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Tim Cook - One of the best experts on this subject based on the ideXlab platform.

Nicole Gardner - One of the best experts on this subject based on the ideXlab platform.

Brian Hickey - One of the best experts on this subject based on the ideXlab platform.

Stella Fearnley - One of the best experts on this subject based on the ideXlab platform.

  • Introduction and Regulatory Framework
    2001
    Co-Authors: Vivien Beattie, Stella Fearnley, Richard Brandt
    Abstract:

    This book penetrates the closed world of the discussions and negotiations that take place between the Finance Director and the auditor of companies. It is out of this interaction process that the audited financial statements ultimately emerge. The book examines six case studies where the authors were able to have in-depth, matched interviews with both the Finance Director (FD) and the audit engagement partner (AEP) of listed UK public companies. These reveal, perhaps for the first time, the pressures on both parties and the effects on their interaction. These interviews were carried out in 1996 and 1997 and, therefore, reflect the economic and regulatory environment of that time. However, although the regulatory environment has changed since then, the fundamental issues that emerge remain unaffected by the passage of time — in particular the quality of earnings and auditor independence.

  • audit market competition auditor changes and the impact of tendering
    British Accounting Review, 1998
    Co-Authors: Vivien Beattie, Stella Fearnley
    Abstract:

    Increased competition within the external audit market and the recent phenomenon of audit tendering has renewed interest in the factors influencing auditor changes. In this paper, a questionnaire instrument is used to elicit perceptions of the factors which influence auditor–client realignments in this new environment and to indicate the relative influence of economic and behavioural factors. Positive, statistically significant associations were found between unsolicited approaches and the consideration of either a change in auditor or the conduct of a competitive tender. Fees are both the most frequently cited reason for considering auditor change and the most frequently cited factor influencing the selection of a new auditor. The chemistry of the relationship with senior audit firm personnel was ranked as more important than service issues in new auditor selection. Several significant associations between the reasons for change and both company size and type of change are identified. In particular, smaller companies, and companies changing from a non-Big Six firm, were more likely to change due to the need for a wider range of services and the influence of third parties. Findings indicated that 55% of auditor changes were effected by means of a tender, with the incumbent auditor having only an 18% chance of retaining the client. The various stages of the tender process appear to be dominated by the Finance Director, with audit committees having a restricted role. Tenders resulted in significant fee reductions in the year of change.

  • Auditor changes and tendering
    Accounting Auditing & Accountability Journal, 1998
    Co-Authors: Vivien Beattie, Stella Fearnley
    Abstract:

    Competitive pressures in the audit market have led to aggressive fee renegotiation and tendering by companies. This paper reviews microeconomic tender theory and finds it to be of limited value in the audit context. Content analysis of semi‐structured interviews conducted with the Finance Directors of 12 UK listed companies which had recently tendered and/or changed auditor are used to investigate the tender/change process. Contrary to popular belief, fee levels do not necessarily dominate the decision to change auditors, rather changes within the client company, audit staffing, and auditor’s professionalism and competency issues dominate. Nor is the selection of a tender “winner” generally based solely on price, as predicted by tender theory and as would be expected when the consequences of audit failure do not fall on the Directors. However, consistent with economic theory, the winning bid appears frequently to be too low, resulting in attempts by auditors to subsequently increase fees and resentment by the Finance Director. Directors generally appear to view the audit tender as relating to not only the attest function per se, but to a larger package of services concerning the financial reporting function. The relative importance of price versus non‐price competition in auditor choice is found to vary across companies. Auditor choice is influenced strongly by both economic and behavioural factors, in particular, by Directors’ assessment of the quality of non‐attest services and the expected quality of working relationships, in addition to price and audit quality.

