Abstract
| Original language | English |
|---|---|
| Pages (from-to) | 282 - 294 |
| Number of pages | 13 |
| Journal | International Journal of Auditing |
| Volume | 19 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2015 |
Cite this
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Principles-based versus rules-based auditing standards: The effect of the transition from AS2 to AS5. / Sin, Fang Yun; Moroney, Robyn Ann; Strydom, Maria.
In: International Journal of Auditing, Vol. 19, No. 3, 2015, p. 282 - 294.Research output: Contribution to journal › Article › Research › peer-review
TY - JOUR
T1 - Principles-based versus rules-based auditing standards: The effect of the transition from AS2 to AS5
AU - Sin, Fang Yun
AU - Moroney, Robyn Ann
AU - Strydom, Maria
PY - 2015
Y1 - 2015
N2 - The transition from a rules-based auditing standard (AS2) to a principles-based auditing standard (AS5) provides a context to assess how such a change impacts audit outcomes. Under a rules-based auditing standard, audit processes are relatively uniform, unscaleable and include significant redundancy. Under a principles-based auditing standard, audit effort can be directed to where risk is greatest; audits are scalable and can be customized. We find that the post-SOX shedding of risky clients by the Big 4 meant that non-Big 4 clients were more likely than Big 4 clients to disclose material internal control weaknesses (MICWs) when assured under AS2. This gap narrowed significantly following the transition to AS5, when risk-based customized audits were possible which benefited Big 4 firms to a greater extent than non-Big 4 firms.
AB - The transition from a rules-based auditing standard (AS2) to a principles-based auditing standard (AS5) provides a context to assess how such a change impacts audit outcomes. Under a rules-based auditing standard, audit processes are relatively uniform, unscaleable and include significant redundancy. Under a principles-based auditing standard, audit effort can be directed to where risk is greatest; audits are scalable and can be customized. We find that the post-SOX shedding of risky clients by the Big 4 meant that non-Big 4 clients were more likely than Big 4 clients to disclose material internal control weaknesses (MICWs) when assured under AS2. This gap narrowed significantly following the transition to AS5, when risk-based customized audits were possible which benefited Big 4 firms to a greater extent than non-Big 4 firms.
U2 - 10.1111/ijau.12045
DO - 10.1111/ijau.12045
M3 - Article
VL - 19
SP - 282
EP - 294
JO - International Journal of Auditing
JF - International Journal of Auditing
SN - 1090-6738
IS - 3
ER -