A Critique of the paper UK Auditors Attitudes to Effectiveness Auditing

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This essay will begin with a discussion of research; Access, Ethics and Sampling. The second part of this essay will focus on a critique of the research paper ‘UK Auditors Attitudes to Effectiveness Auditing’ written by Maurice Pendlebury and Obeid Shreim.

Research access specifically relates to the approach that the researcher carries out. Organisations may be unwilling to grant access because this could threaten confidentiality and expose criticism from public/legal proceedings. Organisations expect perceived values to compensate the time and resources devoted to access. Researchers could gain access to the target organisation by establishing a contact through university/networks, progressive access and by providing feedback on research and training.

Research ethics are centred on the following principles; informed consent, the right to privacy, confidentiality and protection from harm. In practice this is performing research in a way that gives a clear understanding of the impact to the gate-keeper without harming those who are provided with data or those who are affected during/after the research to avoid negative consequences to the participants. This enhances the relationship between the researcher and the organisation in the form of potential access to data and increases a way to judge good research.

The ‘Data Protection Act 1998’ protects the privacy of individuals and shows that researchers are legally bound to protect the privacy of the parties concerning the research. Researchers ought to avoid referring to the participants unless permission is obtained.

In research, it is impractical to analyse all the data due to time and access limitations; which is overcome by sampling. Samples should be selected so they genuinely represent the entire population. Sampling methods are based on research questions and objectives like probability sampling or non-probability sampling. Both methods aim to answer the research questions by identifying sampling frame, sample size and choosing suitable sampling techniques such as random, systematic and cluster. Sampling techniques are selected after looking into feasibility of access to information, benefits, weaknesses and suitability of each technique. Many researchers use a combination of sampling techniques to improve the quality of research findings.

The authors have chosen both primary and secondary research to form the basis of their hypothesis and to address the questions that arise. Secondary research is taken from Goverment legislation, House of Commons reports, a handbook published for PWC on value for money auditing and prior research papers, like ‘Value for Money Auditing’ by Grimwood and Tomkins (1986), which looks in to whether audit effectiveness is achievable., Pendlebury and Shreim have identified an area limited of research within ‘Value For Money Auditing’ from which it concludes that ‘little real effectiveness auditing is conducted by this firm’, forming the basis their hypothesis.

The article focuses on the examination of audit effectiveness, as this area forms difficulty in determining measurability and objectivity. The article is important because it highlights the auditors’ opinion in connection with the need for effectiveness auditing and ‘whether it should be the responsibility of existing external auditors’ and/or other parties. The outcomes are vital because this would introduce a whole new layer of the audit process, effectively and audit of an audit.

The results of the study are derived from a survey that was carried out on samples from three major groups of auditors within England and Wales: National Audit Office, Audit Commission and the private sector firm of accountants.

The following critique can be drawn from the sample selection; Pendlebury and Shreim (1990) state that ‘a major private sector firm of accountants’ was used, implying their results may only reflect the views and cultures of one firm and not the opinions of the private sector overall.

Questions of validity arise regarding Audit involvement based on the passing of the local Government Act 1982 and the National Audit Act 1983. The authors have summarized the debate based on four issues identified, which are: is an audit of effectiveness achievable? Are the existing auditors the appropriate individuals to carry out an ‘effectiveness audit’? Should the audit be undertaken by a team of auditors and or experts drawn from other disciplines? Finally is the audit of effectiveness involved too closely with matters of policy? Pendlebury and Shreim (1990). These questions have been introduced into their questionnaires when issued to the researchers’ key demographic.

A suggestion has been made within the research paper to introduce an audit team comprised of multi-disciplined experts and the appropriateness of external auditor is tested using evidence drawn from USA’s Brown et al (1982) ‘complexity of audit require diversified professionals for auditing’.

Literature supported by General Accounting Office’s (GAO) practice of multi-disciplinary approach to effective auditing, is strongly consistent with the results in table 2 in assertion (e) however assertion (g) proves it is slightly inconsistent with (e).

Table 3 shows NAO ranked external auditors first while other two ranked service department managers. Qualitative nature of the opinions may lead to subjective authors’ judgement in reaching conclusion. Finally, appropriateness of involvement of auditors in policy decisions was discouraged by National audit act (1983) by stating auditors should not question the validity of policies. Auditors feel the same but there is no mechanism to challenge the policy they could be biased to potential barriers to deal with this sensitive issue.

Factors such as unequal distribution of questionnaire to three parties, lower response rate (NAO 64%), missing responses 4, will affect the validity of the research outcome. Furthermore the authors state that the questionnaire was the only data collection method used. However, several data collection methods are available; observation, interviews, etc. A multiple research design is desirable by data collection, using questionnaires followed by an interviews with the sample.

This paper talks about effectiveness auditing nearly two decades ago. Consequently, alternative mechanism should have been developed and practised recently i.e. performance indicators. Thus the results of the paper and attitudes of the present UK auditors may be different. Authors conducted research on auditors to address issues relating to effective auditing and they failed to record the views of those who subjected to audit or responsible for the service departments. This is likely to bring broader perspective to the research findings.

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