Analysis of the influence of audit firms on disclosure in notes to financial statements

Silvio Hiroshi Nakao, Natália Cortes de Oliveira, Paula Carolina Ciampaglia Nardi


Given the purpose of the external audit to certify the reliability of the disclosed information by the companies, the study aimed to verify if the size of audit firms induces the quality of accounting information reported on notes to financial statements. For this, we adopted two research strategies: (i) observation of information in the first two years of IFRS adoption to verify the differences arising from the audit firms experience; and (ii) analysis of conformity to the disclosure requirements for biological assets, which accounting standard brought significant changes to Brazilian accounting and is subject to manager’s discretion, for depth of analysis. A checklist was drawn up as the disclosure requirements for the years 2010 and 2011, and the results were analyzed by mean difference test. The sample was divided into two groups: audited by Big Four and audited by other firms. The results indicated that no business group showed full compliance with the disclosure requirements, although there is greater compliance for companies audited by Big Four. It was identified that there may be preference to the disclosures favorable to the company and that there is no evidence that the audit exhibit enforcement power to require full disclosure. Companies audited by Big Four exhibit a faster adaptation to changes imposed by the adoption of IFRS, suggesting that this is a learning process, since the companies audited by non-Big Four exhibited slight growth in the level of compliance. However, the information most likely to subjectity are biggest difference factors between the two groups. By separating the Big Four sample into types of auditing orientation, by rules or principles, we do not verify significant differences on conformity between the two groups.

Keywords: CPC 29 – Biological Assets and Agricultural Products, Independent Audit, Big Four, Disclosure, Accounting Information.


CPC 29 – Ativo Biológico e Produto Agrícola; Auditoria Independente; Big Four; Divulgação; Informação Contábil.

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ISSN: 1984-8196 - Best viewed in Mozilla Firefox

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