Article

The application of business risk audit methodology within non-Big-4 firms

Citation

Kutum I, Fraser I & Hussainey K (2015) The application of business risk audit methodology within non-Big-4 firms. Journal of Financial Reporting and Accounting, 13 (2), pp. 226-246. https://doi.org/10.1108/JFRA-03-2014-0015

Abstract
Purpose: We explore the application of the business risk audit (BRA) approach within non-Big-4 audit firms, in the United States, United Kingdom and Canada. We focus on the motivation for adopting this approach for non-Big-4 audit firms in the three countries, and the advantages, disadvantages and aftermath of applying this method. Design/methodology/approach: We used a combination of qualitative and quantitative methods in order to obtain the data necessary to address the research questions. Findings: We find that that non-Big-4 audit firms in the three countries have adopted BRA; their motivation was primarily to follow the standards in each country, and the general trend in the industry. The advantages identified are consistent with previous research; a direct benefit was noted for audit effectiveness and risk management for both clients and auditors. One major disadvantage of applying BRA is the cost burden to both the audit firm and their clients. Some of the interviewees claimed that this method is better suited to large firms and large audits Originality/value: This is an innovative study that addresses a contemporary auditing issue. The majority of the audit research studies concentrate on the big audit firm practices; this study is the first to examine the application of audit practices within smaller audit firms.

Journal
Journal of Financial Reporting and Accounting: Volume 13, Issue 2

StatusPublished
Publication date31/12/2015
Publication date online2015
PublisherEmerald
ISSN1985-2517