Audit opinion determinants in Brazilian State-owned companies
DOI:
https://doi.org/10.1590/1808-057x20242055.ptKeywords:
audit, audit report, audit opinion, modified opinion, State-owned companiesAbstract
This study aimed to identify audit opinion modification determinants in Brazilian State-owned companies. Audit opinion modification may indicate risk factors, but studies are still incipient in State-owned companies, which have particular characteristics, especially with regard to controlling shareholder’s dependence and governance and management structure. The findings are useful to regulatory and/or control bodies, as well as to public managers and auditors, as they indicate red flags about State-owned companies, in addition to providing means for discussion on State participation in the economy and government investment efficiency, highlighting risk factors associated with State-owned companies. The results may be used by auditors as a way to anticipate and mitigate audit risk, decreasing or increasing the scope and depth of planned testing. They can also help management anticipate future opinion modifications and prevent weaknesses. A Logit model was applied to test hypotheses regarding characteristics of audit firms and audited companies, considering 2,268 observations related to 233 federal and state-level State-owned companies, from 2001 to 2022. The tests revealed that audit opinion modification in Brazilian State-owned companies is: positively associated with audit delay, opinion modification in the previous fiscal year, the fact that a State-owned company is fiscally dependent, and company size; and negatively associated with: audits performed by the big four, audit tenure, profitability level, federal control of State-owned companies, and audit complexity. These results contribute to grasping audit dynamics in the State environment, highlighting variables specific to State-owned companies, such as dependence, in addition to providing means for regulatory and control bodies in assessing what is expected from entity management and auditors.
Downloads
References
Abernathy, J. L., Barnes, M., Stefaniak, C., & Weisbarth, A. (2016). An international perspective on audit report lag: A synthesis of the literature and opportunities for future research. International Journal of Auditing, 21(1), 100-127. https://doi.org/10.1111/ijau.12083
Alareeni, B. (2018). The associations between audit firm attributes and audit quality-specific indicators: A meta-analysis. Managerial Auditing Journal, 34(1), 6-43. https://doi.org/10.1108/MAJ-05-2017-1559
Araujo, M. D., & Dantas, J. A. (2022). Posicionamento dos auditores sobre continuidade operacional em bancos em dificuldades financeiras. Revista Contabilidade & Finanças, 33(90), e1436. https://doi.org/10.1590/1808-057x20221436.pt
Asare, S. K., & McDaniel, L. S. (1996). The effects of familiarity with the preparer and task complexity on the effectiveness of the audit review process. The Accounting Review, 71(2), 139-159.
Ballesta, J. P., & García-Meca, E. (2005). Audit qualifications and corporate governance in Spanish listed firms. Managerial Auditing Journal, 20(7), 725-738. https://doi.org/10.1108/02686900510611258
Becker, C. L., Defond, M. L., Jiambalvo, J., & Subramanyam, K. (1998). The effect of audit quality on earnings management. Contemporary accounting research, 15(1), 1-24. https://doi.org/10.1111/j.1911-3846.1998.tb00547
Blankley, A. I., Hurtt, D. N., & MacGregor, J. E. (2015). Are lengthy audit report lags a warning signal? Current Issues in Auditing, 9(2), 19-28. https://doi.org/10.2308/ciia-51215
Bushman, R. M., & Piotroski, J. D. (2006). Financial reporting incentives for conservative accounting: The influence of legal and political institutions. Journal of Accounting and Economics, 42(1-2), 107-148. https://doi.org/10.1016/j.jacceco.2005.10.005
Carcello, J. V., & Nagy, A. L. (2004a). Audit firm tenure and fraudulent financial reporting. Auditing: a Journal of Practice & Theory, 23(2), 55-69.
Carcello, J. V., & Nagy, A. L. (2004b). Client size, auditor specialization and fraudulent financial reporting. Managerial Auditing Journal, 19(5), 651-668. https://10.1108/02686900410537775
Carey, P., & Simnett, R. (2006). Audit partner tenure and audit quality. The Accounting Review, 81(3), 653-676.
