IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v11y2023i2p65-d1133665.html
   My bibliography  Save this article

Internal Control Managers’ Accounting Experiences on Audit Quality—Focus on ESG

Author

Listed:
  • Suyon Kim

    (Department of Accounting, College of Commerce, Jeonbuk National University, Jeonju 54896, Republic of Korea)

Abstract

The purpose of this research is to investigate whether internal control (IC) managers’ experience in accounting influences audit quality, employing a regression analysis by utilizing a novel dataset of Korean firms from 2018 to 2020. According to the findings, IC managers who have a deeper understanding of accounting or more expertise in the field have a positive impact on audit quality. Nuancing this link between the accounting-specific experiences of IC managers and audit quality, the study examines how ESG investment impacts the relationship between IC managers’ accounting-related experiences and audit quality. The result confirms that the negative effect of low ESG investment on a firm’s sustainability is reduced when IC managers are with strong accounting competency. In other words, in a circumstance in which a company’s audit risk is high due to insufficient ESG investments, IC managers’s high degree of accounting proficiency cope with audit risk to increase audit quality. Additionally, by analyzing a dataset recently obtained from Korea that assesses the level of accounting expertise possessed by IC managers, it has become evident that this experience plays a key role in the process of improving audit quality. These findings imply that policymakers’ and standard setters’ efforts to promote high-quality audits should be coordinated with IC managers’ accounting experiences.

