What Kind of Audit Rotation Is Preferred by UK Companies - Research Proposal Example

In every research, the population consists of individuals, things or elements that fit within a specified area of study. As for this research, 45 respondents, that is (30%) of the total administrative forming a 150 of the total executives at the Arnold Clark Automobiles headquarters. Such employees will be drawn from various departments that are not limited to accounts, internal audit department, procurement department, and administration department.

Data Collection Instruments

The type of data collection tool broadly depends on the type of data to be collected during research. This research being not empirical will employ two specific methods to enhance the checking of the credibility of data. According to Hay Knechel and Willekens (2014), the use of more than one data collection tool promotes accuracy with limited distortion to the data obtained. The following are some of the data collection methods that will be utilized in this study:

Questionnaires:

Questionnaires are mainly used to collect answers from respondents out of the predefined set of questions (Maynard 2013). It is one way of accessing people’s opinions, ideas of definitions to certain situations. As per this study, both structured and unstructured questionnaires will be used to collect data concerning the most preferred audit rotation technique by UK companies. With the help of 45 questionnaires that would be distributed to the respondents from a different department at Arnold Clark Automobiles group of companies, the researcher will be in a position to collect the results for further analysis.

Review of the financial Reports:

To ascertain the level quality of rotational audit reports as conducted by the company in the past three years to date, financial reports of Arnold Clark Automobiles group of companies will also be reviewed and the result collected will be recorded for future analysis. Therefore, proper precautions will also be put in place to ensure that only valid data are collected.

Literature Review

According to (Philipsen and Xu 2014), mandatory audit rotation constitutes the act of imposing regulation to audit functions for a specified duration through which a particular accounting company may take charge to be an auditor of records. The above sentiments were further supported by Laeven and Michalopoulos (2015) who confirmed that mandatory audit functions are mostly conducted to promote the quality of audit activities with an objective to build up public confidence by eliminating adverse events that are most likely to derail the public trust such as scandals or failures in financial reporting. Since the incorporation of audit rotation act by the Registrar of companies in the UK, the concept has since been reflected under different capacities by most UK companies (Philipsen and Xu 2014). However, the function of audit rotation is treated differently by different companies that are also forming part of the great United Kingdom. Regardless of a nation, mandatory audit rotation is conducted all listed companies of the UK while voluntary audit functions have mostly been carried out by small companies. In Asian countries, mandatory audit rotation is mainly applicable to institutions of insurance companies.

Telò (2016) argues that the disbandment of mandatory audit rotation in some countries in the United kingdoms, Greece, and the Czech Republic has contributed negatively regarding national financial reporting. In situations where any form of rotational auditing has been adopted by a state then the agenda of financial reporting has succeeded before a fall of financial reporting of the company (Telò 2016). In 2015 for instance, UK promoted the use of mandatory audit rotation to mitigate further chances to collapsing of companies like it happened for Metallgesells-Craft Group Of Companies in 1995. The promotion of voluntary audit rotation in the past five years has since been adopted by companies that were targeting to enhance the quality of audit reporting (Tricker 2015). Nevertheless, review group of auditing proposed that mandatory method of audit reporting is most likely to undermine the effectiveness of financial auditing since a company subjected to such a method would feel as if they are getting pushed to look into the quality of their financial reports.

Data Analysis and Interpretation

In most cases, raw data obtained both from the questionaries’ and the periodic reports are often difficult to interpret. Therefore, it would be important to enter such data into a computer system after which they would be manipulated for further analysis. As pointed out by Creswell (2013), it is through the analysis of data that either a researcher or an audience would be in a position to make sense out of research. Therefore, Statistical Package for Social Sciences (SPSS) version 21 has been proposed for this research. However, such would be supported by regression coefficient to analyze the data. SPSS is a unique type of a computer application that is used in the analysis of quantitative data. The use of SPSS was influenced for this study since it would make it easier to compare variables associated with quantitative and qualitative reports that are meant to be investigated in this study to un-earthen preferred audit rotation technique by UK companies. Questionnaires that shall not have been filed by the respondents will not form part of the final analysis. The data collected will be presented in a form of charts, graphs and tables then supported by interpretation for the readers to understand. Consequently, a regression analysis will be established to determine the relation between the variables.

Limitations to the Study

Though this study has a clear methodology, some of the challenges that are most likely to affect the progressive finding have already been projected. First, the study has projected the likeliness to the problem of accessibility. Since the study will be conducted at Arnold Clark Automobiles Group Of Companies that has its internal policies, there is likeliness that the researcher might not be granted an opportunity to access all departments within the organization.

Another proposed limitation proposed in this study is the issue of confidentiality. While appropriate measures have already been put in place to see that all the required respondents have filled in the questionnaire, it is obvious that a few would find it difficult to disclose financial issues of the company. Besides, others would feel as it researcher is intending to make it public the financial distress of the firm. Consequently, it would be a bit difficult to compare the rotation audit policies of different countries bearing in mind that there are several countries forming part of the United Kingdom. Each country is also governed by specific characteristics and financial litigation methods that will limit the credibility to some of the findings.

Ethical Issues

Before conducting the research about the topic stated above, the following ethical issues will be put into consideration:

The research will assure respondent sourced from Arnold Clark Automobiles Company an utmost confidentiality at all times. Therefore, only the researcher will be in a position to know the true identity of the respondents.

Informed consent will be obtained both from the side of the researcher and from the side of the respondents. However, the research will be conducted on a voluntary basis.

The researcher will also clarify the main purpose of this study before conducting the actual research. Such will enable researchers to mitigate chances of access barriers while trying to probe for data from the respondents.

Conclusion

This proposal is designed to report on the most preferred audit rotation by UK companies. The proposal has clarified hoe the expected and observed effects of audit rotation may have on companies that are expecting to employ the technique or to those that are already using the same. By pointing at some of the differences between mandatory and voluntary rotational auditing, it is more likely that that study will utilize mixed international experiences to reveal what it makes to adopt rotational auditing method. Therefore, this study will provide a leeway to the investigation to a preferred method of audit rotation method that should be adopted by the UK companies towards the realization of quality audit functions. Therefore, results obtained from the empirical findings will be utilized to identify the best rotational auditing method that will also not compromise the quality of auditing functions.

Reference list

Creswell, J. W. 2013. Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. Thousand Oaks: SAGE Publications, Inc

Hay, D., Knechel, W.R. and Willekens, M., 2014.The Routledge Companion to Auditing.Routledge.

Laeven, L., Levine, R. and Michalopoulos, S., 2015. Financial innovation and endogenous growth.Journal of Financial Intermediation, 24(1), pp.1-24.

Maynard, J. 2013. Financial accounting, reporting, and analysis.Oxford : Oxford University Press.

Philipsen, N. and Xu, G., 2014. The role of law and regulation in sustaining financial markets.Routledge.

Telò, M., 2016.Globalisation, multilateralism, Europe: towards a better global governance?.Routledge.

Tricker, R. I. 2015.Corporate governance: Principles, policies, and practices. Oxford, United Kingdom : Oxford University Press.