INFORMATIONAL VALUE OF TRANSPARENCY REPORTS REGARDING AUDIT QUALITY: EVIDENCE FROM SERBIA
DOI:
https://doi.org/10.59864/Oditor72502SVMKeywords:
audit quality, ISQM, transparency reports, SerbiaAbstract
High-quality auditing is a prerequisite for maintaining public trust in the profession. However, quality is not easily observable, so regulators mandate certain audit firms to disclosure information about their quality systems in transparency reports. The aim of this paper is to examine the potential of transparency reports to signal audit quality, with particular emphasis on audit firms operating in Serbia. Furthermore, study seeks to assess the progress in the transition to the new quality management regulation. The research is based on an analysis of the content of transparency reports published by audit firms operating in Serbia for 2022 and 2023. The focus of analysis is on disclosures related to their quality control or quality management systems, with a comparative analysis of the content conducted both across firms and over time. The authors found variations in both the form and content of the disclosed information. Some reports reflect tangible efforts to achieve quality, while others seem to function primarily as tools for compliance with regulatory requirements.
Downloads
References
Almeida B., C. M. Viseu, & A. F. Silva. 2022. Transparency in the transparency reports: Empirical evidence from Portugal. Intangible Capital 18, (2): 195-218. https://doi.org/10.3926/ic.1756
Aydemir D., Y. S. Akgul, B. Özcan, & M. H. Aksu. 2023. Uncovering Turkish audit firms' transparency report textual attributes through computer-based approaches and linking them to audit quality. Social Science Research Network. http://dx.doi.org/10.2139/ssrn.5054128
Čular M. 2017. Transparency report delay and disclosure by Croatian audit firms. Croatian Operational Research Review 8, (1): 299-316. https://doi.org/10.17535/crorr.2017.0019
DeAngelo L. E. 1981. Auditor size and audit quality. Journal of Accounting and Economics 3, (3): 183-199. http://dx.doi.org/10.1016/0165-4101(81)90002-1
DeFond M., & J. Zhang. 2014. A review of archival auditing research. Journal of Accounting and Economics 58: 275-326. https://doi.org/10.1016/j.jacceco.2014.09.002
Deumes R., C. Schelleman, H. Vander Bauwhede, & A. Vanstraelen. 2012. Audit firm governance: Do transparency reports reveal audit quality? Auditing: A Journal of Practice & Theory 31, (4): 193-214. https://doi.org/10.2308/ajpt-10301
Financial Reporting Council (FRC). 2019. Transparency Reporting. AQR Thematic Review.
Francis J. R., & M. D. Yu. 2009. Big 4 office size and audit quality. The Accounting Review 84, (5): 1521-1552. https://doi.org/10.2308/accr.2009.84.5.1521
Fu Y., E. Carson, & R. Simnett. 2015. Transparency report disclosure by Australian audit firms and opportunities for research. Managerial Auditing Journal 30, (8/9): 870-910. https://doi:10.1108/maj-06-2015-1201
Girdhar S., & K. Klarskov Jeppesen. 2018. Practice variation in Big-4 transparency reports. Accounting, Auditing and Accountability Journal 31, (1): 261-285. https://doi.org/10.1108/AAAJ-11-2015-2311
International Auditing and Assurance Standards Board (IAASB). 2019. Exposure draft: Proposed International Standard on Quality Management 1. International Federation of Accountants.
International Auditing and Assurance Standards Board (IAASB). 2020. International Standard on Quality Management 1: Quality management for firms that perform audits or reviews of financial statements, or other assurance or related services engagements. International Federation of Accountants.
International Auditing and Assurance Standards Board (IAASB). 2020. ISQM 1 - Basis for conclusions. International Federation of Accountants.
International Auditing and Assurance Standards Board (IAASB). (2021). ISQM 1: first-time implementation guide. International Federation of Accountants.
International Organization of Securities Commissions (IOSCO). 2009. Transparency of firms that audit public companies: Consultation report.
Johl S. K., M. B. Muttakin, D. G. Mihret, S. Cheung, & N. Gioffre. 2021. Audit firm transparency disclosures and audit quality. International Journal of Auditing 25, (2): 508-533. https://doi.org/10.1111/ijau.12230
Knechel W. R., G. V. Krishnan, M. Pevzner, L. B. Shefchik, & U. K. Velury. 2013. Audit quality: Insights from the academic literature. Auditing: A Journal of Practice & Theory 32 (Supplement 1): 385-421. https://doi.org/10.2308/ajpt-50350
La Rosa F., C. Caserio, & F. Bernini. 2019. Corporate governance of audit firms: Assessing the usefulness of transparency reports in a Europe‐wide analysis. Corporate Governance: An International Review 27, (1): 14-32. https://doi.org/10.1111/corg.12235
Li S., F. Liu, F. Ye, & M. D. Yu. 2023. Why bigger is not stronger? A perspective on auditor groups and audit quality. Journal of Accounting and Public Policy 42: 107099. https://doi.org/10.1016/j.jaccpubpol.2023.107099
Manea, L. R., & A. Bratu. 2023. New Perspectives for Improving the Quality of Audit Management. Internal Auditing and Risk Management 67, (1): 44-54. https://doi.org/10.5281/zenodo.7784984
Pivac S., & M. Čular. 2012. Quality index creating and analysis of the transparency of audit firms - case study in Croatia. Croatian Operational Research Review 3, (1): 224-235.
https://www.kor.rs/registri_preduzeca.asp [pristupljeno 07.04.2025.]
Downloads
Published
Issue
Section
How to Cite
