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LITERATURE REVIEW SHOULD BE MORE THAN 1400 WORDS.
Please in methodology use auditing fees, opinion for 2011 . Also in order to get better proposal your amended and justify on my writing would be highly appreciated.
Over the recent years, countries worldwide have experienced the financial crisis, which is the latest event that have played a vital role on increasing the interest in the quality of audit internationally, the integrity of corporate governance and financial reporting.
The problem in the quality of accounting information has also increased expectations of further regulation in the banking sector which may well impact on reporting, auditing and governance outside this sector. National regulatory systems are increasingly interconnected with supranational private sector standard setting bodies, such as the International Accounting Standards Board (IASB), the International Federation of Accountants (IFAC) and governmental bodies such as the European Union (EU) (e.g., Cooper and Robson, 2006: 430(
However, the confidence on audit quality was not just a problem in the US. As Andersen was an international firm, audit clients and regulators in many other countries were affected. Ensuring that the rest firms generate high quality accounting information in the future was seen as priority to guarantee that no other firms fail on producing high quality auditing. Therefore many changes to the regulatory regime for auditors were also made in other jurisdictions including the EU and the UK. Following a government review (CGAA, 2003), in order to ensure major changes in the UK included the restructuring of the Financial Reporting Council (FRC) which took responsibility for setting auditing standards, setting ethical standards for auditors and conducting independent inspections of public interest audits. The review also included changes to the UK Combined Code for Corporate Governance requiring much closer engagement between the audit committee of a company and its auditors, thus creating a much more significant role for the audit committee chair (ACC) in the audit process (FRC, 2003).
The objective of the paper
The objective of this paper is to investigate the affect of auditing quality on earning management? Also the study aim to determine what is the relationship between auditing fees and the auditing quality in UK; finally, this study examines the association between the quality of audit on financial reporting quality and determine the relation between external audit fees and opinion and auditing quality,
In order to there are main point that has to be determined:
Firstly: – Identifying what is auditing quality? And investigate the effect of auditor opinion on auditing quality?
Secondly: determine if there any association between the auditing quality, and the influence on earning management.
Thirdly: determine the relationship between earnings management and audit quality.
2. Literature review
1.1 Audit quality:
Audit quality is the combined probability that the current material error is being identified and reported by auditors (DeAngelo, 1981). Recently, the FRC (2006b) considered how to identify the drivers of promote audit quality and audit quality. The definition of audit quality is lack of clear and agreed identification , the FRC states a key definition presented by the AIU (FRC, 2006b: 19): ‘Undertaking a quality audit involves obtaining sufficient and appropriate audit evidence to support the conclusions on which the audit report is based and making objective and appropriate audit judgments. A quality audit [also] involves appropriate and complete reporting by the auditors which enables the Audit Committee and the Board properly to discharge their responsibilities.’
Titman, and Trueman (1986) introduced the quality of auditing as reliability and strength of the information that is provided to stakeholders after auditing.
The measures and guidelines for the of the auditor’s quality and performance are set forth in generally accepted auditing standards, for example as, independence, exercise and competence of professional care. Noticeably, the qualities consider the performance of auditor is multi-dimensional as set forth in the auditing standards and differences in audit quality are to be expected. ‘Audit quality differences result in variation in the earnings quality of their audit and in credibility that the auditors offer. Due to auditor quality is inherently unobservant and multidimensional, there is no single characteristic of auditor can be used to proxy for quality’ (Balsam et al., 2003: 71). Since there are several factors may be affect audit quality, it is not surprising that researchers have used various measures to proxy for audit quality in prior studies.
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