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Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations

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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Economic and Business Aspects of Sustainability".

Deadline for manuscript submissions: closed (31 October 2021) | Viewed by 41236

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Special Issue Editor

Prof. Dr. Ionel Bostan

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Faculty of Law and Administrative Sciences, Stefan cel Mare University, Str. Universitatii No. 13, 720229 Suceava, Romania
Corr. Member of American Romanian Academy of Arts and Sciences
Interests: financial control; audit; tax law; economics; environmental economy

Special Issue Information

Dear Colleagues,

The managers of organizations of different sizes and with different activity objects obtain important advice after carrying out audits or financial control actions. Obviously, as has been demonstrated over time, once the measures required are implemented, they are usually followed by a significant increase in the organization’s performance regardless of whether it is a company — private or belonging to a state authority — or a public institution. In this context, we consider, in particular, economic performance, which is quantifiable. Therefore, researchers from around the world are welcome to submit original contributions to this Special Issue of the Sustainability journal, which focuses on topics we consider to be of particular interest to a large number of readers, especially since the approaches have to take into account the major constraint that is the obligation to respect a strict/severe normative framework.

General topics of interest comprise but are not limited to:

Investigating the issues related to the implementation of managerial control at the level of organizations;
Performing internal audits;
Exerting external audits and putting into practice the measures proposed by them;
Practical problems related to the application of specific procedures/standards/norms;
The study of the availability of managers/workers to comply with economic–financial legislation;
Researching problems deriving from the control of various public bodies, explaining the possible consequences.

Prof. Dr. Ionel Bostan
Guest Editor

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Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

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Keywords

Implementation of managerial control
Preventive/subsequent control
Carrying out internal/external audits
Efficient control/audit methods and techniques
Computerization of audits
Compliance with economic–financial legislation
Controls performed by various public bodies

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Published Papers (12 papers)

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Editorial

Jump to: Research

4 pages, 190 KiB

Open AccessEditorial

Special Issue “Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations”

by Ionel Bostan

Sustainability 2021, 13(18), 10364; https://doi.org/10.3390/su131810364 - 16 Sep 2021

Cited by 1 | Viewed by 1932

Abstract

Through this editorial, the author aims to present the main landmarks related to the scientific contributions that can be found in the special issue dedicated to the topic “Audit and Financial Control Tools Aimed at Ensuring the Sustainable Performance of Organizations” [...] Full article

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

Research

Jump to: Editorial

21 pages, 346 KiB

Open AccessArticle

Audit Report Lag. Differential Analysis between Spanish SMEs and Non-SMEs

by Susana Escaloni and Mercedes Mareque

Sustainability 2021, 13(22), 12830; https://doi.org/10.3390/su132212830 - 19 Nov 2021

Cited by 5 | Viewed by 2699

Abstract

Audit report lag is considered to be an indicator of audit punctuality and efficiency, while the existence of factors that may determine this lag has been signalled in previous studies. The objective of this study is to identify the determinants of audit report lag in Spanish SMEs, and to analyse the potential singularities of these factors with regards to non-SMEs. With this aim in mind, a set of factors has been analysed; in the previous literature, a relationship has been observed between these factors and the characteristics of the audited company, the auditor and the audit exercise. Additionally, the possible influence of financial crisis and recovery periods is analysed. The sample analysed is made up of 3217 unlisted Spanish firms for the years 2008–2015. Multiple linear regression analysis is used, modelling the audit report lag based on the independent variables related to the characteristics of the audited company, the auditor and the audit exercise. Based on the results obtained, we can support the existence of differences among the independent variables responsible for the audit report lag based on company type (SME/non-SME), with a larger number of factors impacting the audit report lag in SMEs. It is worth noting the significant relationship between audit report lag and opinion and crisis variables, both for the SME and non-SME models. In the case of SMEs, links between audit report lag and the likelihood of bankruptcy, auditor type, number of economic activities carried out by the audited company, the industry to which the audited company pertains, and audit fees were also observed. Furthermore, we can conclude that audit report lag is greater in SMEs and that the independent variables explaining report lag differ according to whether the company is an SME or not. Full article

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

16 pages, 552 KiB

Open AccessArticle

Audit Service Quality Perceived by Customers: Formative Modelling Measurement Approach

by Kristina Peštović, Nikola Milicevic, Nenad Djokic and Ines Djokic

Sustainability 2021, 13(21), 11724; https://doi.org/10.3390/su132111724 - 23 Oct 2021

