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An Empirical Investigation of Determinants of Audit Reports in the UK
Author(s) -
Ireland Jennifer C.
Publication year - 2003
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.05417
Subject(s) - audit , accounting , business , multinomial logistic regression , joint audit , audit evidence , internal audit , scope (computer science) , machine learning , computer science , programming language
Prior studies of audit reporting in the UK only analyse either very small, private companies, or large listed companies. In addition, these studies focus on narrowly defined types of modified audit reports, respectively the ‘small company’ audit qualification, and going‐concern related modifications. In contrast, this paper employs a multinomial logit model to analyse the determinants of both going‐concern and non going‐concern related audit modifications, including modifications for disagreements and limitations on scope. Furthermore, this paper analyses reports over a wide range of both private and public (listed and non‐listed) companies. The determinants of audit reports are shown to differ between different types of audit modification. In addition, subsidiary companies hiring large auditors are significantly less likely to receive non going‐concern related modifications, whereas non‐subsidiary companies hiring large auditors are significantly more likely to receive going‐concern related modifications.