Application of Selected International Standards on Auditing in Different Institutional and Economic Environments

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Basil Abeifaa Der of the School of Business and Law at the University of Agder has submitted his thesis entitled «Application of Selected International Standards on Auditing in Different Institutional and Economic Environments» and will defend the thesis for the PhD-degree Monday 10 October 2022.

He has followed the PhD programme at the School of Business and Law at the University of Agder.

Summary of the thesis by Basil Abeifaa Der:

Application of Selected International Standards on Auditing in Different Institutional and Economic Environments

The International Standards on Auditing (hereafter ISAs) enhance the quality and uniformity of audit practice throughout the world and strengthen public confidence in the financial statements issued by companies. The applicability of the standards may differ depending on whether they are applied in a developed or a developing country. Country variations with respect to the level of technological development may not permit the consistent application of the ISAs.

This dissertation brings to light the variations in how some selected auditing standards such as ISA 240, ISA 500, ISQC 1 and ISA 570 are applied in different institutional and economic environments.

Three studies

The three studies that form this dissertation are briefly introduced in the following three paragraphs.

The first study examines how auditors in two developing countries, Indonesia, and Ghana, apply ISA 240 for fraud detection, including how auditors identify, investigate, and resolve potential fraud issues.

We find that:

(1) senior managers originate most asset misappropriation frauds;

(2) auditors in Indonesia and Ghana do not use information technology or internal control assessment for fraud investigation;

(3) auditors modify the audit program once potential fraud is detected; and

(4) auditors use a more contending than conceding negotiation strategy when resolving potential fraud issues, which often stop short of requiring audit clients to record all audit adjustments.

The second study investigates how auditors responded to the COVID-19 pandemic in two countries: one developing country (Ghana) and one developed country (Norway) recognizing that the significant implications of COVID-19 on the audit profession may vary depending on whether auditors and the reporting entities reside in developing countries or in developed countries.

The findings indicate that auditors in Ghana perceived the pandemic to be more severe in its impact on conducting audits than did their Norwegian counterparts. The analysis of these responses draws upon the theory of adaptive governance.

The third study investigates how COVID-19 impacted the auditor’s assessment of the appropriateness of management’s use of the going concern assumption.

The findings reveal that not only were the government economic interventions crucial to the avoidance of going concern problems, but also management survival strategies (e.g., cost reduction) and methods used by the client (e.g., scenario analysis). The auditor’s use of templates and extensive discussions with the clients to assess the going concern assumption was also important to the avoidance of going concern problems.

Implications

Overall, the findings of this study demonstrate that the characteristics of different environments have a significant impact on the application of the auditing standards.

Differences in institutional settings among countries may not facilitate a consistent application of the international auditing standards. Regarding the application of ISA 240 this dissertation concludes that there are some differences in how the fraud standards are applied by our participants compared to auditors in the developed world.

Study 2 highlights that adaptivity by audit firms under COVID-19 in Ghana and Norway differed largely because of the technological infrastructure and the amount of government grants received by companies in each country.

Regarding the application of ISA 570 in Norway under COVID-19, this dissertation highlights that country specific factors such as the amount of government economic interventions were crucial to the survival of many companies and the applicability of ISA 570 due to increases in risk.

Disputation facts:

The trial lecture and the public defence will take place in Auditorium B1 001, Campus Kristiansand and online via the Zoom conferencing app - registration link below.

Deputy Dean, Professor Emeritus Theis Theisen, Handelshøyskolen ved Universitetet i Agder, will chair the disputation.

The trial lecture Monday 10 October at 10:15 hours

Public defense Monday10 October at 12:00 hours

 

Given topic for trial lecture: «Auditing challenges in both theory and practice in low income economies»

Thesis Title: «Application of Selected International Standards on Auditing in Different Institutional and Economic Environments»

Search for the thesis in AURA - Agder University Research Archive, a digital archive of scientific papers, theses and dissertations from the academic staff and students at the University of Agder.

The thesis is available here:

PhD Thesis Basil Final Final for Printing

 

The Candidate: Basil Abeifaa Der (1990, Wa. Ghana) Bachelor of Science Degree in Business Administration (Accounting Option), Kwame Nkrumah University of Science and Technology,Ghana (2013), Master of Finance by Research University of Brunei Darussalam in Brunei (Southeast Asia) (2016).

Opponents:

First opponent: Teija Laitinen, School of Accounting and Finance, Accounting, Vaasa University, Finland

Second opponent: Professor Stephen K. Asare, University of Florida - Warrington College of Business, USA

Professor Roy Mersland, Department of Management,  University of Agder, is appointed as the administrator for the assessment committee.

Supervisor in the doctoral work was Professor Iris Stuart, University of Agder (main supervisor) and Associate Professor Carmen Olsen, Western Norway University of Applied Sciences (HVL) (co-supervisor)

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Opponent ex auditorio:

The chair invites members of the public to pose questions ex auditorio in the introduction to the public defense. Deadline is during the break between the two opponents. The person asking questions should have read the thesis. For online audience the Contact Persons e-mail are available in the chat function during the Public Defense, and questions ex auditorio can be submitted to Gunvor Guttormsen on e-mail gunvor.guttormsen@uia.no