Changes in standards, the economy and legislation since 2004 : implications for audit evidence

Abstract

The study analyzed changes since 2004, in auditing and accounting standards, in legislation and in the economy, that could have left implications on Maltese auditors in obtaining audit evidence. Moreover, the study took into account the implications that the proliferation of major technological areas left on audit evidence. A qualitative approach was adopted and in-depth interviews were conducted. The study reveals that there were changes in auditing and accounting standards that impacted on the type and/or amount of evidence. It also highlights that changes in accounting standards impacted more than the changes in auditing standards. The shift to fair value accounting affected the extent of evidence availability and evidence became more specialized and external. Moreover, due to the recent financial crisis the level of corroboration of evidence increased. As a result of the growing financial services sector, Big-Fours are increasingly adopting a combined approach in obtaining evidence. Also, the study identifies changes in Maltese legislation that impacted on the type and/or amount of evidence collated. Additionally, evidence obtained is becoming more electronic in nature. The study highly suggests that changes in standards, financial crisis, audit of fair values, impacted more the Big-Fours rather than non Big-Fours. Moreover, a number of recommendations and areas for further research have emerged from this study.