The Mediation Effect of Audit Quality on the Relationship Between Auditor-Client Contracting Features and the Reliability of Financial Reports in Yemen

Afif A. Almasani; Dr. S.M. Ferdous Azam, Sohail Ahmed, Siti Khalidah Binti MD Yusoff

Abstract: The main purpose of this research is to investigate the direct and indirect association between the independent variables auditor-client contracting features (audit firm rotation and audit fees), the mediating variable which is an audit quality and dependent variable is the reliability of financial reports. The main data of this study is collected by survey method. The convenient sampling method is used to collect data. In addition, the respondents of this research are 285 of Yemeni Certified Public Accountants. For the purpose of analyzing, Structural Equation Modeling SEM has been employed through Smart PLS software and SPSS has been used to obtain the descriptive data. The findings of this research revealed that the relationship between the fees of audit and audit firm rotation with audit quality is positively significant. Meanwhile, indicated a positive significant association with the reliability of financial reports. Furthermore, the results disclose a positive significant relationship between the audit quality and the reliability of financial reports. Finally, the results have also confirmed that the audit quality has positively mediated relationship between the fees of audit firm, audit firm rotation; and the reliability of financial reports. The main contribution is a depth examination of the reliability of financial reports and providing an understanding of the role played by audit fees, auditor rotation on audit quality in Yemen.

FULL TEXT PDF 1-12 ] DOI: 10.30566/ijo-bs/2019.109

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