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The application of business risk audit methodology within non-Big-4 firms

Imad Kutum (Kutum & Associates, Mississauga, Canada)
Ian Fraser (Department of Accounting & Finance, University of Stirling, Stirling, UK)
Khaled Hussainey (Accounting & Finance Department, University of Plymouth, Plymouth, UK)

Journal of Financial Reporting and Accounting

ISSN: 1985-2517

Article publication date: 5 October 2015

993

Abstract

Purpose

This paper aims to explore the application of the business risk audit (BRA) approach within non-Big-4 audit firms in the USA, the UK and Canada. This paper focuses on the motivation for adopting this approach for non-Big-4 audit firms in the three countries, and the advantages, disadvantages and aftermath of applying this method.

Design/methodology/approach

A combination of qualitative and quantitative methods to obtain the data necessary to address the research questions was used.

Findings

It is found that non-Big-4 audit firms in the three countries have adopted BRA; their motivation was primarily to follow the standards in each country, and the general trend in the industry. The advantages identified are consistent with previous research; a direct benefit was noted for audit effectiveness and risk management for both clients and auditors. One major disadvantage of applying BRA is the cost burden to both the audit firm and their clients. Some of the interviewees claimed that this method is better suited to large firms and large audits.

Originality/value

This is an innovative study that addresses a contemporary auditing issue. The majority of the audit research studies concentrate on the big audit firm practices; this study is the first to examine the application of audit practices within smaller audit firms.

Keywords

Citation

Kutum, I., Fraser, I. and Hussainey, K. (2015), "The application of business risk audit methodology within non-Big-4 firms", Journal of Financial Reporting and Accounting, Vol. 13 No. 2, pp. 226-246. https://doi.org/10.1108/JFRA-03-2014-0015

Publisher

:

Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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