Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE credits
Today, around the world, the profession of audit is in the eye of the public. Companies worldwide must have an auditor assuring the governance of the company and that the annual reports are in all essentials correct which at times can be difficult. This raises the question of what is a high quality audit. The most used definition of audit quality is DeAngelo’s (1981) which expresses the quality in terms of the auditor’s competence and independence. The quality is then dependent on the probability that the auditor will both discover a breach and report that breach. (DeAngelo, 1981, p. 186) The notion of audit quality is much researched but not in the manner of this study. The research question for this study focuses on the number of assignments and the age of the auditor.
- What is the association between the quality of the audit and the number of audit assignments one auditor has in an active limited company?
- Does the age of the auditor affect the audit quality?
The author chooses to focus the study towards companies in Västerbotten that fulfills the EU requirements of small companies in 2008. This selection resulted in 5654 companies from which the author sampled every tenth company. With some disqualifications due to inability to secure all necessary information, the sample final became 532 companies.
To be able to analyze the material gathered the author researched numerous areas in order to be reasonable sure that the most appropriate information could be gathered for the theoretical framework. The theoretical framework relies upon studies within the field of auditing, both in the US and in Europe; the material has a focus towards the audit quality. Furthermore, the author gathered material from the field of management studies, in form of research on board executives. More studies incorporated in this study come from the field of behavioral research and relates to the age of the auditor. Overall, the author believes this material to be sufficient in order to utilize it for this study.
The author presents the empirical material in figures and tables to ease the understanding of the material for the reader. There are both full model tests as well as individual test of each variable.
In the analysis section, the author combines the theoretical framework with the empirical findings in statistical tests that produce a significant full model at the 95% confidence level. However, none of the independent variables for the research questions is significant in that model and therefore the author also test each variable independently, with the same result; they are not significant at the 95% level.
As an overall conclusion for this study, the independent variables tested for the research questions proves not to be significant and hence the number of assignments an auditor has and the age of the auditor is not important for the quality of the audit.
2011. , 73 p.