  • Auditor changes and tendering : United Kingdom interview evidence
    1998
    Co-Authors: Vivien Beattie, Stella Fearnley
    Abstract:

    Competitive pressures in the audit market have led to aggressive fee renegotiation and tendering by companies. This paper reviews microeconomic tender theory and finds it to be of limited value in the audit context. Content analysis of semi-structured interviews conducted with the Finance Directors of 12 UK listed companies which had recently tendered and/or changed auditor are used to investigate the tender/change process. Contrary to popular belief, fee levels do not necessarily dominate the decision to change auditors, rather changes within the client company, audit staffing, and auditor’s professionalism and competency issues dominate. Nor is the selection of a tender “winner” generally based solely on price, as predicted by tender theory and as would be expected when the consequences of audit failure do not fall on the Directors. However, consistent with economic theory, the winning bid appears frequently to be too low, resulting in attempts by auditors to subsequently increase fees and resentment by the Finance Director. Directors generally appear to view the audit tender as relating to not only the attest function per se, but to a larger package of services concerning the financial reporting function. The relative importance of price versus non-price competition in auditor choice is found to vary across companies. Auditor choice is influenced strongly by both economic and behavioural factors, in particular, by Directors’ assessment of the quality of non-attest services and the expected quality of working relationships, in addition to price and audit quality.

  • Auditor changes and tendering: UK interview evidence
    Accounting Auditing & Accountability Journal, 1998
    Co-Authors: Vivien Beattie, Stella Fearnley
    Abstract:

    Competitive pressures in the audit market have led to aggressive fee renegotiation and tendering by companies. This paper reviews microeconomic tender theory and finds it to be of limited value in the audit context. Content analysis of semi‐structured interviews conducted with the Finance Directors of 12 UK listed companies which had recently tendered and/or changed auditor are used to investigate the tender/change process. Contrary to popular belief, fee levels do not necessarily dominate the decision to change auditors, rather changes within the client company, audit staffing, and auditor’s professionalism and competency issues dominate. Nor is the selection of a tender “winner” generally based solely on price, as predicted by tender theory and as would be expected when the consequences of audit failure do not fall on the Directors. However, consistent with economic theory, the winning bid appears frequently to be too low, resulting in attempts by auditors to subsequently increase fees and resentment by the Finance Director. Directors generally appear to view the audit tender as relating to not only the attest function per se, but to a larger package of services concerning the financial reporting function. The relative importance of price versus non‐price competition in auditor choice is found to vary across companies. Auditor choice is influenced strongly by both economic and behavioural factors, in particular, by Directors’ assessment of the quality of non‐attest services and the expected quality of working relationships, in addition to price and audit quality.

Vivien Beattie - One of the best experts on this subject based on the ideXlab platform.

  • Introduction and Regulatory Framework
    2001
    Co-Authors: Vivien Beattie, Stella Fearnley, Richard Brandt
    Abstract:

    This book penetrates the closed world of the discussions and negotiations that take place between the Finance Director and the auditor of companies. It is out of this interaction process that the audited financial statements ultimately emerge. The book examines six case studies where the authors were able to have in-depth, matched interviews with both the Finance Director (FD) and the audit engagement partner (AEP) of listed UK public companies. These reveal, perhaps for the first time, the pressures on both parties and the effects on their interaction. These interviews were carried out in 1996 and 1997 and, therefore, reflect the economic and regulatory environment of that time. However, although the regulatory environment has changed since then, the fundamental issues that emerge remain unaffected by the passage of time — in particular the quality of earnings and auditor independence.

  • audit market competition auditor changes and the impact of tendering
    British Accounting Review, 1998
    Co-Authors: Vivien Beattie, Stella Fearnley
    Abstract:

    Increased competition within the external audit market and the recent phenomenon of audit tendering has renewed interest in the factors influencing auditor changes. In this paper, a questionnaire instrument is used to elicit perceptions of the factors which influence auditor–client realignments in this new environment and to indicate the relative influence of economic and behavioural factors. Positive, statistically significant associations were found between unsolicited approaches and the consideration of either a change in auditor or the conduct of a competitive tender. Fees are both the most frequently cited reason for considering auditor change and the most frequently cited factor influencing the selection of a new auditor. The chemistry of the relationship with senior audit firm personnel was ranked as more important than service issues in new auditor selection. Several significant associations between the reasons for change and both company size and type of change are identified. In particular, smaller companies, and companies changing from a non-Big Six firm, were more likely to change due to the need for a wider range of services and the influence of third parties. Findings indicated that 55% of auditor changes were effected by means of a tender, with the incumbent auditor having only an 18% chance of retaining the client. The various stages of the tender process appear to be dominated by the Finance Director, with audit committees having a restricted role. Tenders resulted in significant fee reductions in the year of change.

