Abstract Current study seeks to analyze the impact of corporate governance mechanism on audited financial statements reliability by analysing mediating effect of auditor quality. Study based on primary data which was collected from 188 respondents of Libyan banking industry through convenience sampling.

Multiple regression analysis was used to determine the relationship among independent variables and mediating variable and bivariate regression analysis used to analyze the relationship among mediating variable and dependent variable. The current study used reliability of audited financial statement as a dependent variable and auditor quality as mediating variables. The independent variables in current study are; non- audit services, auditor rotation, measures of audit firm size, measures of audit firm fees and measures of audit committee characteristics. Result of current study stated that there is a direct positive relationship between corporate governance practices and auditor quality.

Dec 14, 2015. Essentially in some circumstances Audit needs to fulfil a role of assuring the public that an organisation is healthy and not just that the financial statements are correct. In-text: (Improving Confidence in the Value of Audit, 2015). Your Bibliography: Improving Confidence in the Value of Audit. Jan 28, 2016. Principles of External Auditing has become established as one of the leading textbooks for students studying auditing. Federal Taxation Practice and Procedure (11th Edition) (Jr. ) Ebook PPT EPUB. The Auditor: An Instructional Novella (James K. Loebbecke ) Ebook PPT EPUB D.

The results also reveal a direct strong positive relationship between auditor quality and the reliability of audited financial statements. In terms of mediation, the findings of the study show that auditor quality partially mediates the relationship between corporate governance mechanisms and the reliability of audited financial statements. Introduction Corporate governance has attained immense attention of business world and research scholars in today’s hypercompetitive and volatile business environment. Recent scandals of corporate word like Enron corporation, BCCI, WorldCom, Lehman brothers and HIH insurance group has fostered to consider corporate governance as significant field.

Among the various corporate governance reforms, reliability of reported financial statements information is vital. The crux of corporate governance reforms and implementation are to enhance the efficiency and effectiveness of financial statement reporting and audit quality [7, 12, 39, 55] Therefore scholars and policy makers are much interested to dig out and explore corporate governance related to financial statement reliability and audit quality in both developing and developed countries [43, 48, 51, 52]. Therefore outcome of corporate crises and scandals urged importance of reliability of financial statements, audit quality and corporate governance [5]. There are few studies that investigated the impact of corporate governance mechanism on financial statement reliability in the context of Libya. Current study seeks to fill this gap by examining the impact of corporate governance on reported financial statements reliability with mediating effect of auditor quality in Libyan banking sector. Literature Review Reliability of financial statements and reporting has its roots in industrial revolution and ancient trading [54, 58]. Current business models challenged the old rule of thumbs and separate the authority and power of management control from ownership [35].

This response was to be compatible with contemporary needs of stakeholders of financial statements for accountability [20]. Reliability of audited financial statements is an among the core issues in a today’s corporate sector. It has gained more importance in recent time of financial crunch.

Financial accounting standards Board [21] defined financial reporting as “Quality of information that assures that focus information is reasonably free from error or bias and faithfully represents what it purports to represent”. Bribesh [9] stressed that corporate financial reports should contain certain characteristics and attributes to be effective namely, reliability, relevance, completeness, comparability and understandability. These characteristics and attributes enable the investors to rely on financial statements while taking financial decision. Obaidat [46] and Elliot [19] delineated that reliability is the quality of financial statement that builds confidence of the investors. Reliable information is having characteristics of neutrality and faithful representation of the financial information.

There is paucity of empirical studies that examine the collective impact of NAS, Audit fee, Auditor’s independence regarding reliability of financial statements [4, 25]. Provision of Non-Audit Services (NAS) After decay of Enron, the field of the provision of NAS and auditor independence emerged as burnning issue for scholars and pactitioners [36].

Intense literature revealed that independence of auditors is a serious threat to its corporate clients in many countris [4, 8, 11, 13, 18, 22, 26, 41]. Surely this issue urged the need to control external auditors to prevent from providing NAS that impair the impartiality and independence of auditors [53].

Auditor Rotation The relationship of firm auditor rotation, audit firm independence and audit quality is significant area of research and discussion in accounting literature. There is immense literature can be found that stress on quality of financial reporting by sustaining the auditor independence thorugh auditor rotation reporting [37, 40, 41, 56]. There are other views that posit contrary view point about having little faith in ability of auditor independence due to audit rotation [14, 32]. Rehanfx Registration Code Serial Number. Salleh and Jasmani [49] conducted a study to analyze the relationship of reliability of audited financial statements and audit the auditors’ rotation.

