8 (2021), no. 2, 0943–0952.
[36] KMPG, COVID-19: Potential impact on financial reporting, Accessed on the 27th of April 2020 at https://home.kpmg/xx/en/home/insights/2020/03/covid-19-financial-reportingresource-centre.html (2020).
[37] KMPG International, COVID-19: Potential impact on financial reporting, https://assets.kpmg/content/dam/kpmg/in/pdf/2020/03/firstnotes-covid-19potential-impact-on-financial-reporting.pdf (2020).
[38] W.R. Knechel, L. Niemi, and M. Zerni, Empirical evidence on the implicit determinants of compensation in big 4 audit partnerships, J. Account. Res. 51 (2013), no. 2, 349–387.
[39] D.V. Kousenidis, A.C. Ladas, and Ch.I. Negakis, The effects of the European debt crisis on earnings quality, Int. Rev. Financ. Anal. 30 (2013), 351–362.
[40] G.V. Krishnan and Y. Zhang, Is there a relation between audit fee cuts during the global financial crisis and banks’ financial reporting quality?, J. Account. Public Policy 33 (2014), no. 3, 279–300.
[41] A. Dwi Kurnia and Ch. Iswanaji, Analisis kualitas audit pada masa pandemi covid-19, SENTRI: J. Riset Ilmiah 2 (2023), no. 1, 20–28.
[42] C.S. Lennox and X. Wu, A review of the archival literature on audit partners, Account. Horizons 32 (2018), no. 2, 1–35.
[43] R. Lenz and U. Hahn, A synthesis of empirical internal audit effectiveness literature pointing to new research opportunities, Manag. Audit. J. 30 (2015), no. 1, 5–33.
[44] H.B. Levy, Financial reporting and auditing implications of the covid-19 pandemic, CPA J. 90 (2020), no. 5, 26–33.
[45] M. Mareque, F. L´opez-Corrales, and A. Pedrosa, Audit reporting for going concern in Spain during the global financial crisis, Econ. Res.-Ekon. istraˇzivanja 30 (2017), no. 1, 154–183.
[46] B. Marr and J. Chatzkel, Intellectual capital at the crossroads: Managing, measuring, and reporting of IC, J. Intell. Capital 5 (2004), no. 2, 224–229.
[47] W.F. Messier Jr, Ch.A. Simon, and J.L. Smith, Two decades of behavioral research on analytical procedures: What have we learned?, Audit.: J. Practice Theory 32 (2013), no. 1, 139–181.
[48] M. Noh, H. Park, and M. Cho, The effect of the dependence on the work of other auditors on error in analysts’ earnings forecasts, Inte. J. Account. Inf. Manag. 25 (2017), no. 1, 110–136.
[49] J.S. Persellin, J.J. Schmidt, S.D. Vandervelde, and M.S. Wilkins, Auditor perceptions of audit workloads, audit quality, and job satisfaction, Account. Horizons 33 (2019), no. 4, 95–117.
[50] Gh. Rezaei, Health accounting, Health Account. J. 10 (2021), no. 1, 44–71.
[51] A.M. Rose, J.M. Rose, K.A. Sanderson, and J.C. Thibodeau, When should audit firms introduce analyses of big data into the audit process?, J. Inf. Syst. 31 (2017), no. 3, 81–99.
[52] A.M. Rose, J.M. Rose, I. Suh, and J.C. Thibodeau, Analytical procedures: Are more good ideas always better for audit quality?, Behav. Res. Account. 32 (2020), no. 1, 37–49.
[53] M. Salehi, M.R. Fakhri Mahmoudi, and A. Daemi Gah, A meta-analysis approach for determinants of effective factors on audit quality: Evidence from emerging market, J. Account. Emerg. Econ. 9 (2019), no. 2, 287–312.
[54] A. Samagaio and R. Rodrigues, Human capital and performance in young audit firms, J. Bus. Res. 69 (2016), no. 11, 5354–5359.
[55] U. Sekaran and R. Bougie, Research Methods for Business: A Skill Building Approach, John Wiley & Sons, 2016.
[56] Z. Sarmad, E. Hajazi, and A. Bazgan, Research Methods in Behavioral Sciences, Agah Publishing, Tehran, 2011.
[57] Kh. Shahzad, Th. Pouw, Gh. Rubbaniy, and O. El-Temtamy, Audit quality during the global financial crisis: The investors’ perspective, Res. Int. Bus. Finance 45 (2018), 94–105.
[58] M. Tarek, E.K.A. Mohamed, M.M. Hussain, and M.A.K. Basuony, The implication of information technology on the audit profession in developing country: Extent of use and perceived importance, Int. J. Account. Inf. Manag. 25 (2017), no. 2, 237–255.
[59] G. Trompeter and A. Wright, The world has changed-have analytical procedure practices?, Contemp. Account. Res. 27 (2010), no. 2, 669–700.
[60] A.K.M. Waresul Karim and T. van Zijl, Efficiency and opportunism in auditor quality choice in emerging audit services markets: The case of Bangladesh, Int. J. Account. Inf. Manag. 21 (2013), no. 3, 241–256.
[61] Y. Xu, E. Carson, N. Fargher, and L. Jiang, Responses by Australian auditors to the global financial crisis, Account. Finance 53 (2013), no. 1, 301–338.
[62] D.C.Y. Yuen, Ph.K.F. Law, Ch. Lu, and J.Q. Guan, Dysfunctional auditing behaviour: Empirical evidence on auditors’ behaviour in Macau, Int. J. Account. Inf. Manag. 21 (2013), no. 3, 209–226.
[63] T. Zhang and J. Huang, The risk premium of audit fee: Evidence from the 2008 financial crisis, China J. Account. Stud. 1 (2013), no. 1, 47–61.
International Journal of Nonlinear Analysis and Applications
Volume 16, Issue 3
March 2025
Pages 205-217
  • Receive Date: 24 July 2023
  • Accept Date: 07 September 2023