  • Auditor changes and tendering
    Accounting Auditing & Accountability Journal, 1998
    Co-Authors: Vivien Beattie, Stella Fearnley
    Abstract:

    Competitive pressures in the audit market have led to aggressive fee renegotiation and tendering by companies. This paper reviews microeconomic tender theory and finds it to be of limited value in the audit context. Content analysis of semi‐structured interviews conducted with the Finance Directors of 12 UK listed companies which had recently tendered and/or changed auditor are used to investigate the tender/change process. Contrary to popular belief, fee levels do not necessarily dominate the decision to change auditors, rather changes within the client company, audit staffing, and auditor’s professionalism and competency issues dominate. Nor is the selection of a tender “winner” generally based solely on price, as predicted by tender theory and as would be expected when the consequences of audit failure do not fall on the Directors. However, consistent with economic theory, the winning bid appears frequently to be too low, resulting in attempts by auditors to subsequently increase fees and resentment by the Finance Director. Directors generally appear to view the audit tender as relating to not only the attest function per se, but to a larger package of services concerning the financial reporting function. The relative importance of price versus non‐price competition in auditor choice is found to vary across companies. Auditor choice is influenced strongly by both economic and behavioural factors, in particular, by Directors’ assessment of the quality of non‐attest services and the expected quality of working relationships, in addition to price and audit quality.

  • Auditor changes and tendering : United Kingdom interview evidence
    1998
    Co-Authors: Vivien Beattie, Stella Fearnley
    Abstract:

    Competitive pressures in the audit market have led to aggressive fee renegotiation and tendering by companies. This paper reviews microeconomic tender theory and finds it to be of limited value in the audit context. Content analysis of semi-structured interviews conducted with the Finance Directors of 12 UK listed companies which had recently tendered and/or changed auditor are used to investigate the tender/change process. Contrary to popular belief, fee levels do not necessarily dominate the decision to change auditors, rather changes within the client company, audit staffing, and auditor’s professionalism and competency issues dominate. Nor is the selection of a tender “winner” generally based solely on price, as predicted by tender theory and as would be expected when the consequences of audit failure do not fall on the Directors. However, consistent with economic theory, the winning bid appears frequently to be too low, resulting in attempts by auditors to subsequently increase fees and resentment by the Finance Director. Directors generally appear to view the audit tender as relating to not only the attest function per se, but to a larger package of services concerning the financial reporting function. The relative importance of price versus non-price competition in auditor choice is found to vary across companies. Auditor choice is influenced strongly by both economic and behavioural factors, in particular, by Directors’ assessment of the quality of non-attest services and the expected quality of working relationships, in addition to price and audit quality.

  • Auditor changes and tendering: UK interview evidence
    Accounting Auditing & Accountability Journal, 1998
    Co-Authors: Vivien Beattie, Stella Fearnley
    Abstract:

    Competitive pressures in the audit market have led to aggressive fee renegotiation and tendering by companies. This paper reviews microeconomic tender theory and finds it to be of limited value in the audit context. Content analysis of semi‐structured interviews conducted with the Finance Directors of 12 UK listed companies which had recently tendered and/or changed auditor are used to investigate the tender/change process. Contrary to popular belief, fee levels do not necessarily dominate the decision to change auditors, rather changes within the client company, audit staffing, and auditor’s professionalism and competency issues dominate. Nor is the selection of a tender “winner” generally based solely on price, as predicted by tender theory and as would be expected when the consequences of audit failure do not fall on the Directors. However, consistent with economic theory, the winning bid appears frequently to be too low, resulting in attempts by auditors to subsequently increase fees and resentment by the Finance Director. Directors generally appear to view the audit tender as relating to not only the attest function per se, but to a larger package of services concerning the financial reporting function. The relative importance of price versus non‐price competition in auditor choice is found to vary across companies. Auditor choice is influenced strongly by both economic and behavioural factors, in particular, by Directors’ assessment of the quality of non‐attest services and the expected quality of working relationships, in addition to price and audit quality.