The association between the rotation of mandatory audit partner and reliability of audited financial statements seemed significant. Size of Audit Firm Many researchers found positive linkage between firm size of the audit firm, auditor quality and reliability of the financial statements [2, 23, 42]. Several researchers have defined large firm size in terms of the provision of multi-services to many clients [15, 17, 27, 57], in respect of the proportion of fees charged for both non-auditing and audit services [49], in terms of the audit firm’s market share revenue [27, 47], in terms of the number of clients and the number of members of audit firm and on the basis of internationality [33, 38, 45]. Audit Firm Fees Many researcher indicate that audit quality much dependent on fees charging for audit services and consequently it effects reliability of the financial statements [1, 28, 31, 34]. Security of the auditing profession has been increased deu level of NAS fee collected from audit customers and expected influance of theses fees on independence of auditors and audit quality consequently to reliability of financial statements [30]. Auditor Quality Auditor quality is one of the important elements to make financial reports more reliable and audit committees play significant role in it.

The degree of audit quality is significantly affected by the audit committee [44]. More specifically, effective audit committees are anticipated to improve financial reporting quality by assuming responsibilities especially reviewing the financial statements prepared by the client’s management. Additionally, audit committees are also estimated to play a key role in ensuring the effectiveness of external auditors in the audit engagement process by, fulfilling a number of responsibilities including the selection and remuneration of external auditors, as well as reviewing the auditors work [16]. It is evident that prior and current research indicate that both the existence of the audit committee and the attributes of audit committee members affect the usefulness and reliability of financial reporting [3, 10].

Methodology and Variable Measurement The objectives of the study are to extend the evidence linking external corporate governance mechanisms to reliability of audited financial statements through analyzing the mediating effect of auditor quality. First, current study examines the relationship between internal corporate governance practices and auditor quality, than investigate the relationship between auditor quality and reliability of audited financial statements in the Libyan Banking Sector. The primary data for this study is gathered by opting survey technique so the data used in this study is primary in nature. Convenient sampling is used to gather the data and the main respondent of this study are auditors and loan officers of banking sector of Libya. Current study distributed 500 questionnaires and managed to get 188 respondents as sample size. Model Specification First, a multiple regression equation is set up to investigate the hypothesized relationships among mediating variable and explanatory variables in current study. The econometric form of the equation is given as: (1) Where, AQ = Auditor quality (Dependent variable) NAS = Provision of Non-Audit Services (Independent variable) AR = Auditor Rotation (Independent variable) AFS = Audit Firm Size (Independent variable) AFF = Audit Firm Fees (Independent variable) ACC = Audit Committee Characteristics (Independent variable) Secondly, Bivariate regression equation is set up to investigate the hypothesized relationship between mediating variable and dependent variable.

The econometric form of the equation is given as: (2) Where, RAFS = Reliability of Audited Financial Statement (Dependent variable) AQ = Auditor quality (Independent variable) 4. Measurement of Variables 4.1. References [1] Abbott, L. J., Parker, S., Peters, G. F., & Raghunandan, K. An empirical investigation of audit fees, nonaudit fees, and audit committees.

Contemporary Accounting Research, 20(2), 215–234. [2] Abu Bakar, N. B., Rahman, A. A., & Abdul Rashid, H. Factors Influencing Auditor Independence: Malaysian Loan Officers’ Perceptions.

Managerial Auditing Journal, 20(8), 804-822. [3] Agrawal, A., & Chadha, S. Corporate governance and accounting scandals. Journal of Law and Economics, 48(2), 371–406. [4] Al-Ajmi, J., & Saudagaran, S. Perceptions of auditors and financial-statement users regarding auditor independence in Bahrain. Managerial Auditing Journal, 26(2), 130–160.

[5] Almalhuf, A. Perceptions of Libyan external auditor independence. Unpublished PhD thesis, Liverpool John Moores University. [6] Barzegar, B., & Salehi, M. Re-emerging of Agency Problem: Evidences from Practicing Non-audit Services by Independent Auditors. Journal of Audit Practice, 5(2), 55–66.

[7] Beasley, M. S., Carcello, J. V., Hermanson, D.

