Salta al menu principale di navigazione Salta al contenuto principale Salta al piè di pagina del sito


N. 2 (2022)

Audit Implosion in European Affairs: How to Govern the Dimension and Development of the European Paying Agencies? The Argea Case: A Qualitative Research of Audit Loops and Restatement

22 luglio 2022


Accounting information has a strong political meaning, and cases of accounting failure demonstrate that the regulation and standard are far from saving accountants from making mistake and auditors from failing to recognize the errors. European financial report SoA (Statement of Assurance) offer guidelines for the proper depiction of an entity, but, in the settlement of the accounting practice, there is still plenty of room for the personal professional opinions of the prepares. So this paper use after a quantitative (descriptive and mathematical approach) a qualitative research: “Argea Case”, to discuss a modification of organization settings of an Italian paying agencies, it’s reflexes in efficiency and effectiveness of public spending. As a result, a high risk of losing accounting credibility affects all the participants in the preparation, reviewer and approval of the accounting data that are published and then restated; above all, it reduces the credibility of the paying agency releasing the official financial report affected by mistakes. All these aspects describe the audit implosion in European affairs and how future payments from EU policy are conditioned by the inability to formalize agreements and contracts between auditors, consultants and the government of paying agency; fueling uncertainty, risks and unpredictability events about the quality of  EU public spending.