Cited by 2 | Viewed by 2846

Abstract

The imperative to measure perceived service quality by a formative model in which it represents higher-order formative construct, consisting of reflective first-order constructs ((sub)dimensions), is defined in leading marketing literature in previous years. That approach is of special importance since model misspecifications were often occurring in perceived service quality measurement researches, which may lead to totally wrong conclusions. Furthermore, when it comes to the perceived audit service quality, according to the knowledge of the authors, this is the first implementation of the described approach. Besides the analysis of perceived quality dimensions (all of them originate from intensively used SERVQUAL instrument and are adopted to audit service quality: tangibles, reliability, responsiveness, assurance and empathy), the model included relations between quality and client’s satisfaction and loyalty. The results were obtained by processing 123 responses from Serbian companies. All dimensions of perceived quality influenced it positively and significantly (the strongest influence is related to assurance, followed by responsiveness; smaller coefficient with relatively similar value describes the influence of reliability; followed by empathy; the weakest is the impact of tangibles). Furthermore, research results pointed to the existence of positive relations between audit quality, satisfaction and loyalty. Hereby, satisfaction partially mediates the relationship between quality and loyalty. 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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24 pages, 911 KiB

Open AccessArticle

Supreme Audit Institutions and Sustainability of Public Finance. Links and Evidence along the Economic Cycles

by Ionel Bostan, Mihaela Brindusa Tudose, Raluca Irina Clipa, Ionela Corina Chersan and Flavian Clipa

Sustainability 2021, 13(17), 9757; https://doi.org/10.3390/su13179757 - 30 Aug 2021

Cited by 6 | Viewed by 3562

Abstract

Against the backdrop of concerns for diminishing the vulnerabilities of the economies of the Member States, the EU has adopted measures to strengthen budgetary discipline and control of the public deficit. In this context, the responsibility of government institutions has increased, not only in ensuring the sustainability of public finances but also in direct or indirect cooperation for good economic governance. From this perspective, this study aims to assess the impact of macroeconomic variables and those associated with supreme audit institutions on the sustainability of public finances measured by the size and dynamics of government deficit and gross public debt. Additionally, the impact of the same variables on governmental effectiveness and control of corruption has also been assessed. The data collected from secondary sources and panel data models were used to conduct an empirical study of the EU Member States which covered the 2002–2019 period and the sub-periods, divided as follows: pre-crisis, crisis, and post-crisis. The results of the study show that supreme audit institutions, through their organizational structure, the nature of their activities, and professionalism, may contribute to the reduction of public deficit and gross public debt and, implicitly, to higher efficiency and control of corruption. The results of analyses for the sub-periods show that ISAs played a more important role in reducing government deficit during crisis and post-crisis periods. By confirming or rejecting the results of the few studies that have been conducted so far, this study provides additional evidence that fills the gaps in the literature. 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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18 pages, 332 KiB

Open AccessArticle

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

by Václav Kupec, Přemysl Písař, Michal Lukáč and Gabriela Pajtinková Bartáková

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

Cited by 7 | Viewed by 4747

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 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)

26 pages, 666 KiB

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

by Sohail Ahmad Javeed, Tze San Ong, Rashid Latief, Haslinah Muhamad and Wei Ni Soh

Sustainability 2021, 13(11), 6329; https://doi.org/10.3390/su13116329 - 3 Jun 2021

Cited by 12 | Viewed by 4654

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 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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21 pages, 278 KiB

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

Cited by 7 | Viewed by 2807

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 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)

17 pages, 920 KiB

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 12 | Viewed by 3135

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). 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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26 pages, 725 KiB

Open AccessArticle

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

by Alexandru Tugui, Daniela Tatiana Agheorghiesei and Laura Asandului

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

Cited by 2 | Viewed by 2808

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 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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27 pages, 2654 KiB

Open AccessArticle

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

by Ovidiu-Constantin Bunget, Dorel Mateș, Alin-Constantin Dumitrescu, Oana Bogdan and Valentin Burcă

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

Cited by 9 | Viewed by 3622

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 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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32 pages, 3902 KiB

Open AccessArticle

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

by Veronica Grosu, Dorel Mateș, Monica-Laura Zlati, Svetlana Mihaila, Marian Socoliuc, Marius-Sorin Ciubotariu and Simona-Maria Tanasă

Sustainability 2020, 12(19), 8136; https://doi.org/10.3390/su12198136 - 2 Oct 2020

Cited by 3 | Viewed by 3432

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 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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27 pages, 1937 KiB

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, Monica Laura Zlati, Romeo Victor Ionescu, Mihaela Neculita, Raluca Rusu and Aurelian Constantin

Sustainability 2020, 12(13), 5458; https://doi.org/10.3390/su12135458 - 7 Jul 2020

Cited by 11 | Viewed by 3051

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 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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