Research

Open AccessArticle

Conceptual Comparison of Internal Audit and Internal Control in the Marketing Environment

by

Václav Kupec

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Přemysl Písař

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Michal Lukáč

and

Gabriela Pajtinková Bartáková

Sustainability 2021, 13(12), 6691; https://doi.org/10.3390/su13126691 - 12 Jun 2021

Viewed by 547

Abstract

There is a conceptual problem in the adequate application of internal audit and internal control in the real business of the marketing environment. Although both of these managerial tools are theoretically defined, they are practically interchangeable in business. This limits their application. It [...] Read more.

There is a conceptual problem in the adequate application of internal audit and internal control in the real business of the marketing environment. Although both of these managerial tools are theoretically defined, they are practically interchangeable in business. This limits their application. It is therefore necessary to focus on both concepts and make the theory and practice more precise or remove any overlaps. The aim of this paper is therefore a theoretical and practical comparison of internal audit and internal control concepts in the marketing environment. To fulfil this purpose and verify the hypotheses, this paper uses computer assisted self interviewing. The research was conducted in Q1 2021 with a sample of 3052 small and medium enterprises from the international environment of the EU 27. The research conclusions show a strong correlation of the theoretical perception of the terms of internal audit and internal control. At the same time, they show a weak correlation with the audit and control tools used in practice. They also define audit as planned independent assurance (soft consultation) and control as operational managerial assurance (hard comparison). This defines and clarifies scientific theories for managerial practice, thus enhancing and increasing the efficiency of internal audits and internal control in the business environment. Full article

(This article belongs to the Special Issue Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations)

Open AccessArticle

Conceptualizing the Moderating Role of CEO Power and Ownership Concentration in the Relationship between Audit Committee and Firm Performance: Empirical Evidence from Pakistan

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Sustainability 2021, 13(11), 6329; https://doi.org/10.3390/su13116329 - 03 Jun 2021

Viewed by 675

Abstract

Firms in developing economies generally find ways to enhance their reputation and growth in the international market. In this context, an Audit Committee (AC) is composed of multiple skilled members that control and monitor auditing activities and present a transparent image of their [...] Read more.

Firms in developing economies generally find ways to enhance their reputation and growth in the international market. In this context, an Audit Committee (AC) is composed of multiple skilled members that control and monitor auditing activities and present a transparent image of their firm, which automatically attracts investors and builds investor confidence. Therefore, this study used CEO power and ownership concentration as moderating factors to examine the connection between AC and firm performance. For this purpose, this study used the data of Pakistani manufacturing firms for the period 2008 to 2018 and applied the Ordinary Least Square (OLS) method, the Fixed Effect (FE) model, and the Generalized Method of Moments (GMM). To check the robustness of the results, this study used a Feasible Generalized Least Square (FGLS) model. The findings of this study contended that AC and firm performance have a positive association with each other. Moreover, the findings revealed that CEO power positively influenced firm performance. Furthermore, lower ownership concentration is a valuable approach to maximize a firm’s performance. Importantly, the outcomes concluded that AC and firm performance have a positive connection with the moderating effects of CEO power. Moreover, AC and firm performance also have a positive association with the moderating effect of ownership concentration. Full article

(This article belongs to the Special Issue Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations)

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Open AccessFeature PaperArticle

Does Mandatory Audit Partner Rotation Influence Auditor Selection Strategies?

by

Li-Jen He

and

Jianxiong Chen

Sustainability 2021, 13(4), 2058; https://doi.org/10.3390/su13042058 - 14 Feb 2021

Viewed by 587

Abstract

Under mandatory rotation, the switching cost may be the most influential factor to be considered for experienced mandatory audit rotations. This study attempts to explore the impacts of the mandatory rotation mechanism on company information disclosure and signaling strategies by examining the audit [...] Read more.

Under mandatory rotation, the switching cost may be the most influential factor to be considered for experienced mandatory audit rotations. This study attempts to explore the impacts of the mandatory rotation mechanism on company information disclosure and signaling strategies by examining the audit partner and audit firm switching activities of the mandatory rotation company. Are companies that experience mandatory audit rotation more likely to engage industry specialist auditors with better industry-specific knowledge and reputations to minimize the costs of mandatory rotations? Furthermore, in the case of being required to rotate audit partners, do companies rotate only audit partners, rather than changing both audit partners and audit firms at the same time, to minimize switching costs? To explore these problems, this study examined auditor rotations of listed companies in Taiwan from 2004 to 2016; and expected that, to minimize switching costs, mandatory rotation companies are more likely to select industry specialist auditors to be their successor auditors, and are less likely to rotate audit partners and audit firms at the same time. For the audit partner rotations, we find that, compared to voluntarily rotated companies, a higher percentage of companies choose industry specialist auditors to be their successor audit partners under mandatory rotation. Furthermore, the empirical results support our expectations that companies that experience mandatory audit partner rotation are significantly more likely to engage industry specialists to be their successor audit partners and are more likely to rotate only audit partners rather than rotating both audit partners and audit firms around mandatory audit rotation periods. Full article

