Essays on the Impact of Client Personnel and Regulation on Auditing

This dissertation aims to increase our understanding of how regulatory measures and client firm employees affect financial statement auditing. The chapters in this dissertation exploit two elements that are unique to statutory reporting and auditing in Belgium. First, all firms that are subject to filing statutory accounts with the Belgian National Bank are legally obliged to file a detailed social balance on employment data, alongside their financial statements, making the Belgian setting unique to study employee-related issues. Second, the Belgian regulator mandated quantitative restrictions on the amount of non-audit services fees statutory auditors are allowed to earn since 2003 offering an opportunity to assess the effectiveness of contemporary regulatory measures. In the first chapter, we investigate whether client firms' personnel problems raise concerns for auditors related to financial statement errors. We empirically examine whether auditors exert greater effort in response to personnel problems related to employee turnover in client firms. The second chapter examines whether auditor-provided non-audit services impair auditor independence when non-audit services are quantitatively restricted by a fee-cap. In the third and final chapter, we investigate whether client employee training improves the client's input into the audit and reducing auditor effort.

Jaar van publicatie:2020