Riferimenti bibliografici

  1. Abbot L.J., Parker S., Peters G.F. (2004). Audit committee characteristics and restatement. Auditing: A Journal of Practice and Theory, 23(1): 69-97. DOI: 10.2308/aud.2004.23.1.69.
  2. Abbot L.J., Parkers S., Peters G.F. and Raghunandan K. (2003a). The association between audit committee characteristics and audit fee. Auditing: a Journal of Practice and Theory, 22(2): 17-32. DOI: 10.2308/aud.2003.22.2.17.
  3. Akhigbe A., Mandura J. (2008). Industry signals relayed by corporate earnings restatement. Financial Review, 43(4): 569-589. DOI: 10.1111/j.1540-6288.2008.00203.x.
  4. Archambeault D.S., Dezoort F.T., Hermanson D.R. (2008). Audit Committee In-centive Compensation and Accounting Restatements. Contemporary Accounting Research, 25(4): 965-992. DOI: 10.1506/car.25.4.1.
  5. Arthaud-Day M.L., Certo S.T., Dalton C.M., Dalton D.R. (2006). A changing of the guard: executive and director turnover following corporate financial restatement. Academy of Management Journal, 49(6): 1119-1136. DOI: 10.5465/amj.2006.23478165.
  6. Beneish M.D. (1999). Incentives and penalties related to earnings overstatements that violate GAAP. Accounting Review, 74(4): 425-457.
  7. DOI: 10.2308/accr.1999.74.4.425.
  8. Bracci E., C. Humphrey, J. Moll, I. Steccolini (2015). Public sector accounting, accountability and austerity: more than balancing the books? Accounting, Auditing & Accountability Journal, 28: 878-908. DOI: 10.1108/AAAJ-06-2015-2090.
  9. Brown P., Preiato J., Tarca A. (2014). Measuring country differences in enforcement of accounting standards: An audit and enforcement proxy. Journal of Business Finance & Accounting, 41(1-2): 1-52. DOI: 10.1111/jbfa.12066.
  10. Cadez S., C. Guilding (2008). An exploratory investigation of an integrated contingency model of strategic management accounting. Accounting, organizations and society, 33: 836-863. DOI: 10.1016/j.aos.2008.01.003.
  11. Callen J.L., Livnat J., Segal D. (2006). Accounting restatements: Are they always bad news for investors? The Journal of Investing, 15(3): 57-68. DOI: 10.3905/joi.2006.650145.
  12. Cao Y., Myers L.A., Omer T.C. (2012). Does company reputation matter of financial reporting quality? Evidence from restatements. Contemporary Accounting Research, 29(3): 956-900. DOI: /10.1111/j.1911-3846.2011.01137.x.
  13. Cepiku D., R. Mussari (2010). The Albanian approach to municipal borrowing: From centralized control to market discipline. Public Administration and Development, 30: 313-327. DOI: 10.1002/pad.578.
  14. Chenhall R. (2007). Theorizing contingencies in management control systems research. In: Chapman, C.S., A.G. Hopwood and M.D. Shields (Eds.), Handbook of Management Accounting Research, Elsevier, 163-205.
  15. Chenhall R.H. (2003). Management control systems design within its organizational context: findings from contingency-based research and directions for the future, Accounting, organizations and society, 28: 127-168. DOI: 10.1016/S0361-3682(01)00027-7.
  16. Dechow P.M., Sloan R. (1991). Executive incentives and the horizon problem: An empirical investigation. Journal of Accounting and Economics, 14(1): 51-89. DOI: 10.1016/0167-7187(91)90058-S.
  17. Dechow P.M., Ge W., Schrand C. (2010). Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50(2-3): 344-401. DOI: 10.1016/j.jacceco.2010.09.001.
  18. Dechow P.M., Sloan R.G., Sweeney A.P. (1996). Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research, 13(1): 1-36. DOI: 10.1111/j.1911-3846.1996.tb00489.x.
  19. De Nichilo S. (2020a). Public Choice in European Affairs: Measuring Election Model. European Journal of Social Impact and Circular Economy, 1(1b): 19-37. Published by University of Turin. DOI: 10.13135/2704-9906/4608.
  20. De Nichilo S. (2020b). How Do Earnings Management Practices Distract International Environmental Funds? Empirical Evidence of European Development Funds in Italy. GeoProgress Journal, 7(1): 87-101.
  21. De Nichilo S. (2021a). Management Accounting in European Finance for Smart Tourism and Sustainable Destination: How Organizations Deficiency?, 2(1): 45-74. Published by University of Turin. DOI: 10.13135/2704-9906/5516.
  22. De Nichilo S. (2021b). Management Accounting in European Affairs: a Memorandum Methodology for Formalize Audit Evidence. Corporate Governance and Research & Development Studies, 1. DOI: 10.3280/cgrds1-2021oa10445.
  23. De Nichilo S. (2022). How to resolve audit matters in European Affairs? Introduction to a sustainable management accounting under IAS 37, 3(1): 27-42. Published by University of Turin. DOI: 10.13135/2704-9906/6597.
  24. Desai H., Hogan C.E., Wilkins M.S. (2006). The reputational penalty for aggressive accounting: earnings restatements and management turnover. Accounting Review, 81(1): 83-112. DOI: 10.2308/accr.2006.81.1.83.
  25. Desai H., Krishnamurthy S., Venkataraman K. (2006). Do short sellers target firms with poor earnings quality? Evidence from earnings restatements. Review of Accounting Studies, 11(1): 71-90. DOI: 10.1007/s11142-006-6396-x.