R., & Neal, T. The Audit Committee Oversight Process. Contemporary Accounting Research, 26(1), 65–122. Retrieved from [8] Beaulieu, P., & Reinstein, A. Belief perseverance among accounting practitioners regarding the effect of non-audit services on auditor independence. Journal of Accounting and Public Policy, 29(4), 353–373. [9] Bribesh, F.

The Quality of Corporate Annual Reports Evidence from Libya. Unpublished PhD thesis, University of Glamorgan. [10] Carcello, J. V., & Neal, T. Audit Committee Characteristics and Auditor Dismissals Following “New” Going-Concern Reports. The Accounting Review, 78(1), 95–117.

Download Gratis Lagu Toni Braxton Unbreak My Heart. [11] Chen, C. P., Su, X., & Wu, X. Forced Audit Firm Change, Continued Partner Client Relationship, and Financial Reporting Quality. Auditing: A Journal of Practice & Theory, 28(2), 227–246.

[12] Cohen, J., Krishnamoorthy, G., & Wright, A. The Corporate Governance Mosaic and Financial Reporting Quality.

Journal of Accounting Literature, 23, 87–152. [13] Congress, U.

Sarbanes-Oxley Act (2002). One Hundred Seventh Congress of the United States of America at the second Session: HR (Vol. [14] Davis, L. R., Soo, B.&Trompter, G. Auditor Tenure and the Ability to Meet or Beat Earnings Forecasts. Contemporary Accounting Journal, 26(2), 517–54.

[15] DeAngelo, L. Auditor Size and Audit Quality. Journal of Accounting and Economics, 3(3), 183–199. [16] Dhaliwal, D., Naiker, V., & Navissi, F. The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees. Contemporary Accounting Research, 27(3), 787–827. [17] Dopuch, N.

Capital markets’ reaction to qualified audit reports. Journal of Accounting and Economics, 6(1), 3. [18] Ebimobowei, A. Non-Audit Services and the Impairment of Auditors’ Independence: A Further Examination. Pakistan Journal of Social Sciences, 8(2), 100–107. [19] Elliott, R. The future of audits.

Journal of Accountancy, September, 74–82. [20] Faraj, S. Reliability of the Audited Financial Statements the Case of Libya (pp. Paper presented 2009 at “British Accounting Association Annual Conference”, 21-23 April,2009. [21] Financial Accounting Standards Board.

Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-Useful Financial Reporting Information. [22] Firth, M. Auditor-Provided Consultancy Services and their Associations with Audit Fees and Audit Opinions. JBFA Journal of Business Finance & Accounting, 29(5-6), 661–693. [23] Francis, J. The effect of Big 4 office size on audit quality.

The Accounting Review, 84 (5), 1521–52. [24] Gana, M. R., & Krichen, A. Board characteristics and external audit quality: Complementary or substitute mechanisms? The belgium case.

International Journal of Management Sciences and Business Research, 2(3), 68–74. [25] Geiger, M. Lowe., & Pany, K. Outsourced Internal Audit Services and the Perception of Auditor Independence.

The CPA Journal, 72(4), 20–24. [26] General Accounting Office (GAO). Required study on the potential effects of mandatory audit firm rotation. Size of Audit Fees and Perceptions of Auditors’ Ability to Resist Management Pressure in Audit Conflict Situations.

Abacus, 27(2), 162–172. [28] Gul, F., Chen, C.

Discretionary Accounting Accruals, Managers’ Incentives and Audit Fees. Contemporary Accounting Research, 20(3), 441–464. [29] Hair, J. Babin, & Anderson,R. Multivariate Data Analysis. Harlow: Pearson Education Limited.

[30] Holland, K., & Lane, J. Perceived auditor independence and audit firm fees. Accounting and Business Research, 42(2), 115–141. [31] Hope, O. K., & Langli, J.

Auditor Independence in Private Firm and Low Litigation Risk Setting in Narway. The Accounting Review., 85(2), 573–605. [32] Jackson, A.B., Moldrich, M., & Roebuck, P.

Mandatory audit firm rotation and audit quality. Managerial Auditing Journal, 23, 420–37. [33] Jang, H.J.,& Lin, C. Audit quality and trading volume reaction: a study of initial public offerings of stocks. Journal of Accounting & Public Policy, 12(3), 263–87. [34] Jensen, K. L., & Payne, J.

