Work detail

Response by Czech Auditors and Audit Regulators to the Financial Crisis

Author: Mgr. Tatiana Chudá
Year: 2016 - summer
Leaders: Ing. Monika Hollmannová
Work type: Finance, Financial Markets and Banking
Language: English
Pages: 65
Awards and prizes:
Abstract: Auditors play an important role in the reliability of financial statements. Many investors and
other financial information users rely on their opinion. During the financial crisis, auditors
were critised since they did not warn the markets about financially distressed companies. In
our thesis, we examine whether auditors change their behaviour during a financial crisis.
Using our collected data for joint stock companies in the Czech Republic, we focus on
frequency of modified and going concern opinions, amount of audit and non-audit fees
charged by auditors, and audit reporting lag. Our audit fees model showed that there were
significantly lower audit fees after the crisis than during the crisis years. The results also
suggest that both Big 4 and non-Big 4 auditors increased their frequency of issuing modified
opinions (most of which were going concern opinions) during the crisis period. In our logit
going concern models for the individual years we observed change of the auditors’ behaviour
during the crisis years 2008-2010. We have also found out that Big 4 auditors increased their
audit reporting lag in 2008 but our overall results suggest that the audit reporting lag was
shorter during the crisis.




Patria Finance
Česká Spořitelna