臺大管理論叢 NTU Management Review VOL.30 NO.2

The Relationship between Shared Audit Opinions and the Audit Quality of Group Enterprises’ Financial Statements – Based on the Audit Adjustment 60 The Relationship between Shared Audit Opinions and the Audit Quality of Group Enterprises’ Financial Statements – Based on the Audit Adjustment English Summary The Taiwan Statements of Auditing Standards No. 54 “Special Consideration – Audits of Group Financial Statements” severely restricts the shared-opinion audit report on group financial statements. This restriction implies that engaging with the same audit firm in the group company can ensure better audit quality for the group financial statements. To evaluate the argument of this restriction, this study examines whether or not group companies with component firms in Taiwan have higher audit quality (proxied by the Audit Adjustment) when hiring the same audit firm, compared to those with component firms engaging with different audit firms. In response to the increasingly harsh and internationalized competitive environment, many companies engage in mergers around the world to pursue larger production scales or attain greater market share. To achieve the objectives mentioned above, enterprises carry out industrial integration and prompt globalization by setting up various organizational forms in other countries, such as subsidiaries, associates, joint ventures, and branches to formulate group enterprises. This situation is particularly noticeable in Taiwan: due to the geographical location and lack of natural resources, the main driving force of economic growth in Taiwan is export trade. However, due to the intricacies of organizational structures and complex transactions within group enterprises, the auditing of financial reports is even more complicated. To improve the audit quality of a financial statement for group companies, the two major international auditing standards development agencies – International Auditing and Assurance Standards Board (IAASB) and American Institution of Certified Public Accountants (AICPA) – issued the new auditing standards ISA 600 and AU-C 600 (with the titles of the two standards being “Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors”)) to replace the old auditing standards. Compared to the old standards, ISA 600 completely prohibits shared-opinion audit reports on the group financial statements while AU-C 600 does not. Jan-Zan Lee, Department of Accountancy, National Taipei University Hsin-Chi Chen, Department of Accounting, Tunghai University Tsung-Yi Tsai, Department of Accounting Information, Southern Taiwan University of Science and Technology