(This article belongs to the Special Issue Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations)

Open AccessArticle

Rethinking the Role of M&As in Promoting Sustainable Development: Empirical Evidence Regarding the Relation Between the Audit Opinion and the Sustainable Performance of the Romanian Target Companies

by

Roxana Manuela Dicu

,

Ioan-Bogdan Robu

,

George-Marian Aevoae

and

Daniela-Neonila Mardiros

Sustainability 2020, 12(20), 8622; https://doi.org/10.3390/su12208622 - 18 Oct 2020

Cited by 1 | Viewed by 701

Abstract

External growth strategies face crucial barriers when taken into consideration for investing if the involved companies are not audited. The integrity of a company’s financial information, its control systems, and its sustainable behavior represent cornerstones when participating in mergers and acquisitions (henceforth M&As). [...] Read more.

External growth strategies face crucial barriers when taken into consideration for investing if the involved companies are not audited. The integrity of a company’s financial information, its control systems, and its sustainable behavior represent cornerstones when participating in mergers and acquisitions (henceforth M&As). Thus, the audit function became a must and its role increased over the years, becoming an intrinsic part of faithfully disclosing financial and nonfinancial information (sustainable reporting included). M&As are ideal when the need for rapid innovation is required, in order to maintain or develop a sustainability policy. Given the environmental issues, we analyzed a sample of 1491 target companies listed on Bucharest Stock Exchange, clustered into three categories: polluters, medium polluters, and low polluters. The study reveals that the investors’ decision to purchase a certain amount of stake in target companies is influenced by the audit opinion and the sector in which they operate, depending on their pollution status. Full article

(This article belongs to the Special Issue Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations)

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Open AccessArticle

An Informal Ethics Auditing in Authorized Valuation for Business Sustainability in Romania

by

Alexandru Tugui

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Daniela Tatiana Agheorghiesei

and

Laura Asandului

Sustainability 2020, 12(20), 8562; https://doi.org/10.3390/su12208562 - 16 Oct 2020

Viewed by 793

Abstract

This study presents the results of an extensive exploratory research on ethics in valuation activity carried out by authorized valuers in Romania. Ethics is the foundation of success and sustainability in business. In turn, business sustainability is the mirror of the social responsibility [...] Read more.

This study presents the results of an extensive exploratory research on ethics in valuation activity carried out by authorized valuers in Romania. Ethics is the foundation of success and sustainability in business. In turn, business sustainability is the mirror of the social responsibility assumed, the effort to ensure the sustainability of society. The goal of this study is broad and consists of investigating the position of authorized valuers in Romania in relation to the level of ethics achieved in the activity carried out with reference to expressing their professional opinion from the perspective of general concern for ethics. Our quantitative exploratory research consists of conducting a nationwide survey on a valid sample of 558 authorized valuer respondents. The main conclusions clearly highlight that the valuer faces external pressures—the influence from the clients’ side, and, in the face of this challenge, personal reputation and social responsibility are criteria in the ethical decision. The results of this research invite all stakeholders to take a reflective approach regarding the coordinates of the valuer’s personal ethics and the support mechanisms that provide it, in order to ensure the sustainability of his activity, to the benefit of the profession, the business and the entire society. Full article

(This article belongs to the Special Issue Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations)

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Open AccessArticle

The Link between Board Structure, Audit, and Performance for Corporate Sustainability

by

Ovidiu-Constantin Bunget

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Dorel Mateș

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Alin-Constantin Dumitrescu

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Oana Bogdan

and

Valentin Burcă

Sustainability 2020, 12(20), 8408; https://doi.org/10.3390/su12208408 - 13 Oct 2020

Cited by 1 | Viewed by 768

Abstract

The economic and social transformations, the bankruptcies recorded, and the financial crisis affecting all economies have increased the interest for the corporate governance concept. Our intention in this paper was to study the impact of corporate governance attributes on performance given the information [...] Read more.