  26. Dewar R., J. Hage (1978). Size, technology, complexity and structural differentia-tion: towards a conceptual synthesis. Administrative Science Quarterly, 23: 111-136. DOI: 10.2307/2392436.
  27. Dezoort F.T., Saltiero S.E. (2001). The effects of corporate governance experience and financial-reporting and audit knowledge on audit committee members’ judgment. Auditing: A Journal of Practice & Theory, 20(2): 31-47. DOI: 10.2308/aud.2001.20.2.31.
  28. Donaldson L., (2001). The contingency theory of organizations, Sage.
  29. Drazin R., A.H. Van de Ven (1985). Alternative forms of fit in contingency theory, Administrative science quarterly, 30(4): 514-539. DOI: 10.2307/2392695.
  30. Ettredge M., Fuerherm E.E., Li C. (2014). Fee pressure and audit quality. Ac-counting, Organizations and Society, 39(4): 247-263. DOI: 10.1016/j.aos.2014.04.002.
  31. Ettredge M., Scholz S., Smith K.R., Sun L. (2010). How do restatements begin? Evidence of earnings management preceding restatement financial report. Journal of Business Finance & Accounting, 37(3-4): 332-335. DOI: 10.1111/j.1468-5957.2010.02199.x.
  32. Farber D.B. (2005). Restoring trust after fraud: Does corporate governance matter?. The Accounting Review, 80(2): 539-561. DOI: 10.2308/accr.2005.80.2.539.
  33. Freeman J. (1973). Environment, technology and the administrative intensity of organizations. American Sociological Review, 38: 750-763. DOI: 10.2307/2094136.
  34. Gauld R., N. Mays (2006). Are New Zealand’s new primary health organisations fit for purpose? British Medical Journal, 333: 1216-1218. DOI: 10.1136/bmj.39029.493542.94.
  35. Gerdin J., J. Greve (2004). Forms of contingency fit in management accounting research-a critical review, accounting. Organizations and Society, 29: 303-326. DOI: 10.1016/S0361-3682(02)00096-X.
  36. Gillespie N.K., Dietz G. (2009). Trust repair after an organization-level failure. Academy of Management Review, 34 (1): 127-145.
  37. DOI: 10.5465/amr.2009.35713319.
  38. Gleason C., Jenkins N., Johnson W. (2008). The contagion effect of accounting restatements. The Accounting Review, 83(1): 83-110.
  39. DOI: 10.2308/accr.2008.83.1.83.
  40. Hennes K.M, Leone A.J., Miller B.P. (2008). The importance of distinguishing er-rors from irregularities in restatement research: The case of restatement and CEO/CFO turnover. The Accounting Review, 83(6): 1487-1591. DOI: 10.2308/accr.2008.83.6.1487.
  41. Hennes K.M., Leone A.J., Miller B.P. (2014). Determinants and market conse-quences of auditor dismissals after accounting restatements. The Accounting Review, 89(3): 1051-1082. DOI: 10.2308/accr-50680.
  42. Hiedemann A.M., G. Nasi, R. Saporito (2017). A public service-dominant logic for the executive education of public managers. Teaching Public Administration, 35: 66-87. DOI: 10.1177/0144739416665881.
  43. Huang Y., Scholz S. (2012). Evidence on the association between financial restatements and auditor resignations. Accounting Horizons, 26(3): 439-464. DOI: 10.2308/acch-50200.
  44. Hofer C.W. (1975). Toward a contingency theory of business strategy. Academy of Management journal, 18: 784- 810. DOI: 10.5465/ambpp.1974.17528426.
  45. Ismanu S., Putri D.R., Haris Z.A. (2021). Accounting Information Systems Design of Budget Realization Audit through ACL from SAIBA application (Case Stu-dy on Public University). International Journal of Economics, Management, Business and Social Science (IJEMBIS) 1(3): 2774-5376. Available at:
  46. Islam J., H. Hu (2012). A review of literature on contingency theory in managerial accounting. African journal of business management, 6: 5159-5164. DOI: 10.5897/AJBM11.2764.
  47. Jensen C.B., Winthereik B.R. (2017). Audit Loops and Audit Implosion. Draft chapter for Conceptualizing Ethnographic Redescription: Strathernian Conversations, ed. Ashley Lebner. Berghahn Press.
  48. Keune M.B., Johnstone K.M. (2012). Materiality judgements and the resolution of detected misstatements: The role of manager, auditors, and audit committees. The Accounting Review, 87(5): 1641-1677. DOI: 10.2308/accr-50185.
  49. Khandwalla P.N. (1977). The Design of Organizations, Harcourt Brace Jovano-voich, New York.
  50. Knapp M.C. (1987). An empirical study of audit committee support for auditors involved in technical disputes with client management. The Accounting Review, 62(3): 578-588. Available at:
  51. Kravet T., Shevlin T. (2010). Accounting restatements and information risks. Re-view of Accounting Studies, 15(2): 264-294. DOI: 10.1007/s11142-009-9103-x.
  52. Li Y., Park Y., Wynn J. (2018). Investor reactions to restatements conditional on disclosure of internal control weaknesses. Journal of Applied Accounting Research, 19(3): 423-439. DOI: 10.1108/JAAR-10-2017-0107.
  53. Libby R., Brown T. (2013). Financial statement disaggregation decisions and auditor’s tolerance for misstatement. The Accounting Review, 88(2): 641-665. DOI: 10.2308/accr-50332.
  54. Libby R., Kinney Jr W.R. (2000). Does mandated audit communication reduce opportunistic corrections to manage earnings to forecasts?. The Accounting Review, 75(4): 383-404. DOI: 10.2308/accr.2000.75.4.383.
