10.36172/EKONOMISTI.2021.XVII.03.TEIMURAZ.PARTSKHALADZE

Expanded Summary 

Aim of the article is to identify and establish the impact of audit services, other than financial audit services, on increased total revenues and higher quality of service. The model attempted to assert two hypothesis. Hypothesis 1: other professional activity supports audit activity. Hypothesis 2: labor management affects audit revenues. For this purpose, we studied impact of labor structure on audit revenues and impact of revenues from other professional activities on audit revenues. The model attempted to assert two hypothesis. Hypothesis 1: other professional activity supports audit activity. Hypothesis 2: labor management affects audit revenues. For this purpose, we studied impact of labor structure on audit revenues and impact of revenues from other professional activities on audit revenues. Effectiveness of personnel employed in the field of audit is 3 times higher than the effectiveness of administrative personnel. The model indicates that at the given stage of development, increased labor in the field of administration worsens the labor structure and adversely affects profitability of audit companies. 

Keywords: Audi services, Financial Audit, Professional activity, Audit revenue

Introduction 

Audit is essential to ensure reliability of financial and management information and facilitates decision-making on micro and macro levels, with increased value under conditions of informational competition. Besides establishment of international standards, outcomes of audit activities mainly depend on fair activity of audit companies. Therefore, it is important to analyze factors which affect audit activities in a positive or negative manner. 

Two factors are important to emphasize in the context of audit activities: diversification of activities by companies and labor management. 

 Description and Analysis of the Study 

Audit companies carry out other professional activities in addition to audit services, such as accounting, evaluation, tax consultancies, legal services and other professional activities. Such diversification of activities by audit companies may facilitate strengthening of the companies, but ay also damage audit activity itself, may have a filling effect and support development of audit activities in companies. 

Labor structure implies distribution of employed persons between audit activities and other professional activities and labor distribution between the fields of administrative and executive personnel. This analysis will enable to identify labor structure indicators, which may have negative or positive impact on the outcomes of audit activities. 

One of the main question is how to evaluate outcomes of audit activities? What is the level of effectiveness of audit activity? Which indicator would measure the effectiveness? With this regard, we assume that increased revenue under the conditions of free competition indicates on customers tending towards specific companies, since such companies create more reliable product. Based on the above, profitability of companies may be used as the measure of effectiveness. 

Results Analysis

This model is statistically important. There is no issue relating to auto correlation in the model, as evidenced by Durbin – Watson statistics, coefficients are important, as evidenced by t-statistics; determination coefficient and F-Statistics also indicate on the statistical importance of the model. 

The model attempted to assert two hypothesis. Hypothesis 1: other professional activity supports audit activity. Hypothesis 2: labor management affects audit revenues. For this purpose, we studied impact of labor structure on audit revenues and impact of revenues from other professional activities on audit revenues. Higher employment in the field of audit increases company revenues by GEL 62,000 on average, and employment in administration by GEL 20,000. As for impact of other revenues, increase of other revenues by each one GEL increases audit revenues by GEL 1,7. However, the later in standardized model is quite insignificant in terms of impact on revenues and is also characterized by diminishing return. 

Conclusions 

As a conclusion: 1. other professional activities have positive impact on audit activity at the given stage of development, although this factor is characterized by adequate independence and has insignificant weight in terms of impact on the increase of revenue from audit activities. Besides, this factor is characterized by lower diminishing return with regard to increase of revenues from audit activities. 2. