Author:

Keywords:

Social Sciences, Business, Finance, Management, Business & Economics, Nonprofit, Audit quality, Audit opinion, Auditor gender, Auditor sector expertise, Partner-level characteristics, INDUSTRY SPECIALIZATION, FINANCIAL STATEMENT, MANAGE EARNINGS, FEMALE AUDITORS, QUALITY, INFORMATION, DETERMINANTS, EXPERTISE, ASSESSMENTS, KNOWLEDGE, 1501 Accounting, Auditing and Accountability, Accounting, 3501 Accounting, auditing and accountability

Abstract:

Purpose This study investigates the association between individual auditor characteristics (gender, experience and sector expertise) and audit opinions in Belgian nonprofit organizations (NPOs). The purpose is to identify auditor characteristics that imply a better assurance of financial statement (FS) quality. FS quality is essential to enhance financial accountability towards the resource providers of NPOs and the public at large. Design/methodology/approach Multinomial regressions are conducted on a dataset of Belgian NPOs. Propensity Score Matching is used to control for potential self-selection bias. Findings Auditors with sector expertise are found to provide better assurance than their non-sector-expert counterparts. The former are more likely to disclose FS errors and uncertainties in their audit report. Originality/value This study contributes to the auditing literature by focusing on an understudied audit market, namely the nonprofit audit market. The number of nonprofit studies that investigate determinants of audit quality is very scarce, and none of them explore the determinants of audit opinions. Moreover, these studies ignore individual auditor characteristics as determinants of audit quality. The findings of this paper provide meaningful information for several actors in the NP field and for audit firms.