Journal of Accounting and Management Information Systems (JAMIS)

The dynamics of audit market and financial reporting under International Financial Reporting Standards: the case of Romanian listed companies

Vol. 19, No. 1/2020 ,   p139..157

Marta Tache

Keywords:   IFRS, audit market, reporting, Big 4, audit opinion

Abstract:   Research question: The purpose of this article is to analyze the dynamics of audit market related to the audit services and financial reporting in accordance with International Financial Reporting Standards. Motivation: Although there is a solid foundation of rules and principles, the practical controversy over the rule of law, the features of the financial market, the characteristics of the accounting regulation process and the ability to adapt the environment seem to be endless. A credibility benchmark is made by the auditor's opinion that increases the reliability of financial statements, thus providing investors with assurance about the entity's independence. In this context, a strong maturation of Romanian market seems to improve the institutional context under IFRS adoption and an increased number of companies audited by Big 4 reveals a solid audit market. Idea: The main purpose of the research is to investigate the actual circumstances regarding International Financial Reporting Standards and the changes on audit market regulated by International Standard on Auditing (IAS), regarding Romanian listed companies. The in-depth knowledge of these elements makes it possible to highlight the existing achievements, thus marking a bond between IFRS and IAS, as two congruent standards. Data: In the present survey, a sample of 20 companies listed on the Bucharest Stock Exchange, Premium Shares, during 2016-2018 has been analyzed. Tools: The study implies a quantitative model based on Whitney test for verifying the association between the type of auditor and the audit opinion in the context of IFRS. Findings: The result indicates that the majority of firms is audited by Big 4 and a change of audit firm is not directly associated to the change of audit opinion after the adoption of IFRS became mandatory. In the same time, the present survey shows a continuous improvement of the audit market under IFRS adoption.