The economic and social transformations, the bankruptcies recorded, and the financial crisis affecting all economies have increased the interest for the corporate governance concept. Our intention in this paper was to study the impact of corporate governance attributes on performance given the information published by the entities listed on five stock exchanges from Europe, namely the main market from Bucharest Stock Exchange (BSE) in Romania, the Athens Stock Exchange(ATHEX) main market in Greece, Financial Times Stock Exchange 100 Index (FTSE 100) from Great Britain, Spanish Stock Exchange 35 Index (IBEX 35) from Spain, and Warsaw Stock Exchange 20 Index (WIG 20) from Poland, between 2016–2018. Through mathematical modeling and multiple linear regression, we aimed to determine the extent to which corporate governance characteristics, firm characteristics, industry and stock market fixed effects, and random effects influence the performance of 226 entities included in our sample. The empirical findings revealed that CEO duality, the number of non-executive directors and women on board, audit committee, and audit opinion influenced performance measured by the Return on Assets (ROA) and Return on Equity (ROE) indicators. The ideas highlighted and the results obtained in this research contribute to the literature that analyzes the extent to which an effective governance determines the increase in performance, needed for a sustainable development. Full article

(This article belongs to the Special Issue Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations)

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Open AccessArticle

Econometric Model for Readjusting Significance Threshold Levels through Quick Audit Tests Used on Sustainable Companies

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Marius-Sorin Ciubotariu

and

Simona-Maria Tanasă

Sustainability 2020, 12(19), 8136; https://doi.org/10.3390/su12198136 - 02 Oct 2020

Cited by 1 | Viewed by 827

Abstract

Given the present-day economic situation, which is characterized by economic destabilization as a result of the pandemic crisis, auditors are facing the issue of establishing materiality, which is partly based on the fact that a certain level of financial misstatement influences the decisions [...] Read more.

Given the present-day economic situation, which is characterized by economic destabilization as a result of the pandemic crisis, auditors are facing the issue of establishing materiality, which is partly based on the fact that a certain level of financial misstatement influences the decisions of the involved parties. The aim of the present study is to suggest an econometric model for readjusting significance threshold levels through quick audit tests used on sustainable companies. The main objectives of the study are to emphasize the causal relationship between the manifestation of constant errors in financial reports and the inconsistency of audit opinions, as well as to put into practice the causal relationship that exists between the improvement of the audit function and sustainability itself, given companies’ crisis situation. In this particular context—based on the entire sample of companies listed in the Bucharest Stock Exchange (BVB), Bucharest Exchange Trading Plus category (BET Plus)—we estimated a number of financial indicators between 2009 and 2018 so that we could determine the materiality of accounting errors identified by auditors in order to express an opinion regarding the reliability and accuracy of financial reporting. The study’s key findings show that, given the economic crisis, the significance threshold level is a volatile test and it needs to be reconsidered taking into account the decline in the quality of reporting and, indirectly, the disclosure of financial information. From a holistic point of view, we believe that our study will have a significant impact on both practitioners and regulatory entities by shifting the qualitative approaches of analysis itself towards key prudential regulations stipulated by International Standard on Auditing (ISA) 320, ISA 450 and ISA 700. The study also highlights the process of refining information sources that can impact the significance, understanding and materiality of business decisions. Full article

(This article belongs to the Special Issue Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations)

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Open AccessArticle

Attracting European Funds in the Romanian Economy and Leverage Points for Securing their Sustainable Management: A Critical Auditing Analysis

by

Valentin-Marian Antohi

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Sustainability 2020, 12(13), 5458; https://doi.org/10.3390/su12135458 - 07 Jul 2020

Cited by 3 | Viewed by 830

Abstract

Against the backdrop of Romania’s successive negative performance in attracting European funds (coming last in the EU top), as indicated by audit reports for projects that have been funded so far, this paper proposes a new approach in relation to analysis and performance [...] Read more.

Against the backdrop of Romania’s successive negative performance in attracting European funds (coming last in the EU top), as indicated by audit reports for projects that have been funded so far, this paper proposes a new approach in relation to analysis and performance improvement in securing EU funds, while identifying viable solutions for the betterment of the current situation. Furthermore, the authors develop a new audit performance analysis model (NOP), described as a dynamic and flexible model, based on reducing the fraud and error risk in the structural fund management of European-funded projects. The analysis methods encompass literature reviews, observational studies, database management, statistical analysis, and the synthesis of the whole findings. The main conclusion of the analysis is the critical necessity of integrity improvement in the context of managing the non-reimbursable funds through audit activities based on ISA805, the international standard on auditing European-funded projects. Full article

(This article belongs to the Special Issue Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations)

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