Mishiel Said Suwaidan

External auditors' reliance on internal auditors and its impact on audit fees: An empirical investigation

Purpose - The purpose of this paper is to investigate the perceptions of a sample of Jordanian external auditors for the importance given by them to a number of factors which may influence their reliance on an internal auditor during their external audit. The paper also examines the relationship, if any, between the degree of reliance on the internal and external audit fees. Design/methodology/approach - A sample of 100 external auditors is employed to investigate the perceptions of external auditors as to the importance given by them to a number of factors which may influence their reliance on an internal auditor during their external audit. Also, a cross-sectional multiple regression analysis is conducted to examine the impact of this reliance on audit fees. Findings - The results of the paper indicate that external auditors in Jordan consider the objectivity, competence and work performance of internal auditors as very important factors affecting their reliance decisions. It is found that “objectivity” had the highest mean score (4.353), followed by “competence” (4.188) and “work performance” (4.156). The results of the multiple regression analysis indicated that the size of the audited company is the most important variable in explaining the variation in audit fees paid by the sample companies. As for the reliance variable, it is found insignificant. Originality/value - It is believed that no previous research has examined these issues on the basis of Jordanian data. Thus, the current paper aims to extend the literature on these topics on a developing country with different characteristics. The results of this paper will be of concern to companies in their attempt to reduce external audit fees. Audit firms may also benefit from the paper in terms of reducing the efforts of external auditors due to the understanding and cooperation between external and internal auditors.

Social responsibility disclosure in corporate annual reports: evidence from the Gulf Cooperation Council countries

The objectives of this study are two-fold: 1) to evaluate social responsibility disclosure in the annual reports of manufacturing companies listed in the financial markets of the Gulf Cooperation Council (GCC); 2) to examine the impact of a number of company variables on the extent of disclosure of this information. To achieve these objectives, a disclosure index was developed and applied to the annual reports of 60 manufacturing companies listed in the financial markets of the six countries included in the GCC. The results indicate that, on average, a company disclosed about 26% of the 45 items included in the index with only eight companies receiving disclosure scores of 40% or more. The results of regression analysis revealed that the size of the company and the auditing firm (international or local) are major variables in explaining variation in the extent of social responsibility disclosure between the sample companies.