The Effect of Audit Renewal Strategy and Best Audit Practice on Audit Performance: An Empirical Investigation of Certified Public Accountants (CPAs) in Thailand
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Published:
Nov 7, 2018
Keywords:
Audit Renewal Strategy Best Audit Practice Audit Performance Transformational Climate Audit Experience Usefulness
Main Article Content
Abstract
The purpose of this study is to examine the effect of audit renewal strategy and best audit practice on audit performance via the moderating influences which include transformational climate and audit experience usefulness. Audit renewal strategy is recognized as the auditor’s capability of transforms; method, concept, process, and learning to improve a competitive advantage permanently and promote audit performance. It is the key procedure of substantial transformation with respect to the main organizational characteristic of sustaining a firm’s a long-term prospects and survivability. Likewise, audit renewal strategy has a positive impact on audit performance based on dynamic capabilities theory. Data were collected from 391 CPAs in Thailand by questionnaire mail survey. The statistic used to analyze is the ordinary least square regression. The results of OLS regression indicates that audit renewal strategy positively affects best audit practice and audit performance. Besides, the findings also indicate that transformational climate positively moderates the relationships between audit renewal strategy and best audit practice. The best audit practice significantly influences audit performance. Especially, the result shows that audit tenure has a negative influence on audit performance. It can be interpreted that the audit tenure in the context of Thailand reduces audit performance because new auditor may be lack experience and knowledge of the client’s firm compared with the old auditor. Finally, theoretical and managerial contributions, conclusion, and suggestions for future research are discussed as well.
Article Details
How to Cite
Jiraphatthanaponsin, T., Boonlua, S., & Janjarasjit, S. (2018). The Effect of Audit Renewal Strategy and Best Audit Practice on Audit Performance: An Empirical Investigation of Certified Public Accountants (CPAs) in Thailand. JOURNAL OF SOUTHERN TECHNOLOGY, 11(2), 197–209. Retrieved from https://so04.tci-thaijo.org/index.php/journal_sct/article/view/103244
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References
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Carpenter, D. (2007). Audit team brainstorming, fraud risk detection identification, and fraud risk detections assessments: implications of SAS No.99. The Accounting Review, 82(5), 1119-1138.
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Lissack, M R., & Gunz, H. P. (1999). Managing Complexity in Organizations: A View in Many Directions, Quorum Books Publication.
McHugh, M., & Paul, P. (2012). Audit firm changes post Sarbanes Oxley: impact on the market for public company audits. The CPA Journal, 82, 24-31.
Meschi, P. X., & Metais, E. (2006). International acquisition performance and experience:
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Messier, M. B., & Eilifsen, A. (2005). A Review and Integration of Empirical Research on Materiality: Two Decades Later Auditing. A Journal of Practice & Theory, 24(2), 153–187.
Mgbame, C. O., Izedonmi, F. I. O., & Enofe, A. (2012). Gender factor in audit quality: Evidence from Nigeria. Research Journal of Finance and Accounting, 3(4), 81-88.
Nunally, J., & Bernstein, I. H. (1994). Psychometric Theory. (3rd ed.). New York, McGraw-Hill.
Obaidat, A. N. (2007). Accounting qualitative characteristics gap: evidence from Jordan. International Management Review, 3(2), 26-32.
Peecher, M. E., Schwartz, R., & Solomon, I. (2007). It’s all about quality: perspectives on strategic-systems auditing. Accounting, Organizations and Society, 32(4), 463-486.
Robson, K., Humphrey, C., Khalifa, R., & Jones, J. (2007). Transforming audit technologies: business risk audit methodologies and the audit field accounting. Organizations and Society, 32, 409-438.
Schultz, J. J., Bierstaker, J. L., & O’Donnell, E. (2010). Integrating business risk into auditor judgment about the risk of material misstatement: the influence of a strategic-systems-audit approach. Accounting, Organizations and Society, 35, 238-251.
Solomon, I., & Trotman, K. T. (2003). Experimental judgment and decision research in auditing: the first 25 years of AOS. Accounting Organizations and Society, 28, 395-412.
