The Latvian Audit Services Market : Current Issues and Challenges

• Autorzy: Ludmila Rozgina
• Języki publikacji: EN

Abstrakty

EN

New EU rules on statutory audit reform were adopted by the Council of the EU in April 2014. The changes affect all areas of audit regulation, including market competition, auditor oversight, audit quality and application of standards, audit reporting, corporate governance related to auditors, auditor selection and auditor independence. The purpose of this study is to examine the current state and expected changes in the Latvian audit market within the context of EU audit reform. The research methods are respectively systematic, logical and comparative analysis, analysis of secondary data, as well as expert methods. The principal results of the study provide evidence of the high level of market concentration of Latvia's audit firms/networks, the dominant share of non-audit revenue in total revenue for the four biggest players on the market, the auditing oligopoly in the PIE market, the impact of EU audit reform on auditor- client relationships, and the activities of audit committees in the banking sector. The results of the study indicate that Latvia's audit firms are not fully transparent. Based on the findings and results of the study, the author proposes a set of recommendations aimed at making the Latvian audit market more transparent and less concentrated. (original abstract)

Słowa kluczowe

EN

Audit; Public interest entities; Legal regulations

PL

Audyt; Jednostki zainteresowania publicznego; Regulacje prawne

• Czasopismo: Forum Scientiae Oeconomia
• Rocznik: 2018
• Tom: 6
• Numer: nr 4 Surviving & Thriving in a Complex Business Environment
• Strony: 7--21

Twórcy

autor

Ludmila Rozgina

• The Institute of Research and International Symposiums "IRIS -ALKONA ", Riga, Latvia

