Recent trends in joint audits and their relevance to Maltese Companies : an analysis

Abstract

Purpose: The study aims to determine whether joint audits are commonly adopted within the Maltese auditing profession and to assess the opinions of the interviewees regarding the potential introduction of mandatory joint audits. The study also examines the potential advantages and drawbacks, as well as the effects of joint audits on certain factors such as audit quality, audit costs and audit market concentration. Design: Objectives were achieved through a comprehensive review of both local and international literature, complemented by twenty-five semi-structured interviews and one respondent providing their feedback in a questionnaire format, resulting in a total of twenty-six. Interviews were conducted with audit firms, internal auditors, and CFOs. Qualitative data was obtained from the open-ended questions and were subject to thematic analysis to further yield a thorough assessment of the findings. Findings: Findings indicate that joint auditing in Malta is not so common amongst different audit firms and companies. Diverse perspectives have emerged from the conducted interviews regarding audit quality, audit costs and audit market concentration, especially between Big-4 and medium-sized audit firms. Disparate viewpoints also emerged regarding the report’s credibility and accuracy and the possibility of introducing mandatory joint audits. Conclusions: This study concludes that joint audits are perceived differently by various stakeholders. The majority of Medium-sized audit firms believe that the benefits of joint audits would eventually outweigh the drawbacks, whilst Big-4 firms hold a contrasting viewpoint. Moreover, until no regulations are imposed, joint audit practises within the local market would probably be rare. Value: Throughout this study, the author aims to provide insights into the different perspectives that auditors and CFOs have on joint auditing. There exists a significant divergence of opinion when it comes to joint audits between different-sized audit firms, and clearly, finding a solution could enhance healthy competition in the local audit market.