M42 - AuditingNávrat zpět

The paper investigates the extent and reasons for restatements of financial statements by Czech firms. In 2013, Czech accounting regulation was amended to remove inappropriate accounting treatment for prior period errors and changes in accounting policies. A sample of 3,407 financial statements for the period 2013-2017 also includes a significant amendment to accounting standards in 2016. The combination of both amendments creates a quasi-natural experiment enabling investigation into firms' response to regulatory changes. Empirical analysis shows that restatements occurred in 7.4% of the cases. Using non-parametric tests, we found that restatements are more frequent in joint-stock companies and that corrections of prior period errors dominate over changes in accounting policies. An expected one-time increase in restatements in 2016 is confirmed; however, the hypothesis that increased restatements are driven by changes in accounting policies required by new GAAP can be neither confirmed nor refuted. The main cause is that over 50% of the entities did not disclose their reason for restatement, despite the fact that disclosure is mandated by accounting standards and all financial statements are audited.

The aim of this paper is to analyze the market concentration of audit services in the Czech Republic and compare its results with the international research. The analysis is based on transparency reports for years 2011-2014. Auditors that in the reporting period carried out the statutory audit at some public interest entity are required to compile and publish the transparency report. Among other information, auditors are required to specify their total turnover split into turnover of audit fees and turnover of non-audit fees. Globally recognized Herfindahl-Hirschman index is selected as an appropriate analytical tool. Herfindahl-Hirschman index is complemented by indicators of market share (Current ratios) and the Lorenz curve which graphically displays the unequal distribution of the turnover on the market of audit services. These data show that in the period under investigation the firms forming Big4 obtained about 85% of audit fees. In the year 2014 the Big4 firms occupied 80% of total fees and 84% of audit fees. As a major player on the Czech market of audit services can be regarded two firms - Ernst & Young (EY) in the area of total fees and KPMG in the area of audit fees. The analysis clearly indicates a high level of market concentration of audit services in the Czech Republic. The high level of market concentration has its impacts on the audit quality and leads Authorities in the US and in the EU to the tightening of audit regulation.