Suggested Citation

  • Suyon Kim, 2023. "Internal Control Managers’ Accounting Experiences on Audit Quality—Focus on ESG," IJFS, MDPI, vol. 11(2), pages 1-14, April.
    • Handle: RePEc:gam:jijfss:v:11:y:2023:i:2:p:65-:d:1133665
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/11/2/65/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/11/2/65/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
    2. Jaehong Lee & Eunsoo Kim, 2021. "Would Overconfident CEOs Engage More in Environment, Social, and Governance Investments? With a Focus on Female Representation on Boards," Sustainability, MDPI, vol. 13(6), pages 1-16, March.
    3. Mark L. Defond & Jieying Zhang, 2014. "The Timeliness of the Bond Market Reaction to Bad Earnings News," Contemporary Accounting Research, John Wiley & Sons, vol. 31(3), pages 911-936, September.
    4. Duojiao Tan & Bilal & Simon Gao & Bushra Komal, 2020. "Impact of Carbon Emission Trading System Participation and Level of Internal Control on Quality of Carbon Emission Disclosures: Insights from Chinese State-Owned Electricity Companies," Sustainability, MDPI, vol. 12(5), pages 1-14, February.
    5. Okeefe, Tb & Simunic, Da & Stein, Mt, 1994. "The Production Of Audit Services - Evidence From A Major Public Accounting Firm," Journal of Accounting Research, Wiley Blackwell, vol. 32(2), pages 241-261.
    6. Il-Hang Shin & Ho-Young Lee & Hyun-Ah Lee & Myungsoo Son, 2017. "How does human resource investment in internal control affect audit reporting lag?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 24(1-2), pages 195-215, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rita Lamboglia & Daniela Mancini, 2021. "The relationship between auditors’ human capital attributes and the assessment of the control environment," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(4), pages 1211-1239, December.
    2. Christensen, Brant E. & Newton, Nathan J. & Wilkins, Michael S., 2021. "How do team workloads and team staffing affect the audit? Archival evidence from U.S. audits," Accounting, Organizations and Society, Elsevier, vol. 92(C).
    3. Knechel, W. Robert & Thomas, Edward & Driskill, Matthew, 2020. "Understanding financial auditing from a service perspective," Accounting, Organizations and Society, Elsevier, vol. 81(C).
    4. Rajib Doogar & Padmakumar Sivadasan & Ira Solomon, 2010. "The Regulation of Public Company Auditing: Evidence from the Transition to AS5," Journal of Accounting Research, Wiley Blackwell, vol. 48(4), pages 795-814, September.
    5. Brähler, Gernot & Brune, Philipp & Göttsche, Max, 2011. "Determinanten der Prüfungshonorare von Unternehmen aus der Medienbranche - eine empirische Untersuchung unter Einsatz einer Regressionsanalyse," Ilmenauer Schriften zur Betriebswirtschaftslehre, Technische Universität Ilmenau, Institut für Betriebswirtschaftslehre, volume 9, number 92011.
    6. Tharindra Ranasinghe & Lin Yi & Ling Zhou, 2023. "Do auditors charge a client business risk premium? Evidence from audit fees and derivative hedging in the U.S. oil and gas industry," Review of Accounting Studies, Springer, vol. 28(2), pages 1107-1139, June.
    7. Kenneth J. Reichelt & Dechun Wang, 2010. "National and Office‐Specific Measures of Auditor Industry Expertise and Effects on Audit Quality," Journal of Accounting Research, Wiley Blackwell, vol. 48(3), pages 647-686, June.
    8. Blankley, Alan I. & Hong, Keejae P. & Kerr, David & Wiggins, Casper E., 2014. "A note on the effect of PCAOB inspections on the audit quality of triennial CPA firms," Research in Accounting Regulation, Elsevier, vol. 26(2), pages 212-216.
    9. Tobias Svanstr�m, 2013. "Non-audit Services and Audit Quality: Evidence from Private Firms," European Accounting Review, Taylor & Francis Journals, vol. 22(2), pages 337-366, June.
    10. Nitai Chandra Debnath & Suman Paul Chowdhury & Safaeduzzaman Khan, 2022. "The impact of audit quality on real earnings management: evidence from Bangladesh," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(2), pages 218-231, June.
    11. Rustam, Sehrish & Rashid, Kashif & Zaman, Khalid, 2013. "The relationship between audit committees, compensation incentives and corporate audit fees in Pakistan," Economic Modelling, Elsevier, vol. 31(C), pages 697-716.
    12. Scott Whisenant & Srinivasan Sankaraguruswamy & K. Raghunandan, 2003. "Evidence on the Joint Determination of Audit and Non‐Audit Fees," Journal of Accounting Research, Wiley Blackwell, vol. 41(4), pages 721-744, September.
    13. Masaki KUSANO & Yoshihiro SAKUMA, 2019. "Recognition versus Disclosure and Audit Fees and Costs:Evidence from Pension Accounting in Japan," Discussion papers e-19-007, Graduate School of Economics , Kyoto University.
    14. Jorien L. Pruijssers & Pursey P. M. A. R. Heugens & J. Oosterhout, 2020. "Winning at a Losing Game? Side-Effects of Perceived Tournament Promotion Incentives in Audit Firms," Journal of Business Ethics, Springer, vol. 162(1), pages 149-167, February.
    15. Karen M. Y. Lai & Andriyawan Sasmita & Ferdinand A. Gul & Yee Boon Foo & Marion Hutchinson, 2018. "Busy Auditors, Ethical Behavior, and Discretionary Accruals Quality in Malaysia," Journal of Business Ethics, Springer, vol. 150(4), pages 1187-1198, July.
    16. Eghosa Inneh & Isaiah Omotayo FAKUNLE & Romoke Rafiat BUSARI & Ibrahim Gbenga OLATUNJI, 2022. "Audit Characteristics and Financial Reporting Timeliness of Nigerian Listed Non-Financial Institution," Journal of Economics and Behavioral Studies, AMH International, vol. 14(2), pages 13-25.
    17. Mihai Carp & Costel Istrate, 2021. "Audit Quality under Influences of Audit Firm and Auditee Characteristics: Evidence from the Romanian Regulated Market," Sustainability, MDPI, vol. 13(12), pages 1-16, June.
    18. Corbella, Silvano & Florio, Cristina & Gotti, Giorgio & Mastrolia, Stacy A., 2015. "Audit firm rotation, audit fees and audit quality: The experience of Italian public companies," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 25(C), pages 46-66.
    19. Curtis Hall & J. Scott Judd & Jayanthi Sunder, 2023. "Auditor conservatism, audit quality, and real consequences for clients," Review of Accounting Studies, Springer, vol. 28(2), pages 689-725, June.
    20. Caramanis, Constantinos & Lennox, Clive, 2008. "Audit effort and earnings management," Journal of Accounting and Economics, Elsevier, vol. 45(1), pages 116-138, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:11:y:2023:i:2:p:65-:d:1133665. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.