Long-term Auditor-client relationship and its effects on the audit quality

• Pages: 123-129

Vol. 7 No. 2

July, 2021

ISSN 2410-3918

Acces online at www.iipccl.org

123

Academic Journal of Business, Administration, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

Long-term Auditor-client relationship and its eects on the audit quality

Dr. Burim Berisha

University of Business and Technology - Kosovo

Abstract

Apartfromthis,thelong-termAuditor client relationship has been the center of aention

inmost ofthediscussions anddebates as well.Numerous studieshavebeen conductedby

the academic researchers, nancial and professional analysts, regulatory authorities and

governingbodies,andinsomecasesbytheAuditorsandthermsaswellregardingtheeects

of long-term Auditor-client relationship on audit quality, equity risk premium, nancial

reportsquality, auditpricing etc.These studiesprovideus withdierent results,both with

thepositiveandnegativeassociationsandeectsoflong-termAuditor-clientrelationshipon

thebasisofdierentfactorsandcontexts.

Forlong, auditing hasbeen discussed indierent studies andresearch areas butmostly in

associationwithpubliclylistedcompanies.Lessaentionhasbeenpaidtotherelationshipof

Auditors and clients as far as clients in SMEs are concerned. In any country around the globe,

SMEs are of major contribution in terms of backing the economy, giving it both the boost

andthestability,astheycollectivelyformthemajorchunkoftheeconomy.Ifwespecifyour

studytotheSMEsinKosovo,then80%oftheenterprisesinKosovorepresenttheSMEsector;

inadditiontheyemploy around60%ofthemanpower.Basedonthesefacts,anddue toless

aentiongiventoAuditor-clientrelationship interms ofSMEs,instead of;we havedirected

ourconcerns towards thestudyof eects ofAuditor-client relationshipon audit quality in

SMEs in this particular research study.

Keywords: Long-term Auditor, client relationship, audit quality.

Introduction

Numerousstudieshavebeenconducted bytheacademicresearchers,nancialand

professional analysts, regulatory authorities and governing bodies, and in some cases

bytheAuditorsandthermsaswellregardingtheeectsoflong-termAuditor-client

relationshipon audit quality, equity riskpremium,nancial reports quality, audit

pricingetc.Thesestudiesprovideuswithdierentresults,bothwiththepositiveand

negativeassociationsandeectsoflong-termAuditor-clientrelationshiponthebasis

ofdierent factors and contexts.Ourdenedobjective for thisstudyis to examine

howthelong-termAuditor-clientrelationshipaectstheaudit qualityinSmalland

Medium Enterprises (SMEs).

Weasthewritersofthisstudyhaveworkedlastyearonresearchstudyrelatedtothe

adoptionofIFRSforSMEs.Duringthatresearchstudy,wehadtointerviewboththe

AuditorsandtheSMEs,andduringthedatacollectionprocesswerealizedthatmost

oftheSMEseitherhavelong-termrelationshipwiththeirAuditorsorintendtohave

long term relationship. We the authors of this study took up a debate and discussion

regardingtheeectsoflong-termAuditor-clientrelationship,andwefoundthatboth

ofusweresupportingtwo oppositeviews, suchthat, onein thefavor oflong-term