Management of financial statements auditing in the Visegrad Group countries
-
DOIhttp://dx.doi.org/10.21511/ppm.18(1).2020.01
-
Article InfoVolume 18 2020, Issue #1, pp. 1-16
- Cited by
-
Funding dataFunder name: Internal Grant Agency (IGA) of the Czech University of Life Sciences in Prague, Faculty of Economics and ManagementFunder identifier: –Award numbers: 2019/A0013
- 1478 Views
-
283 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This paper aims at comparing the management perspectives with the audit conditions in the Visegrad Group (V4) countries (the Czech Republic, the Slovak Republic, Poland, and Hungary) in the following areas: legislation governing the auditing, statutory duty of auditing, mandatory rotation of auditors in public interest entities, requirements on auditors and professional activities, and audit supervision organizations. The paper also tests the hypothesis whether there is a relationship between the size of the accounting entity and the auditor’s opinion.
The methodology is based on the statistical analysis of the data using the Chi-square test of independence applied to a sample of 800 randomly selected accounting entities from all V4 countries (200 per each country in question).
The results demonstrated significant differences in the management approaches to financial reporting, especially in the area of the statutory duty of auditing. In addition, quantitative research was conducted to determine whether there is a relationship between the size of the accounting entity and the auditor’s opinion. At the 5% significance level, no such dependence has been found for any of the V4 countries, but at the 10% significance level, the dependence has already been proved in case of the Republic of Poland and Hungary.
The practical value of the obtained results is the knowledge of how to manage accounting standards for business entities in the V4 countries, as well as to determine the statutory duty to audit financial statements. These results might be of a special practical importance for business managers, tax authorities, and auditors operating in the EU countries.
- Keywords
-
JEL Classification (Paper profile tab)G32, M41, M42
-
References32
-
Tables16
-
Figures3
-
- Figure 1. Auditor’s opinions on small accounting entities
- Figure 2. Auditor’s opinions on medium-sized accounting entities
- Figure 3. Auditor’s opinions on large accounting entities
-
- Table 1. Names of public registers in the V4 countries and links to them
- Table 2. Comparison of the legal regulations and standards in the V4 countries
- Table 3. Comparison of the statutory duty of auditing in the V4 countries
- Table 4. Comparison of the mandatory rotation of auditors at public-interest entities
- Table 5. Comparison of requirements on auditors in the V4 countries
- Table 6. Basic information about professional organizations and audit supervision organizations in the V4 countries
- Table 7. Main activities of professional and audit supervision organizations
- Table 8. Categorization of accounting entities and auditor’s opinions in the V4 countries
- Table 9. Contingency table of research values for the Czech Republic
- Table 10. Final testing results for the Czech Republic
- Table 11. Contingency table of research values for the Slovak Republic
- Table 12. Final testing results for the Slovak Republic
- Table 13. Contingency table of research values for the Republic of Poland
- Table 14. Final testing results for the Republic of Poland
- Table 15. Contingency table of research values for Hungary
- Table 16. Final testing results for Hungary
-
- Aasare, S. K., & Wright, A. M. (2012). Investors’, Auditors’, and Lenders’ Understanding of the Message Conveyed by the Standard Audit Report on the Financial Statements. Accounting Horizons, 26(2), 193-217.
- Bhaskar, L. S., Schroeder, J. H., & Shepardson, M. L. (2019). Integration of Internal Control and Financial Statement Audits: Are Two Audits Better than One? Accounting Review, 94(2), 53-81.
- Boersma, M., Sourabh, S., Hoogduin, L., & Kandhai, D. (2018). Financial statement networks: an application of network theory in the audit. Journal of Network Theory in Finance, 4(4), 59-85.
- Botez, D. (2018). Recent Challenge for Auditors: Using Data Analytics in the Audit of the Financial Statements. Brain-broad Research in Artificial Intelligence and Neuroscience, 9(4), 61-71.
- Cobo, E. P., Herrero Crespo, A., & Montoya del Corte, J. (2017). Are credit risk analysts concerned about the audit of the financial statements of SMEs? Universia Business Review, 53, 150-167.
- Domaracka, D., & Hunyady, K. (2016). Objective and Purpose of Financial Statement Audit and Forensic Audit (pp. 39-42) (Ucetnictvi a auditing v procesu svetove harmonizace, Conference: International Scientific Conference on Accounting and Auditing in the Process of International Harmonization). Vranov nad Dyji: University of Economics, Prague.
- Fan, Y., Liao, Y., Li, F., Zhou, S., & Zhang, G. (2019). Identity-Based Auditing for Shared Cloud Data with Efficient and Secure Sensitive Information Hiding. IEEE Access, 7, 114246-114260.
- Feizizadeh, A. (2018). The effect of audit financial statements components on prevention and detection of fraud. Amazonia Investiga, 7(17), 31-40.
- Frishammar, J., Richtnér, A., Brattström, A., Magnusson, M., & Björk, J. (2019). Opportunities and challenges in the new innovation landscape: Implications for innovation auditing and innovation management. European Management Journal, 37(2), 151-164.
