Klaus Ruhnke

Nutzen von Abschlussprüfungen: Bezugsrahmen und Einordnung empirischer Studien

SummaryThe following study develops an object-oriented research framework to prove the usefulness of audits. This framework integrates various elements and constructs associated with the usefulness of audits. The relationship between the elements and constructs are shown. Next, the results of central empirical studies are assigned to respective categories. This integrative approach makes it possible, to draw up a systematic overview of the empirical usefulness research. On the one hand, this may stimulate new empirical research projects and, on the other hand, it should open up possibilities for more profound theoretical research projects.

Audit Materiality Disclosures and Credit Lending Decisions

This study examines credit lending decision adjustments of executive board members of German banks following different levels of auditor materiality threshold disclosures. Based on an experimental research design, we find that if a materiality threshold, which is in line with current audit standards and audit firm guidelines, is disclosed, credit lenders do not adjust a preliminary credit lending decision. However, if the disclosed audit materiality threshold increases, we are able to document adjustments to prior credit lending decisions. Furthermore, we show that the qualitative materiality factor investigated negatively affects prior credit lending decisions. The findings from this study contribute to the current debate about the audit reporting model. Our results suggest that disclosing audit materiality is beneficial to informed financial statements users because it offers the opportunity to make credit lending decisions that are in line with the materiality threshold applied by the auditor. Therefore, disclosing auditor’s materiality as a signal about the potential noise and bias in the audited financial statements contributes to efficient contracting.

Changing the Institutional Framework of Statutory Audit: Internal Stakeholders' Perceptions of the Associated Benefit and Costs

Abstract This paper analyses the expected benefits and costs associated with changes to the institutional framework of statutory audits. We focus on five changes: Mandatory external audit firm rotation, auditor appointment by an independent regulator, a general ban on providing non-audit services, a ban on providing non-audit services to audit clients, and mandatory joint audits. We survey supervisory board members and management representatives from German companies to analyse how these changes affect the following beneficial attributes: Client-specific expertise and knowledge, general professional competence and expertise, independence and professional scepticism, and reputation. Our results show that none of the proposed changes is expected to increase the benefit of audits. A ban on non-audit services to audit clients is perceived to have the least disadvantageous effect, followed by a general ban on non-audit services, mandatory external audit firm rotation, appointment by an independent regulator, and mandatory joint audits. Although all changes are expected to increase auditor independence and professional scepticism, this increase is offset by a decrease in other beneficial attributes, particularly client-specific expertise and knowledge. Compared to supervisory board members, management representatives anticipate significantly larger decreases in the benefit of audits and significantly larger increases in costs.