Audit expectation gap: Evidence from Morocco

This study seeks to verify the contribution of internal audit (IA), especially its role in improving financial performance in Yemeni commercial banks, with a specific focus on three factors, namely: the independence and objectives of IA, the quality of IA and the size of IA. This study reviews some existing literature on the contribution and role of IA in improving financial performance. It relies on available data from questionnaires. 90 questionnaires were distributed to nine commercial banks in Yemen (23 branches) working under the supervision of the Central Bank of Yemen; 81 questionnaires (90%) were regained and used in the process of analysis. To analyze the data, three analysis approaches were used, including description, correlation, and regression. The results showed that the IA has a significant impact on the overall performance of Yemeni commercial banks. Furthermore, the results showed that the auditors’ efficiencies, as well as their financial and accounting experiences, have a significant and positive impact on financial performance. It was revealed that the independence and objectivity of internal auditors are highly insignificant for financial performance. However, the size of IA and the frequency of the auditors’ meetings have a negative and significant effect on financial performance. This study provides some recommendations for improving the effectiveness of IA, which in turn will contribute to improving financial performance.

This literature review evaluates empirical studies which concentrate on economic effects on joint audits from an international perspective. We briefly introduce the theoretical and empirical joint audit framework that comprises an adequate structure of the state-of-the-art of empirical research in this field. This is followed by a discussion of the following output factors of joint audits: (1) audit quality; (2) audit costs and (3) audit market concentration. We will summarize the key findings in each area, and provide a description of the analyzed proxies. Finally, we will discuss the current limitations of the studies and give useful recommendations for future empirical research activities in this topic.

Auditing has a very important role in the economic life and the auditor’s report is considered as the end of accounting information system in the enterprise, where it gives full and thorough summary of information content. So, this study aims to identify the existence level and form of financial market reaction on the auditor report by defining the change impact of the external auditor’s opinion on the stock prices of service companies listed in Amman Stock Exchange (ASE) in the period 2010–2017. The study population consists of all the 37 service companies listed in ASE, in which the audit report type has changed from unqualified to qualified and vice versa, where the number of observations was 48 – 32 from unqualified to qualified and 16 from qualified to unqualified. The results showed that there is statistically significant difference of stock prices after changing the report type from unqualified to qualified, where its prices declined as a result of this change, while there weren’t any statistical differences of stock prices as a result of changing the report type from qualified to unqualified. So, companies must pay more attention to the auditor report issued on its behalf, and work at its best to keep this report unqualified.