Audit Procurement: Managing Audit Quality and Audit Fees in Response to Agency Costs. Auditing: A Journal of Practice & Theory, 24(2), 27–48. [35] Jurney, N.

How Do Nonprofessional Investors Understand and USE Relevance and Reliability of Financial Information? Unpublished PhD Thesis, University Of Oklahoma. [36] Klein, A. Economic Determinants of Audit Committee Independence. The Accounting Review, 77(2), 435–452. [37] Knechel, W.

R., &Vanstraelen,A. The relationship between auditor tenure and audit quality implied by going concern opinions. Auditing: A Journal of Practice & Theory, 26(1), 113–131. [38] Krishnan, G. Does Big 6 auditor industry expertise constrain earnings management? Accounting Horizons, 17, 1–16. [39] Krishnan, G., & Visvanathan, G.

Do Auditors Price Audit Committee’ s Expertise? The Case of Accounting versus Nonaccounting Financial Experts. Journal of Accounting, Auditing & Finance, 24(1), 115–144. [40] Lassila, D. C., Shelley, M. K., & Smith, L.

Do Complexity,Governance, and Auditor Independence Influence whether Firms Retain TheirAuditors for Tax Services? Journal of the American Taxation Association, 32(1), 1–23. Y., Mande, V., & Son, M. Do Lengthy Auditor Tenure and the Provision of Non-Audit Services by the External Auditor Reduce Audit Report Lags? International Journal of Auditing, 13(2), 87–104. [42] Lennox, C. Audit quality and executive officers’ affiliations with CPA firms.

Journal of Accounting and Economics, 21(1), 205–231. [43] Mallin, C. Corporate governance. Oxford; New York: Oxford University Press. [44] Mansouri, A., Pirayesh, R., & Salehi, M.

Audit Competence and Audit Quality: Case in Emerging Economy. International Journal of Business and Management, 4(2), 17–25. [45] Mutchler, J. F., Hopwood, W. & McKeown, J. The influence of contrary information and mitigating factors on audit opinion decisions on bankrupt firms. Journal of Accounting Research, 35(2), 295 – 310.

[46] Obaidat, A. Accounting Information Qualitative Characteristics Gap: Evidence from Jordan. International Management Review, 3(2), 25–32. [47] Porter, B., Hatherly, D. J., & Simon, J. Principles of external auditing. Chichester: Wiley.

[48] Reed, D. Corporate governance reforms in developing countries. Journal of Business Ethics, 37(3), 223-247. [49] Salleh, K., & Jasmani, H. Audit Rotation and Audit Report: Empirical Evidence from Malaysian PLCs over the Period of Ten Years. Social and Behavioral Sciences, Volume 145, 40-50.

[50] Shockley, R. Perceptions of audit independence: A conceptual model. Journal of Accounting, Auditing & Finance, 5(2), 126–43. [51] Solomon, J., & Solomon, A. Corporate governance and accountability.

New York: John Wiley. Retrieved from [52] Sternberg, E.

Corporate governance: Accountability in the marketplace. London: Institute of Economic Affairs. [53] Sullivan, W. F., Zaccaro, T. A., Schneir, A. D., Janofsky, & Walker (2009). The SEC’ s View of Auditor Independence.

Bloomberg Finance L.P. Bloomberg Law Reports, 2(11), 2–4. [54] Taylor, M.

H., DeZoort, F. T., Munn, E., & Thomas, M.

A proposed framework emphasizing auditor reliability over auditor independence. Accounting Horizons, 17(3), 257–266. [55] Turley, S., & Zaman, M. Audit committee effectiveness: informal processes and behavioural effects. Accounting, Auditing & Accountability Journal, 20(5), 765–788. Retrievedfrom[56] Vanstraelen, A.

Impact of renewable long-term audit mandates on audit quality. European Accounting Review, 9(3), 419–442. Retrieved from[57] Wilson, T. & Grimlund, R.

An examination of the importance of an auditor’s reputation. Auditing: A Journal of Practice and Theory, 9(2), 43– 59. [58] Yang, Z., Rohrbach, K., & Chen, S.

The Impact of Standard Setting on Relevance and Reliability of Accounting Information: Lower of Cost or Market Accounting Reforms in China. Journal of International Financial Management and Accounting, 16(3), 194–228.