Financial Auditor’s Reaction to the Challenges of the Economic Crisis

Author:Associate Prof. Ovidiu-Constantin BUNGET, Ph. D.; Associate Prof. Rodica Gabriela BLIDIȘEL, Ph. D.; Lecturer Alin Constantin DUMITRESCU, Ph. D.; Raluca DEMIAN

JEL:M42

DOI:

Keywords:auditor behavior, audit risk, financial-economic crisis, the audit fee

Abstract:
This paper sets out to investigate if changes in the economic climate can impact auditor’s perception on the consequences of expressing an inadequate opinion, influencing him in changing his behavior in carrying out audit work.\r\nBy using a questionnaire to interrogate 31 auditors, this paper’s results emphasize how auditors respond to a specific change in the environment, like the economic crisis, that leads to an increase of the audit risk and, consequently, of the audit report user’s expectations to implement sufficient and appropriate audit procedures to restrict audit risk to an acceptable level. The paper reveals that, even though an additional effort was necessary, auditors decreased audit fees during the crisis, because the audit market became more competitive. The paper also provides relevant information regarding auditor’s assessment of going concern, showing that the downturn has led to an increase in the number of modified opinions, because audit clients were facing financial challenges.\r\n

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