Verdu-Jover, A. J., Llorens-Montes, F. S., & Garcia-Morales, V. J. (2006). Environment-flexibility coalignment and performance: An analysis in large versus small firms. Journal of Small Business Management, 44, 334-349.
Wangcharoendate, S., & Ussahawanitchakit, P. (2010). Best audit practices of caps in Thailand: effects on audit independence, judgment, performance and credibility. Journal of International Finance and Economics, 12(4), 49-60.
Yamane, T. (1967). Statistics: An Introductory Analysis, 2nd ed. New York: Harper
Agarwal, R., & Helfat, C. E. (2009). Strategic renewal of organizations. Organization Science, 20,
281-293.
Armstrong, J. S., & Overton, T. S. (1977). Estimating non-response bias in mail surveys. Journal of Marketing Research, 14(3), 396-402.
Aulakh, P. S., Kotabe, M., & Teegen, H. (2000). Export strategies and performance of firms from emerging economies: evidence from Brazil, Chile, and Mexico. Academy of Management Journal, 43(3), 342-361.
Blokdijk, J. H. (2004). Tests of control in the audit risk model: effective. International Journal of Auditing, 8, 185-194.
Burchell, S., Colin, C., Antony, H., John, H., & Jenine, N. (1980). The roles of accounting in organizations and society. Accounting Organizations and Society, 1(4), 5-27.
Carnaghan, C. (2006). Business process modeling approaches in the context of process level audit risk assessment: an analysis and comparison. International Journal of Accounting Information Systems, 7, 170-204.
Carpenter, B., & Dirsmith, M. (1993). Sampling and the abstraction of knowledge in the auditing profession: an extended institutional theory perspective. Accounting, Organizations and Society, 18(1), 41-63.
Carpenter, D. (2007). Audit team brainstorming, fraud risk detection identification, and fraud risk detections assessments: implications of SAS No.99. The Accounting Review, 82(5), 1119-1138.
Chakravarthy, B. S., & Doz, Y. (1992). Strategy process research: focusing on corporate self-renewal. Strategic Management Journal, 13, 5-14.
Chung, J., & Monroe, G. S. (2001). Gender differences in information processing: an empirical test of the hypothesis-confirming strategy in an audit context. Accounting and Finance, 38 (2), 265–279.
Cohen, J., & Kida, T. (1989). The impact of analytical review results, internal control reliability and experience on auditors’ use of analytical review. Journal of Accounting Research (Autumn), 2(2), 63-76.
Dixon, R., Mousa, G. A., & Woodhead, A. D. (2004). The necessary characteristics of environmental auditors: a review of the contribution of the financial auditing profession. Accounting Forum, 28(2), 119-138.
Duncan, R. B. (1972). Characteristics of organizational environments and perceived environmental uncertainty. Administrative Science Quarterly, 17(3), 313-327.
Federation of Accounting Professions of Thailand (FAP). (2014). ASEAN Economic Community; AEC, Retraeved March 10, https://www.fap.or.th/index.php?
Flier, B., Van Den Bosch, F. A. J., & Volberda, H. W. (2003). Co-evolution in strategic renewal behavior of British, Dutch and French financial incumbents: interaction of environmental selection, institutional effects and managerial intentionality. Journal of Management Studies, 40, 2163-2187.
Floyd, S. W., & Wooldridge, B. (2000). Building Strategy from the Middle: Reconceptualizing Strategy Process. Thousand Oaks, CA, SAGE.
Francis, J. R. (2011). A framework for understanding and researching audit quality. Auditing, A Journal of Practice & Theory, 30(2), 125–152.
Garavan, T. (2007). A Strategic perspective on human resource development. Advances in Developing Human Resource, 9(1), 11-30.
Gomez, G. D. (2003). The usefulness of the audit report in investments and financial decision. Managerial Auditing Journal, 18(6), 549-559.
Grewal, R., & Tansuhaj, P. (2001). Building organizational capabilities for managing economic crisis: the role of market orientation and strategic flexibility. Journal of Marketing, 65, 67- 80.
Grewal, R., & Tansuhaj, P. (2001). Building organizational capabilities for managing economic crisis: the role of market orientation and strategic flexibility. Journal of Marketing, 65, 67- 80.
