What do you understand by money laundering?
This paper contributes to the literature on auditor industry expertise in many ways. First, it extends previous studies on this topic to examine whether industry specialists demonstrate different risk preferences in client acceptance decisions.
The finding that partner-level industry specialists are more likely to accept less risky clients may partly explain why industry specialists have better quality clients.
A Journal of Practice and Theory 35 2: Recently, audit firms have paid more attention to client acceptance decisions due to increased litigation risk. As a result more and more studies have investigated what goes into making this important decision. However, most prior studies examine whether auditors evaluate client risk characteristics when making client portfolio management decisions and whether auditors change their portfolio management strategies in response to changed in response to changes in litigation liability.
Few studies have examined the impact of auditor characteristics other than accounting firm size. Auditors with different attributes could have different risk considerations in making client portfolio management decisions.
In fact, previous studies have suggested that auditors use industry experience as a risk management strategy to mitigate risk on client portfolio management decisions because industry specialists provide high-quality audits and thus decrease litigation risk and reflect a good client-auditor match.
Audit firms make large investments in specialized industries, so specialist auditors have an incentive to shed risky clients to avoid litigation risk and protect their reputation; hence, whether audit firms use industry expertise as a risk management strategy to mitigate the effect of risk is an empirical issue.
The authors of this paper hope to explore whether industry specialization affects the association between risk considerations and client acceptance decisions.
The sample is restricted to Taiwanese listed companies audited by Big N audit firms from to The final sample contains 9, observations.
The authors find that auditors are less likely to accept clients with audit risk higher than that of existing clients. The authors find that firm-level industry expertise has no significant effect on the association between risk consideration and client acceptance decisions.
The authors find that partner-level industry specialists alone are less likely to accept clients with higher financial risk or higher audit risk, which supports the hypothesis that partner-level industry specialization affects the association between risk factors and client acceptance decisions.
No evidence is found that firm-level industry expertise alone affects risk considerations in client acceptance decisions.The client wasn’t happy with the old auditor’s report, so it switches audit teams to see whether it can get a more favorable report from an auditor that’s not as familiar with the company.
If the client won’t give you permission to speak with the old auditor, your firm may not want to accept the engagement. Abernethy and Chapman (hereafter referred to as A∓C) in their acceptance of Lakeside as a new client, you should reflect on Readings and as well as what you read in .
Acceptance decisions for audit and assurance engagements. In answering requirements on client and engagement acceptance, candidates are warned that their comments must be made specific to the scenario presented to them in order to pass the requirement.
It is very common for audit clients to approach their auditor for the .
This audit client briefing provides you with a publication that can be shared with your audit clients to help explain the requirements of CAS The briefing provides management with an explanation of requests made by auditors when auditing accounting estimates.
Conducted in Accordance With Generally Accepted Auditing Standards Source:SASNo;SASNo ments conducted in accordance with generally accepted auditing standards (GAAS) (for example,a review of interim financial information conducted in Acceptance and Continuance of Client Relationships and Audit Engagements.
implemented the rotation of Audit partners, in compliance with legislation, continuity of our business. GRI Client and engagement acceptance and continuity Our policies and procedures also include assessing risk in support of decision making regarding the Acceptance of potential clients • Identification of risks by assessing the.