Audit risk and articulation errors from different cash flow disclosures: evidence from China

Yi Si, Meimanage Fonseka, Gao-liang Tian and Hua Feng

Asia-Pacific Journal of Accounting & Economics, 2019, vol. 26, issue 5, 555-576

Abstract: We investigate the effects of articulation errors on audit opinions and fees, and moderating effects of the auditor size and different litigation regimes on the relationships between articulation errors on audit opinions and fees in China. We find that auditors are more likely to issue modified audit opinions (MAOs) and charge higher audit fees from their clients with higher absolute articulation errors, especially for big auditors and in high litigation risk regime. We also find that auditors who do not issue MAOs to clients with abnormal articulation errors receive higher fees than auditors who do issue MAOs.

Date: 2019
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DOI: 10.1080/16081625.2017.1323651

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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