Corporate Governance and Audit Process

Abstract

Based on agency theory, the importance of Corporate Governance (CG) is to reduce agency conflicts between those who control and those who own the residual claims in a firm. Auditors can be also considered as a part of CG structure because they monitor the quality of the financial reporting process to reduce the information asymmetry between managers and stakeholders. The interaction between CG and external audit services often suggest that they are complementary. In fact, auditors must work with other factors in the CG structure to ensure that stakeholders receive the highest quality financial reports and help to protect their interests. Therefore, the objective of this study is to explore the perceptions of experts on the CG consideration in outlining and directing an audit engagement. A semi-structured interview is conducted with two certified public accountants (CPA) to obtain a consensus on the opinion of experts. Analyzing of interviewees’ response suggests that auditors consider CG as a monitoring device in their audit engagement. Among different aspects of CG the board of directors is more considered by auditors. CG has more influence when auditors are planning an audit process.

Keywords: corporate governance, auditors, audit process, board of director

JEL Classification: G34