Gul, F. A., Fung, S. Y. K., & Jaggi, B. (2009). Earnings quality: some evidence on the role of auditor tenure and auditors’ industry expertise. Journal of Accounting and Economics, 47(3), 265–287.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate Data Analysis. 7th ed. Prentice Hall, Upper Saddle River, New Jersey.
Huff, J. O., Huff, A. S., & Thomas, H. (1992). Strategic renewal and the interaction of cumulative stress and inertia. Strategic Management Journal, 13, 55-75.
Hui, L. T., & Fatt, Q. K. (2007). Strategic organizational conditions for risks reduction and earnings management: a combined strategy and auditing paradigm. Accounting Forum, 31, 179-201.
Joshi, M., Ravi, K., & Stephen, J. P. (2003). Alignment of strategic priorities and performance: an integration of operations and strategic management perspectives. Journal of Operations Management, 21(3), 353-369.
Kaplan, S. E., O'Donnell, E. F., & Arel, B. M. (2008). The influence of auditor experience on the persuasiveness of information provided by management. Auditing, A Journal of Practice & Theory, 27(1), 67-83.
Khalifa, R., Sharma, N., Humphrey, C., & Robson, K. (2007). Discourse and audit change: Transformations in methodology in the professional audit field. Accounting, Auditing and Accountability Journal, 20(6), 825-854.
Lacetera, N., Cockburn, I. M., & Henderson, R. (2004). “Do Firms Change Capabilities by Hiring New People?”, A Study of the Adoption of Science-Based Drug Discovery. In Baum, J.A.C and McGahan, A. M. (Eds.), Business Strategy over the Industry Lifecycle: Advances in Strategic Management, 21. Boston, MA, Elsevier.
Lissack, M R., & Gunz, H. P. (1999). Managing Complexity in Organizations: A View in Many Directions, Quorum Books Publication.
McHugh, M., & Paul, P. (2012). Audit firm changes post Sarbanes Oxley: impact on the market for public company audits. The CPA Journal, 82, 24-31.
Meschi, P. X., & Metais, E. (2006). International acquisition performance and experience:
a resource-based view evidence from French acquisitions in the United States (1988-2004). Journal of International Management, 12, 430-448.
Messier, M. B., & Eilifsen, A. (2005). A Review and Integration of Empirical Research on Materiality: Two Decades Later Auditing. A Journal of Practice & Theory, 24(2), 153–187.
Mgbame, C. O., Izedonmi, F. I. O., & Enofe, A. (2012). Gender factor in audit quality: Evidence from Nigeria. Research Journal of Finance and Accounting, 3(4), 81-88.
Nunally, J., & Bernstein, I. H. (1994). Psychometric Theory. (3rd ed.). New York, McGraw-Hill.
Obaidat, A. N. (2007). Accounting qualitative characteristics gap: evidence from Jordan. International Management Review, 3(2), 26-32.
Peecher, M. E., Schwartz, R., & Solomon, I. (2007). It’s all about quality: perspectives on strategic-systems auditing. Accounting, Organizations and Society, 32(4), 463-486.
Robson, K., Humphrey, C., Khalifa, R., & Jones, J. (2007). Transforming audit technologies: business risk audit methodologies and the audit field accounting. Organizations and Society, 32, 409-438.
Schultz, J. J., Bierstaker, J. L., & O’Donnell, E. (2010). Integrating business risk into auditor judgment about the risk of material misstatement: the influence of a strategic-systems-audit approach. Accounting, Organizations and Society, 35, 238-251.
Solomon, I., & Trotman, K. T. (2003). Experimental judgment and decision research in auditing: the first 25 years of AOS. Accounting Organizations and Society, 28, 395-412.
Verdu-Jover, A. J., Llorens-Montes, F. S., & Garcia-Morales, V. J. (2006). Environment-flexibility coalignment and performance: An analysis in large versus small firms. Journal of Small Business Management, 44, 334-349.
Wangcharoendate, S., & Ussahawanitchakit, P. (2010). Best audit practices of caps in Thailand: effects on audit independence, judgment, performance and credibility. Journal of International Finance and Economics, 12(4), 49-60.
Yamane, T. (1967). Statistics: An Introductory Analysis, 2nd ed. New York: Harper