Castro, R. L., Vasconcelos, J. P., & Dantas, J. A. (2017). Impactos das normas internacionais de auditoria nos relatórios dos auditores sobre as demonstrações financeiras dos bancos brasileiros. Revista Ambiente Contábil, 9(1), 1-20. https://doi.org/10.21680/2176-9036.2017v9n1ID7827
Chung, H., Sonu, C. H., Zang, Y., & Choi, J. H. (2019). Opinion shopping to avoid a going concern audit opinion and subsequent audit quality. Auditing: A Journal of Practice & Theory, 38(2), 101-123.
Constanti, V. G. (2019). Análise do desempenho financeiro das empresas estatais federais: Um contraponto entre as classificações legais e a dependência de recursos do controlador. Tribunal de Contas da União.
Cunha, P. R., Beuren, I. M., & Pereira, E. (2009). Análise dos pareceres de auditoria das demonstrações contábeis de empresas de Santa Catarina registradas na Comissão de Valores Mobiliários. Revista de Informação Contábil, 3(4), 44-65. https://doi.org/10.34629/ric.v3i4.66-80
Cunha, P. R., Lunelli, L. D., Santos, V. D., Faveri, D. B., & Rodrigues, M. M., Júnior. (2015). Relação entre as características do comitê de auditoria e o atraso da emissão do relatório da auditoria independente (audit delay). Contabilidade, Gestão e Governança, 18(3), 47-65.
Dahlia, R., Thomas, S., & Stephanie, W. (2023). Till death do us part: An examination of the impact of unbroken auditor-client relationships on audit efficiency and audit quality. Auditing: A Journal of Practice & Theory, 43(1), 167-190. https://doi.org/10.2308/AJPT-2021-022
Dantas, J. A., Carvalho, P. R., Couto, B. A., & Silva, T. N. (2016). Determinantes da remuneração dos auditores independentes no mercado de capitais brasileiro. Revista Universo Contábil, 12(4), 68-85. http://10.4270/ruc.2016428
DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3(2), 183-199. https://doi.org/10.1016/0165-4101(81)90002-1
DeFond, M., & Zhang, J. (2014). A review of archival auditing research. Journal of Accounting and Economics, 58(2-3), 275-326. http://dx.doi.org/10.1016/j.jacceco.2014.09.002
Deis, D. R., & Giroux, G. A. (1992). Determinants of audit quality in the públic sector. The Accounting Review, 67(3), 462-479.
Eny, N., & Mappanyukki, R. (2020). Moderating role of audit fees on the effect of task complexity and independence towards audit judgment. Journal of Economics, Business, and Accountancy Ventura, 23(2), 194-204. https://10.14414/jebav.v23i2.2326
Francis, J. R. (2011). A framework for understanding and researching audit quality. Auditing: A Journal of Practice & Theory, 30(2), 125-152. https://10.2308/ajpt-50006
Francis, J. R., & Krishnan, J. (1999). Accounting accraals and auditor reporting conservatism. Contemporary Accounting Research, 16(1), 135-165. https://10.1111/j.1911-3846.1999.tb00577.x
Francis, J. R., & Yu, M. D. (2009). Big 4 office size and audit quality. The Accounting Review, 84(5), 1521-1552. https://10.2308/accr.2009.84.5.1521
Gissel, J. L., Robertson, J. C., & Stefaniak, C. M. (2010). Formation and consequences of going concern opinions: A review of the literature. Joumal of Accouting Literature, 29, 59-141.
