A Comparative Perspective on Independent Audit of Unlisted Companies : Cases of Turkey, Japan and Albania

Abstract

This study aims to discuss the extent to which independent audits of unlisted companies should be expanded by focusing on thresholds that specify the size of unlisted companies subject to independent audits in three countries that are socially and economically quite different from one another : Japan, Turkey and Albania. Various factors affect stakeholders’ need for independent audits. In other words, different criteria may be considered to define thresholds. In this study, to develop suggestions for the thresholds, we analysed types of wrongdoings encountered in these countries and considered their corruption perception scores. In this study, we first revealed the similarities and differences in the types of wrongdoings encountered in accounting and independent auditing practices in the three countries by applying an in-depth interview method to the relevant interviewees in these countries. The findings indicate that in these countries, the types and intensities of wrongdoings differ in some respects and wrongdoings more or less exist in their accounting practices. In this context, we suggest that the types and intensities of wrongdoings encountered in these countries and their corruption perception scores should be disregarded when defining thresholds that specify the size of the unlisted companies subject to independent audits. Moreover, we suggest that the thresholds should be suitable for contributing to meeting stakeholders’ needs. If very high thresholds are defined for unlisted companies, very few entities will be subject to independent audits. In contrast, if very low thresholds are defined, this audit obligation is highly likely to increase the administration costs of external audit services for very small companies. Extremely low thresholds are also likely to impose an audit obligation A comparative perspective on independent audit of unlisted companies : Cases of Turkey, Japan and Albania1） Mehmet Ozbirecikli, PhD CPA2）, Professor of Accounting Mustafa Kemal University Hatay, Turkey ozbirecikli@mku.edu.tr Yoshiaki Jinnai Professor of Accounting Tokyo Keizai University Tokyo, Japan jinnai@tku. ac. jp Nertila Cika CPA Tirana University, IT-AL Consult Tirana, Albania Nertila.Cika@albanianaudit.com A comparative perspective on independent audit of unlisted companies : . . . 152 on very small companies, which may result in poor audit quality.