Ethical considerations on audit client acceptance and continuance : an analysis

Abstract

Purpose: The purpose of this study is to analyse the ethical issues encountered by Maltese audit practitioners at audit engagement stage together with the safeguards they have in place to help them in identifying and dealing with ethical issues at audit engagement stage. This study is also going to analyse the perspective on audit ethics taken by Maltese audit practitioners. These aspects will enable the researcher to analyse the ethical considerations taken by Maltese audit practitioners on audit client acceptance and continuance. Design: The objectives of this study were achieved through the use of ten semi-structured interviews with two large audit firms, six small/medium audit firms and two sole audit practitioners. The interview questions were based on preliminary research done prior to the study while allowing space for discussion. Findings: The study suggest that Maltese audit practitioners encounter most of the ethical issues related to their fundamental principles. This being said, the findings suggest that most of the Maltese audit practitioners have sufficient policies and procedures in place to identify and counter most of these ethical issues at audit engagement stage. This study also suggests that different Maltese audit practitioner categories tend to take different approaches in dealing with ethical dilemmas encountered at audit engagement stage. Conclusions: This study concludes that the most common ethical issues encountered by Maltese audit practitioners are related to audit fees, confidentiality and providing nonassurance services to assurance clients. Additionally, this study indicated that large audit firms have more detailed and formal procedures which help them in identifying and dealing with ethical issues at audit engagement stage when compared to small/medium audit firms and sole audit practitioners. This study also concludes that larger audit firms prefer more to follow a set of prescribed rules when they are encountered with an ethical dilemma at audit engagement stage, whilst other categories of audit practitioners consider other aspects of ethics. Value: This study yielded a number significant findings for the Maltese auditing profession on Ethical issues faced by Maltese audit practitioners at audit engagement stage together with how they identify and deal with them accordingly. This study also provides sufficient literature on ethical considerations taken by audit practitioners specifically at audit engagement stage.