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Nature of Audit and Demand for Audit
[Podstata auditu a poptávka po auditu]

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  • Michal Bobek

Abstract

The article analyses the purpose of audit in the current market economy. The article focuses on the demand for the audit. The article presents theories of audit (Policeman theory, Lending credibility theory, Theory of inspired confidence and Agency theory) and hypothesis of existence of audit (Monitoring hypothesis, Information hypothesis and Insurance hypothesis). These theories explain the reasons for the existence of the audit and its functions. These theories and hypothesis are compared with the factors determined as crucial for forming the demand for audit services. The article compares the results to the current development and repetitive misstatements in audited financial statements. The results and presents the reasons for that.

Suggested Citation

  • Michal Bobek, 2018. "Nature of Audit and Demand for Audit [Podstata auditu a poptávka po auditu]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2018(1), pages 5-23.
    • Handle: RePEc:prg:jnlcfu:v:2018:y:2018:i:1:id:507:p:5-23
    DOI: 10.18267/j.cfuc.507
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    References listed on IDEAS

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    3. Glover, SM, 1997. "The influence of time pressure and accountability on auditors' processing of nondiagnostic information," Journal of Accounting Research, Wiley Blackwell, vol. 35(2), pages 213-226.
    4. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    5. Ting Sun & Michael Alles & Miklos A. Vasarhelyi, 2015. "Adopting continuous auditing: A cross-sectional comparison between China and the United States," Managerial Auditing Journal, Emerald Group Publishing, vol. 30(2), pages 176-204, February.
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    7. Clive S. Lennox, 1999. "Audit Quality and Auditor Size: An Evaluation of Reputation and Deep Pockets Hypotheses," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(7‐8), pages 779-805, September.
    8. Fama, Eugene F & Laffer, Arthur B, 1971. "Information and Capital Markets," The Journal of Business, University of Chicago Press, vol. 44(3), pages 289-298, July.
    9. Tan, Ht, 1995. "Effects Of Expectations, Prior Involvement, And Review Awareness On Memory For Audit Evidence And Judgment," Journal of Accounting Research, Wiley Blackwell, vol. 33(1), pages 113-135.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Audit; Demand for audit; Agency theory; Poptávka po auditu; Teorie zastoupení;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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