An analysis of the influences and pressures in collecting sufficient audit evidence

Abstract

Purpose: This dissertation seeks to collect a first-hand account of auditors’ determination of sufficient appropriate audit evidence within the Maltese auditing profession. Therefore, the objective of this study is to (i) identify which stopping rule or a mix of stopping rules are used in auditors’ audit evidence sufficiency judgements and (ii) to analyse the perceptions of Maltese auditors on the influence of several personal, task, and environmental factors on auditors’ audit evidence sufficiency judgements. Design: This study adopted a qualitative approach to allow an in-depth analysis of the topic under investigation. The findings arising from this study through semistructured interviews are based on the observations of sixteen auditors occupying different job positions within Big Four, mid-tier, and small practices in Malta. Findings: This study indicated that auditors make use of all stopping rules in determining that sufficient audit evidence has been collected. The magnitude threshold rule was favoured in easier scenarios, whereas in complex scenarios auditors resorted to the representational and propositional stability rules. Furthermore, this study determined that all personal, task, and environmental factors analysed influenced auditors’ audit evidence sufficiency, however not all factors were equally influential. It was observed that the most significant influencing factors are auditors’ knowledge and experience, use of decision aids, fraud risk, time budget pressure and accountability. Conclusions: It is of paramount importance that auditors collect sufficient appropriate audit evidence prior to issuing the audit opinion. This will safeguard the integrity of the local auditing profession. However, to achieve this, the threats that are hindering auditors from exercising quality audit evidence sufficiency judgements and resultantly, terminating the search for audit evidence prematurely need to be addressed. Value: This is the first study to be carried out in Malta analysing how auditors determine when sufficient audit evidence is collected, and which factors influence such a determination. Therefore, this study unveils original and valuable information. Regulators and audit firms can use this information to foster the right environment as well as instituting policies and procedures for auditors to exercise proper audit evidence sufficiency judgements. Furthermore, audit firms can refer to the data presented here when organising training courses.