From audit efficiency to effectiveness : the statutory audit approach in differently-sized firms

Abstract

Purpose: The primary objective of the dissertation was to define and assess efficiency and effectiveness in differently-sized firms. For this study, differentlysized firms comprised of the Big 4 and International Mid-Tier firms. Moreover, the interrelationship of efficiency and effectiveness was analysed, and the potential for a trade-off between the two is determined. Finally, differences if any, between the Big 4 and International Mid-Tier firms were evaluated. Design: Semi-structured face-to-face interviews were conducted with audit officers of the respective companies within the population. Furthermore, the data obtained from the aforementioned was corroborated with open-ended e-mail interviews with auditors having experience with both the Big 4 and International Mid-Tier firms. Findings: The results of the study show that an efficient audit is considered to be one that is in line with the stipulated budgets whilst an effective audit correlates to giving an adequate opinion in the audit report. It was found that a high interrelationship exists between efficiency and effectiveness. Moreover, substantial differences are currently in place between the Big 4 and International Mid-Tier firm. Conclusion: The study concludes that both efficiency and effectiveness cohesively are given great importance in the local scenario, and consequently, the potential for a trade-off is not present. Implication: Audit officers will benefit from this dissertation as the definition of efficiency and effectiveness is clearly stipulated, and consequently, a benchmark can be set throughout the audit process. Moreover, hindering effects of both terms are highlighted together with initiatives for improvement of both efficiencies and effectiveness. Finally, the main differences between the Big 4 and International Mid-Tier firms were identified, and consequently, the latter can focus on the deficiencies in order to become competitive with the Big 4.