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The perceived association between audit rotation and audit quality: Evidence from the UAE

The perceived association between audit rotation and audit quality: Evidence from the UAE
The perceived association between audit rotation and audit quality: Evidence from the UAE
Purpose: the purpose of this paper is to explore the perceived association between audit rotation (AR) and audit quality (AQ) using respondents from a sample of audit firms operating in a developing economy, the United Arab Emirates (UAE). The paper addresses the following research question: How do UAE auditors perceive the association between various forms of AR and AQ?

Design/Methodology: we collected perception data from a sample of UAE auditors using a questionnaire, and applied several non-parametric statistical techniques to analyze the data, and to answer five exploratory research questions on the perceived association between various forms of AR and AQ.

Findings: the findings suggest that the UAE auditors in our sample did not perceive the association between individual types of AR and AQ as significantly different, and that AR in general is essential for AQ improvement and enhances trust in the audit process. Similarly, we find more support for the perception that medium audit tenure is associated with a lower impairment effect on auditor independence. Furthermore, we find no significant differences in perception based on gender, but younger/less experienced professionals and professionals in self-employed practices and small audit firms (compared to other demographics) significantly perceived AR enforceability and AT length to be associated with AQ. Our findings help to enrich our understanding of the perceived AR-AQ association in a relatively new context and less researched audit area in a developing economy.

Originality/Value: although lively debates on the question of AR and AQ within the accounting, finance, investment professions and in the financial media continue, there has been relatively limited knowledge and a dearth of empirical studies on this question in most developing economies. Being the first attempt in the country – the UAE, this study contributes towards addressing this gap in empirical knowledge by exploring the perceived association between various forms of AR and AQ in a developing economy.
Auditor rotation, Auditor tenure, Audit quality, Auditor efforts, Auditor trust, United Arab Emirates
2042-1168
1-41
Malagila, John
cc93732f-b2bd-49c9-843e-4a6039b4124c
Bhavani, Ganga
0401157e-b317-45be-8737-acab3aff6a59
Amponsah, Christian
5842e6d0-780e-436c-8cc4-417e91919578
Malagila, John
cc93732f-b2bd-49c9-843e-4a6039b4124c
Bhavani, Ganga
0401157e-b317-45be-8737-acab3aff6a59
Amponsah, Christian
5842e6d0-780e-436c-8cc4-417e91919578

Malagila, John, Bhavani, Ganga and Amponsah, Christian (2020) The perceived association between audit rotation and audit quality: Evidence from the UAE. Journal of Accounting in Emerging Economies, 10 (3), 1-41. (doi:10.1108/JAEE-08-2018-0082). (In Press)

Record type: Article

Abstract

Purpose: the purpose of this paper is to explore the perceived association between audit rotation (AR) and audit quality (AQ) using respondents from a sample of audit firms operating in a developing economy, the United Arab Emirates (UAE). The paper addresses the following research question: How do UAE auditors perceive the association between various forms of AR and AQ?

Design/Methodology: we collected perception data from a sample of UAE auditors using a questionnaire, and applied several non-parametric statistical techniques to analyze the data, and to answer five exploratory research questions on the perceived association between various forms of AR and AQ.

Findings: the findings suggest that the UAE auditors in our sample did not perceive the association between individual types of AR and AQ as significantly different, and that AR in general is essential for AQ improvement and enhances trust in the audit process. Similarly, we find more support for the perception that medium audit tenure is associated with a lower impairment effect on auditor independence. Furthermore, we find no significant differences in perception based on gender, but younger/less experienced professionals and professionals in self-employed practices and small audit firms (compared to other demographics) significantly perceived AR enforceability and AT length to be associated with AQ. Our findings help to enrich our understanding of the perceived AR-AQ association in a relatively new context and less researched audit area in a developing economy.

Originality/Value: although lively debates on the question of AR and AQ within the accounting, finance, investment professions and in the financial media continue, there has been relatively limited knowledge and a dearth of empirical studies on this question in most developing economies. Being the first attempt in the country – the UAE, this study contributes towards addressing this gap in empirical knowledge by exploring the perceived association between various forms of AR and AQ in a developing economy.

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1 JAEE Full_Manuscript_AR-UAE_25-02-2020_ACCEPTED - Accepted Manuscript
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More information

Accepted/In Press date: 25 February 2020
Keywords: Auditor rotation, Auditor tenure, Audit quality, Auditor efforts, Auditor trust, United Arab Emirates

Identifiers

Local EPrints ID: 438321
URI: http://eprints.soton.ac.uk/id/eprint/438321
ISSN: 2042-1168
PURE UUID: 80911c62-2685-4a8e-9480-aa1e83962d54
ORCID for John Malagila: ORCID iD orcid.org/0000-0001-5327-2286

Catalogue record

Date deposited: 05 Mar 2020 17:30
Last modified: 26 Nov 2021 02:55

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Contributors

Author: John Malagila ORCID iD
Author: Ganga Bhavani
Author: Christian Amponsah

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