  55. Lin J.W., Li J.F., Yang J.S. (2006). The effect of audit committee performance on earning quality. Managerial Auditing Journal, 21(9): 921-933. DOI: 10.1108/02686900610705019/full/html.
  56. Martinov N., Roebuck P. (1998). The assessment and integration of materiality and inherent risk: An analysis of major firms’ audit practices. Interational Journal of Auditing, 2(2): 103-126. DOI: 10.1111/1099-1123.00034.
  57. Marsh R.M., H. Mannari (1981). Technology and size as determinants of the or-ganizational structure of Japanese factories. Administrative science quarterly, 26: 33-57. DOI: 10.2307/2392598.
  58. Mautz R.D., Shoulders JR C.D., Smith M.C. (1996). Reporting accounting changes and fundamental error: A teaching note. Accounting Education, 5(4): 367-388. DOI: 10.1080/09639289600000033.
  59. Monfardini P., Von Maravic P. (2012). Municipal auditing in Germany and Italy: Explosion, change or recalcitrance? Financial Accountability and Management, 28(1): 52-76. DOI: 10.1111/j.1468-0408.2011.00536.x.
  60. Monfardini P., Von Maravic P. (2019). Too big to be audited? The new world of auditing in international organizations. Financial Accountability and Management, 35(2): 143-157. DOI: 10.1111/faam.12186.
  61. Moroney R., Trotman K.T. (2016). Differences in auditor’s materiality assessment when auditing financial statements and sustainability reports. Contemporary Auditing Research, 33(2): 551-575. DOI: 10.1111/1911-3846.12162.
  62. Myers L.A., Scholz S., Sharpe N.Y. (2013). Restating under the radar? Determinants of restatement disclosure choices and the related market rections. DOI: 10.2139/ssrn.1309786.
  63. Ng T. B.–P., Tan H.-T. (2007). Effects of qualitative factor salience, expressed client concern, and qualitative materiality thresholds on auditors’ audit adjustment decisions. Contemporary Accounting Research, 24(4): 1171-1192. DOI: 10.2139/ssrn.980451.
  64. OECD (2017). Government at a Glance. OECD Publishing, Paris. DOI: 10.1787/gov_glance-2017-en.
  65. Osborne S.P. (2010). Delivering Public Services: Time for a new theory?. Public Management Review, 12: 1-10. DOI: 10.1080/14719030903495232.
  66. Osborne S.P., Z. Radnor, G. Nasi (2013). A new theory for public service management? Toward a (public) service-dominant approach. The American Review of Public Administration, 43: 135-158. DOI: 10.1177/0275074012466935.
  67. Osborne S.P., Z. Radnor, T. Kinder, I. Vidal (2015). The SERVICE Framework: A Public‐service‐dominant Approach to Sustainable Public Services. British Journal of Management, 26: 424-438. DOI: 10.1111/1467-8551.12094.
  68. Power M. (1997). The audit society: Rituals of verification. Oxford: Oxford University Press.
  69. Power M. (2000). The audit implosion: Regulating risk from the inside. London: ICAEW.
  70. Otley D.T. (2016). The contingency theory of management accounting and control: 1980–2014, Management accounting research, 31: 45-62. DOI: 10.1016/j.mar.2016.02.001.
  71. Otley D.T. (1980). The contingency theory of management accounting: achievement and prognosis, Accounting, organizations and society, 5: 413-428. DOI: 10.1007/978-1-4899-7138-8_5.
  72. Pennington R.R., Kelton A.S., DeVries D.D. (2006). The Effects of Qualitative Overload on Technology Acceptance. Journal of Information Systems, 20(2): 25-36. DOI: 10.2308/jis.2006.20.2.25.
  73. Peterson K. (2012). Accounting complexity, misreporting, and the consequences of misreporting. Review of Accounting Studies, 17(1): 72-95. DOI: 10.1007/s11142-011-9164-5.
  74. Plumlee M.A., Yohn T.L. (2015). An examination of management’s regulatory fi-ling choices surrounding restatements. Journal of Management Accounting Research, 27(2): 121-144. DOI: 10.2308/jmar-50744.
  75. Radnor Z., S.P. Osborne (2013). Lean: A failed theory for public services?. Public Management Review, 15: 265- 287. DOI: 10.1080/14719037.2012.748820.
  76. Radnor Z., S.P. Osborne, T. Kinder, J. Mutton (2014). Operationalizing Co-Production in Public Services Delivery: The contribution of service blueprinting. Public Management Review, 16: 402-423. DOI: 10.1080/14719037.2013.848923.
  77. Saulpic O., P. Zarlowski (2014). Management control research and the manage-ment of uncertainty: rethinking knowledge in management. In Otley, D. and K. Soin (Eds.). Management Control and Uncertainty. Palgrave Macmillan, Basingstoke, UK, 207-223.
  78. Schoonhoven C.B. (1981). Problems with contingency theory: testing assumptions hidden within the language of contingency “theory”. Administrative science quarterly, 26(3): 349-377. DOI: 10.2307/2392512.
  79. Van de Ven A.H., D.L. Ferry (1980). Measuring and Assessing Organizations, New York, John Wiley and Sons.
  80. Van de Ven A.H., R. Drazin (1984). The concept of fit in contingency theory (No. SMRC-DP-19), Minnesota University Minneapolis Strategic Management Research Center.
  81. Yoon K., Pearce T. (2021). Can Substantive Analytical Procedures with Data and Data Analytics Replace Sampling as Tests of Details?. Journal of Emerging Technologies in Accounting, 18(2): 185-199. DOI: 10.2308/JETA-19-03-23-10.


Caricamento metriche ...