Habib, A. (2013). A meta-analysis of the determinants of modified audit opinion decisions. Managerial Auditing Journal, 28(3), 184-216. https://10.1108/02686901311304349
Habib, A., Bhuiyan, M. B., & Wu, J. (2021). Corporate governance determinants of financial restatements: A meta-analysis. The International Journal of Accounting, 56(1), 1-71. http://10.1142/S1094406021500025
Hassan, Y. M., & Naser, K. (2013). Economy, determinants of audit fees: Evidence from an emerging economy. International Business Research, 6(8). 56-74. http://dx.doi.org/10.5539/ibr.v6n8p13
He, K., Pan, X., Tian, Y., & Wu, Y. (2024). Political turnover and audit opinion: Evidence from China. Auditing: A Journal of Practice & Theory, 20(20) 1-27. https://doi.org/10.2308/AJPT-2022-025
Ireland, J. C. (2003). An empirical investigation of determinants of audit reports in the UK. Journal of Business Finance & Accounting, 30(7-8), 975-1016. https://10.1111/1468-5957.05417
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. https://doi.org/10.1016/0304-405X(76)90026-X
Kent, P., Routledge, J., & Stewart, J. (2010). Innate and discretionary accruals quality and corporate governance. Accounting and Finance, 50(1), 171-195. https://10.1111/j.1467-629X.2009.00321.x
Khan, A., Siddiqui, J., & Muttakin, M. B. (2015). Audit fees, auditor choice and stakeholder influence: Evidence from a family-firm dominated economy. The British Accounting Review, 47(3), 304-320. http://dx.doi.org/10.1016/j.bar.2015.03.002
Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375-400. https://doi.org/10.1016/S0165-4101(02)00059-9
Knechel, W. R., & Vanstraelen, A. (2007). The relationship between auditor tenure and audit quality implied by going concern opinions. Auditing: A Journal of Practice & Theory, 26(1), 113-131. https://doi.org/10.2308/aud.2007.26.1.113
Krishnan, J., & Krishnan, J. (1996). The role of economic trade-offs in the audit opinion decision: An empirical analysis. Journal of Accounting, Auditing & Finance, 11(4), 565-586. https://doi.org/10.1177/0148558X9601100403
Kurnia, R., & Cellica, L. (2016). The impact of bankruptcy prediction, company’s financial condition, previous year audit opinion, firm size and audit tenure towards auditor’s going concern opinion. Accounting and Finance Review, 1, 51-58.
Kyriakou, M. I., & Dimitras, A. I. (2018). Impact of auditor tenure on audit quality: European evidence. Investment Management and Financial Innovations, 15, 374-386. http://dx.doi.org/10.21511/imfi.15(1).2018.31
Lawrence, A., Minutti-Meza, M., & Zhang, P. (2016). The importance of client size in the estimation of the big 4 effect: A comment on DeFond, Erkens, and Zhang (2016). Management Science, 63(11), 3650-3653.
Lei n. 12.527, de 18 de novembro de 2011. (2011). Regula o acesso a informações previsto no inciso XXXIII do art. 5º, no inciso II do § 3º do art. 37 e no § 2º do art. 216 da Constituição Federal; altera a Lei n. 8.112, de 11 de dezembro de 1990; revoga a Lei n. 11.111, de 5 de maio de 2005, e dispositivos da Lei n. 8.159, de 8 de janeiro de 1991; e dá outras providências. https://www.planalto.gov.br/ccivil_03/_ato2011-2014/2011/lei/l12527.htm
Lei Complementar n. 101, de 4 de maio de 2000. (2000). Estabelece normas de finanças públicas voltadas para a responsabilidade na gestão fiscal e dá outras providências. https://www.planalto.gov.br/ccivil_03/leis/lcp/lcp101.htm
Lennox, C. (2000). Do companies successfully engage in opinion-shopping? Evidence from the UK. Journal of Accounting and Economics, 29(3), 321-337. https://doi.org/10.1016/S0165-4101(00)00025-2
Marques, V. A., Louzada, L. C., Amaral, H. F., & Souza, A. A. (2018). O poder da reputação: Evidências do efeito big four sobre a opinião do auditor. Revista Contemporânea de Contabilidade, 15(35), 3-31. http://dx.doi.org/10.5007/2175-8069.2018v15n35p3