- Hejduková, P., & Kureková, L. (2016). Performance of health systems – the evaluation of selected indicators at the level states of the Visegrad Group (pp. 212-218) (Theoretical and Practical Aspects of Public Finance 2016, 21st International Conference on Theoretical and Practical Aspects of Public Finance 2016). Prague: University of Economics.
- Hindls, R., Hronova, S., & Seger, J. (2007). Statistika pro ekonomy (8th ed.). Praha: Professional Publishing.
- Hinke, J., Černá, M., Zborková, J., Gezo, M. (2018). Benefits and Weaknesses of External Audit of the Financial Statements Prepared by the Czech Small Business Units. Innovation Management and Education Excellence through Vision 2020 (pp. 3070-3080) (Conference IBIMA, Vol. IV-VI). Milan: International-Business-Information-Management-Association.
- Ismail, Z., Kiennert, C., Leneutre, J., & Chen, L. (2016). Auditing a cloud provider’s compliance with data backup requirements: A game theoretical analysis. IEEE Transactions on Information Forensics and Security, 11(8), 1685-1699.
- Jindrichovska, I., & Kubickova, D. (2017). The role and current status of IFRS in the completion of national accounting rules – Evidence from the Czech Republic. Accounting in Europe, 14(1-2), 56-66.
- Kafka, T. (2009). Průvodce pro interní audit a risk management. Praha: C. H. Beck.
- Mendez, C., & Bachtler, J. (2017). Financial Compliance in the European Union: A Cross-National Assessment of Financial Correction Patterns and Causes in Cohesion Policy. JCMS: Journal of Common Market Studies, 55(3), 569-592.
- Műllerová, I., & Králíček, V. (2017). Auditing pro manažery aneb proč a jak se ověřuje účetní závěrka. Praha: Wolters Kluwer.
- Naheem, M. A. (2016). Internal audit function and AML compliance: the globalisation of the internal audit function. Journal of Money Laundering Control, 19(4), 459-469.
- Postula, M., Klepacki, J., & Sobolewska, J. (2018). Local Government Public Debt Rules in the Visegrad Group Countries as Tools for the Optimization of Socio-Economic Development. Lex Localis, 16(3), 569-590.
- Rahman, A., Rozsa, Z., & Cepel, M. (2018). Trade Credit and Bank Finance–Evidence from the Visegrad Group. Journal of Competitiveness, 10(3), 132-148.
- Rahman, A., Tvaronaviciene, M., Smrcka, L., & Androniceanu, A. (2019). The effect of bank competition on the cost of credit: empirical evidence from the Visegrad countries. Acta Polytechnica Hungarica, 16(4), 175-195.
- Raiborn, C., Butler, J. B., Martin, K., & Pizzini, M. (2017). The internal audit function: A prerequisite for Good Governance. Journal of Corporate Accounting & Finance, 28(2), 10-21.
- Roychowdhury, S., & Srinivasan, S. (2019). The Role of Gatekeepers in Capital Markets. Journal of Accounting Research, 57(2), 295-322.
- Sharma, D. S., Tanyi, P. N., & Litt, B. A. (2016). Costs of mandatory periodic audit partner rotation: Evidence from audit fees and audit timeliness. Auditing: A Journal of Practice & Theory, 36(1), 129-149.
- Silvestre, A. O., Pereira, F.A., El Khatib, A. S. (2016). Independent Audit: A Study about the Content of Brazilian Football Clubs Financial Statements Reports. Revista Contabilidade e Controladoria-RC C, 8(2), 90-107.
- Stašová, L. H. (2019). The scope of control of the supreme audit office in the Slovak Republic and in the other Visegrad Four countries. Society and Economy, 41(2), 245-262.
- Szivos, L., & Orosz, I. (2014). The Role of Data Authentication and Security in the Audit of Financial Statements. Acta Polytechnica Hungarica, 11(8), 161-176.
- Tang, F., Norman, C. S., & Vendrzyk, V. P. (2017). Exploring perceptions of data analytics in the internal audit function. Behaviour & Information Technology, 36(11), 1125-1136.
- Tene, J. M., & Quintanilla Castellanos, J. (2015). Role of the financial statements audit in SMEs. Revista Publicando, 2(5), 277-284.
- Vanstraelen, A., & Schelleman, C. (2017). Auditing private companies: what do we know? Accounting and Business Research, 47(5), 565-584.
- Velentzas, J., Broni, G., & Kartalis, N. (2017). Deterrence, Detection, and Investigation of Economic Fraud and Auditor’s Responsibilities Relating to Audit of Financial Statements According to International Standards (pp. 719-742) (Advances in Applied Economic Research. International Conference on Applied Economics (ICOAE)). Warsaw: Springer Proceedings in Business and Economics.
- Zhang, J., Yang, X., & Appelbaum, D. (2015). Toward effective Big Data analysis in continuous auditing. Accounting Horizons, 29(2), 469-476.