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The aim of this contribution is to present managers and owners of SMEs with a comprehensive concept for the preparation and implementation of a systemic approach to management auditing. The concept is presented in the form of a model called the “Systemic Approach to Management Audits”, as developed by the author. The principle behind the model is to conduct individual audit activities according to a predetermined order, as represented by a sub-model called “Advised Activities during Management Audits”. The model, or the application of a purposeful, standardized and, above all, systemic approach, was compiled on the basis of a two-phase questionnaire survey conducted in 2015/2016 and 2018/2019 among managers of SMEs, as well as guided interviews with professional auditors. The partial aim is to also highlight the relatively poor knowledge and implementation of management auditing in SMEs, and to encourage the use of the presented methodology by them.

We examine whether and how individual auditors affect audit outcomes using a large set of archival Chinese data. We analyze approximately 800 individual auditors and find that they exhibit significant variation in audit quality. The effects that individual auditors have on audit quality are both economically and statistically significant, and are pronounced in both large and small audit firms. We also find that the individual auditor effects on audit quality can be partially explained by auditor characteristics, such as educational background, Big N audit firm experience, rank in the audit firm, and political affiliation. Our findings highlight the importance of scrutinizing and understanding audit quality at the individual auditor level.

Not all Islamic higher education in Indonesia have references for conducting an internal audit. Moreover, not all of them have internal auditors. In fact, the latest ministerial regulation has required each Islamic higher education to have an internal audit team. It overwhelms Islamic higher education to form and operate internal auditor teams because there are no fixed standards. However, several Islamic higher education institutions have formed and run an internal audit function. Thus, this study aims to determine the pattern of internal audit management in Islamic higher education. This study used a qualitative approach to figure out the pattern of internal audit management in two Islamic higher education institutions that had already had internal auditors before the latest regulations were published. As a result, there were similarities and differences between the two patterns. These similarities and differences will be used as a reference standard for internal audits in Islamic Higher Education.

With the current shift toward real-time audit review, subordinates become aware of supervisors' views earlier in the audit process. I use an experiment to examine whether earlier knowledge of supervisors' views increases subordinates' tendencies to agree with those views because subordinates predecisionally distort evidence. In a going-concern task, I find that auditors who learn the partner's view before evaluating evidence (1) evaluate individual evidence items as more consistent with the partner's view, and (2) make going-concern judgments that are more consistent with the partner's view, than do auditors who learn the same partner's view after evaluating evidence. In a second experiment, I examine whether auditors anticipate the distortion's effect on subordinates' judgments. I find that auditors expect subordinates to make judgments that agree with supervisors' views, but auditors do not expect subordinates to agree even more with those views when subordinates learn those views earlier in the audit process.

Opponents of mandatory rotation argue that a change of partner is bad for audit quality, as it results in a loss of client-specific knowledge. On the other hand, proponents argue that a change of partner is beneficial, as it results in a positive peer review effect and a fresh perspective on the audit. We test the impact of mandatory partner rotation on audit quality using a unique dataset of audit adjustments in China. Our results suggest that mandatory rotation of engagement partners results in higher quality audits in the years immediately surrounding rotation. Specifically, we find a significantly higher frequency of audit adjustments during the departing partner's final year of tenure prior to mandatory rotation and during the incoming partner's first year of tenure following mandatory rotation.

We develop a contingency approach to explain how firm ownership influences the monitoring function of the board—measured as the magnitude of external audit fees contracted by the board—by extending agency theory to incorporate the resource dependence notion that boards have distinct incentives and abilities to monitor management. Analyses of data on Continental European companies reveal that while board independence and audit services are complementary when ownership is dispersed, this is not the case when ownership is concentrated—suggesting that ownership concentration and board composition become substitutes in terms of monitoring management. Additional analysis shows that the relationship between board composition and external audit fees is also contingent upon the type of the controlling shareholder.

The spread of the principles and techniques of financial accounting into new systems for measuring, ranking, and auditing performance represents one of the most important and defining features of contemporary governance. Audit procedures are redefining accountability, transparency, and good governance and reshaping the way organizations and individuals have to operate. They also undermine professional autonomy and have unanticipated and dysfunctional consequences. Taking up the concept of audit culture as an analytical framework, we examine the origins, spread, and rationality driving these new financialized techniques of governance, not least through the work of the Big Four accountancy firms, and trace their impact across a number of fields, from administration and the military to business corporations and universities. We ask, what new kinds of ethics of accountability does audit produce? Building on Mitchell (1999), Strathern (2000a), Trouillot (2001), and Merry (2011), we identify how the techniques and logics of financial accountancy have five audit effects. These are “domaining,” “classificatory,” “individualizing and totalizing,” “governance,” and “perverse” effects. We conclude by reflecting on the problems of audit culture and suggest ways to reclaim the professional values and democratic spaces that are being eroded by these new systems of governing by numbers.

Although regulation makes audit committees responsible for determining and negotiating audit fees, researchers and practitioners express concerns that CFOs continue to control these negotiations. Thus, regulation may give investors a false sense of security regarding auditor independence. We utilize the recent financial crisis and economic recession as an exogenous shock that allows us to shed light on the relative influence of the audit committee and the CFO on fee negotiations. During the recession, we find larger fee reductions in the presence of more powerful CFOs, and smaller fee reductions in the presence of more powerful audit committees. We also find the CFO or the audit committee primarily influences fees when their counterpart is less powerful. Our findings suggest a more complex relationship between the CFO and the audit committee than current regulations recognize and cast doubt on the ability of regulation to force one structure on the negotiation process.

Purpose – This paper aims to investigate management auditing, a thorough examination of an organization and the management in place, through an empirical research to gather data about how management audits are perceived and implemented among Geneva’s (Switzerland) business community. The board of directors is in charge of a corporation’s overall supervision. The internal auditing function works under the aegis of the board to ensure that the directors will properly execute their responsibilities as defined by corporate governance rules. Management auditing could thus be used to improve corporation performance. However, management audits are not commonly used or referred to as a tool to address corporate governance. Findings enable the authors to both explain why management audits are not commonly used or referred to as a tool to address corporate governance and generate related research hypotheses. Design/methodology/approach – In this paper, the authors rely on an ethnographic study aimed at exploring perceptions of management audits in service companies from the Geneva region. This study is based on transcripts from 85 semi-directed interviews, conducted over a three-year period, of professionals with managerial and auditing backgrounds. The economic context during these three years was consistently characterized by the Swiss and international financial crises, ensuring that the findings remain comparable over this time period. Findings – This paper identified three main factors that influence the integration of management audits into corporate practices: the degree of acceptance of the tools and requirements of management audits, the national culture and values embodied in the practice and the degree of corporate governance maturity. This paper presents the findings in the form of hypotheses that can be tested on any adoption of good corporate governance practices – not on management audits alone. Research limitations/implications – Notwithstanding the limitations due to its nature and extent, this study’s main limitation is its lack of validation of the hypotheses. In further research, the authors intend to use a quantitative survey to validate the research hypotheses and make statistical inferences. Originality/value – This paper contributes to the literature because it is, to the authors’ knowledge, the first study to empirically examine the significant link between management audits and corporate governance. The findings could be interesting for an international audience because they indicate possible action points that boards of directors can leverage to carry out management audits. The findings also bridge a gap between the literature on management audits and the expanding role of the internal audit function. This study also examines the way companies – in the Swiss context – understand, perceive and may be ready to apply management audits as a good corporate governance practice.