Marques, V. A., Vaz, U. O., Miranda, D. V., & Checon, R. P. (2023). Quando os controles importam: Evidências da associação não linear entre as deficiências de controles internos e a qualidade de auditoria. Revista Contabilidade & Finanças, 34(92), e1692. https://doi.org/10.1590/1808-057x20231692.en
Mowchan, M. J. (2023). Do accounting firms change strategy through office managing partner appointments? Evidence from the U.S. Accounting, Organizations and Society, 108, 101442. https://doi.org/10.1016/j.aos.2023.101442
Mutchler, J. F., Hopwood, W., & McKeown, J. M. (1997). The influence of contrary information and mitigating factors on audit opinion decisions on bankrupt companies. Journal of Accounting Research, 35(2), 295-310. https://doi.org/10.2307/2491367
Myers, J. N., Myers, L. A., & Omer, T. C. (2003). Exploring the term of the auditor-client relationship and the quality of earnings: A case for mandatory auditor rotation? The Accounting Review, 78(3), 779-799.
Ramadhan, A. P., & Sumardjo, M. (2021). Previous years audit opinions, profitability, audit tenure and quality control system on going concern audit opinion. European Journal of Business and Management Research, 6(2), 140-145. https://doi.org/10.24018/ejbmr.2021.6.2.817
Santos, S. F. (2020). Os determinantes da opinião modificada em auditoria no setor público: O caso do ensino superior universitário público em Portugal (Dissertação de Mestrado). Instituto Universitário de Lisboa.
Secretaria de Coordenação e Governança das Empresas Estatais. (2022). Boletim das Empresas Estatais Federais, 22.
Secretaria do Tesouro Nacional. (2021). Raio-x das empresas dos Estados brasileiros: Um panorama das estatais estaduais brasileiras. STN.
Silva, E. R., & Rodrigues, J. M. (2022). Evidenciação de partes relacionadas em empresas estatais: Análise dos fatores determinantes do nível de evidenciação previsto no CPC 05 (Apresentação de Trabalho). 16º Congresso ANPCONT, Foz do Iguaçu, PR, Brasil.
Silva, J. D. (2022). O efeito da maldição do vencedor nas contratações públicas da auditoria independente (Dissertação de Mestrado). Universidade Federal do Rio Grande do Norte.
Susanto, Y. K. (2018). Auditor switching: Management turnover, qualified opinion, audit delay, financial distress. International Journal of Business, Economics and Law, 15(5), 125-132.
Teoh, S. H., & Wong, T. J. (1993). Perceived auditor quality and the earnings response coefficient. The Accounting Review, 68(2), 346-366.
Tribunal de Contas da União. (2014). Acórdão 1.046/2014 (Plenário). TCU.
Yang, J. S., & Krishnan, J. (2005). Audit committees and quarterly earnings management. International Journal of Auditing, 9(3), 201-219. https://doi.org/10.1111/j.1099-1123.2005.00278.x
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Vinícius Alves dos Santos Pereira, José Alves Dantas
This work is licensed under a Creative Commons Attribution 4.0 International License.
The content of the article(s) published in the RC&F are of the entire liability of the authors, including with regard to the truth, updating and accuracy of data and information. The authors shall assign the rights in advance to the Department of Accounts and Actuarial Sciences of the FEA/USP, which shall permit the publication of extracts or of the whole, with prior permission, provided that the source is cited (Creative Commons – CCBY).
RC&F shall not charge a fee for the submission of articles. The submission of articles to RC&F shall imply that the author(s) authorizes/authorize its publication without the payment of author’s rights.
The submission of articles shall authorize the RC&F to adjust the text of the article(s) to their publication formats and if necessary, to make spelling, grammar and regulatory changes.