Bibliografia

• Annual reports of Latvian audit firms, their associates, commercial banks and other PIEs. Available at: https://www.lursoft.lv/en/register-of-companies-annual-reports (accessed 2 December 2017).
• Antle, R., Gordon, E., Narayanamoorthy, G., Zhou, L. (2006), The joint determination of audit fees, non-audit fees, and abnormal accruals, Review of Quantitative Finance and Accounting, 27 (3): 235-266.
• Arel, B., Brody, R., Pany, K. (2005), Audit firm rotation and audit quality, The CPA Journal, January, 36-39.
• Association of Latvian Commercial Banks (2017) Quarterly report for the 4th quarter 2016, available at: https://www.lka.org.lv/wp-content /uploads/2017/12/Banku_statistika_www_12_2016-2.pdf (accessed 02.12.2017).
• Beck, P. J., Frecka, T. J., Solomon, I. (1988), An empirical analysis of the relationship between MAS involvement and auditor tenure, Journal of Accounting Literature, 7: 65-84.
• Bell, T.B., Causholli, M., Knechel, W.R. (2015), Audit firm tenure, non-audit services, and internal assessments of audit quality, Journal of Accounting Research, 53(3): 65-84.
• Burton, J.C., Roberts, W. (1967), A study of auditor changes, Journal of Accountancy, April, 31-36.
• Davis, L.R., Soo, B.S., Trompeter, G. M. (2009). Auditor tenure and the ability to meet or beat earnings forecasts, Contemporary Accounting Research, 26: 517-548.
• DeAngelo, L.E. (1981), Auditor independence, 'low balling' and disclosure regulation, Journal of Accounting and Economics, 3:113-127.
• Deloitte Audits Latvia, SIA (2017), Transparency report for the financial year 2016, available at: https://www2.deloitte.com/content /dam/Deloit te/ lv/Documents/audit/ Transparency_report_2017.pdf (accessed 2 December 2017).
• Deloitte Audits Latvia, SIA (2018), Transparency report for the financial year 2017, available at: https://www2.deloitte.com/content/dam/Deloitte/lv/Documents/audit/Transparancy report Deloitte Latvia 2017 ENG.pdf (accessed 2 May 2018).
• Ernst &Young Baltics, SIA (2016), Transparency report for the financial year 2016, available at: https://www.ey.com/Publication/vwLUAssets/Transparency_report_Latvia/$File/2016 Transparency Report - Latvia.pdf (accessed 02.12.2017).
• Ernst &Young Baltics, SIA (2017), Transparency report for the financial year 2017, available at: https://www.ey.com/Publication/vwLUAssets/ey-transparency-report-en/$FILE/ey-transparency-reporten.pdf (accessed 2 December 2017).
• European Commission (2006), Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (consolidated version), available at: https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:157:0087:0107:EN:PDF (accessed 2 December 2017).
• European Commission (2016), Reform of the EU statutory audit market, available at: http://europa.eu/rapid/press-release_MEMO-16-2244_en.pdf (accessed 2 December 2017).
• European Union (2014). Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0537&from=EN (accessed 2 December 2017).
• Financial and Capital Market Commission (2006), Regulation No 46 on preparation of the annual report and consolidated annual report of credit institutions, investment brokerage companies and investment management companies. Available in Latvian at: https://likumi.lv/ta/id/129249-kreditiestazu-ieguldijumubrokeru-sabiedribu-un-ieguldijumu-parvaldes-sabiedribu-gada-parskata-unkonsolideta-gada-parskata (accessed 28 June 2018).
• Financial and Capital Market Commission (2016), Reliability of the Latvian banking sector as a stable cooperation partner in the financial sector to be promoted, available at: http://www.fktk.lv/en/media-room/press-releases/6049-reliability-of-the-latvian-banking-sector-as-a-stable-cooperation-partner-in-the-financial-sector-to-bepromoted.html (accessed 28 June 2018).
• Knechel, W.R., Sharma, D.S. (2012), Auditor-provided non-audit services and audit effectiveness and efficiency: Evidence from pre- and post-SOX audit report lags, Auditing: A Journal of Practiceand Theory, 31(4): 85-114.
• Koh, K., Rajgopal, S., Srinivasan, S. (2013), Non-audit Services and Financial Reporting Quality: Evidence from 1978-1980, Review of Accounting Studies, 18 (1): 1-33.
• KPMG Baltics, SIA (2016), Transparency report for the financial year 2016, available at: https://assets.kpmg.com/content/dam/kpmg/lv/pdf/Transparency-Report-2016-EN.pdf (accessed 2 December 2017).
• KPMG Baltics, SIA (2018), Transparency report for the financial year 2017, available at: https://home.kpmg.com/lv/en/home/about/governance/transparencyreport.html (accessed 5 February 2018).
• Latvian Association of Certified Auditors (n.d.), Register of statutory auditors and audit firms, available at: http://eng.lzra.lv/revidenti-un-komercsabiedribas/zverinatu-revidentu-komercsabiedribu-registrs.html (accessed 2 December 2017).
• Nasdaq Baltic Stock Exchanges (2015). Review of Corporate Governance Practices in the Baltics in 2015, http://www.nasdaqbaltic.com/files/baltic/CG review/Review of CG practices in the Baltics in 2015.pdf (accessed 28 June 2018).
• Nasdaq Baltic (2016a), Market capitalization, available at: http://www.nasdaqbaltic.com/market/?pg=capital&lang=en (accessed 2 December 2017).
• Nasdaq Baltic (2016b), Issuers' documents, available at: http://www.nasdaqbaltic.com/ market/?pg=issuer_documents&issuer=&list[]=BABT&list[]=BAFB (accessed 2 December 2017).
• Pricewaterhouse Coopers, SIA (2016), Transparency report for the financial year 2016, available at: https://www.pwc.com/lv/en/about/transparency-report-fy-16-eng.pdf (accessed 2 December 2017).
• Pricewaterhouse Coopers, SIA (2017), Transparency report for the financial year 2017, available at: https://www.pwc.com/lv/lv/assets/TR_eng_2017.pdf (accessed 2 December 2017).
• The Audit Service Act of the Republic of Latvia, dated 03.05.2001, available at: https://likumi.lv/ta/en/en/id/2094 (accessed 2 March 2018).
• Velte, P., Loy, T. (2018), The impact of auditor rotation, audit firm rotation and non- audit services on earnings quality, audit quality and investor perceptions: A literature review, Journal of Governance & Regulation, 7(2): 74-90.

Identyfikatory

DOI

10.23762/FSO _VO L6_NO 4_1