The Added Value of Auditing in Belgium: Does Audit Remain If No Longer Mandatory?

31 Pages Posted: 18 Dec 2012

See all articles by Diane Breesch

Diane Breesch

Vrije Universiteit Brussel

Kris Hardies

University of Antwerp

Jan De Muylder

Vrije Universiteit Brussel (VUB)

Date Written: December 17, 2012

Abstract

In Belgium, all “large” companies are legally required to appoint a statutory auditor. The thresholds of the criteria to be considered “large” are, however, not that large. Consequently, many relative small companies in Belgium are legally required to appoint a statutory auditor. The evidence on the added value of auditing in small companies remains to date, however, rather scant and is often contradictory. In this study, we, therefore, tried to assess if companies in Belgium would still appoint an auditor if they would no longer be required to do so. Additionally, we also examined which factors would contribute to the voluntary appointment of auditors by companies in Belgium. Our results (based upon an email questionnaire, n=288) show that the majority (nearly 65%) of companies in Belgium would still appoint an auditor if they would no longer be required to do so. The most important reasons why companies would keep on hiring an auditor (i.e., the added value of the audit) are the fact that audits improve the credibility of financial statements, the fact that audits improve the internal control systems of companies, and because audits impose financial discipline on a company. Furthermore, our study indicates that larger companies, companies with more shareholders, and listed companies are more inclined to voluntarily appoint an auditor.

Keywords: voluntary audit, mandatory audit, added value, audit demand

JEL Classification: M49

Suggested Citation

Breesch, Diane and Hardies, Kris and De Muylder, Jan, The Added Value of Auditing in Belgium: Does Audit Remain If No Longer Mandatory? (December 17, 2012). Available at SSRN: https://ssrn.com/abstract=2190396 or http://dx.doi.org/10.2139/ssrn.2190396

Diane Breesch (Contact Author)

Vrije Universiteit Brussel ( email )

Pleinlaan 2
Brussels, Brussels 1050
Belgium

Kris Hardies

University of Antwerp ( email )

Department of Accounting and Finance
Pleinlaan 13
Antwerp, 2000
Belgium

Jan De Muylder

Vrije Universiteit Brussel (VUB) ( email )

Pleinlaan 2
Brussels, Brussels Hoofdstedelijk Gewest 1050
Belgium

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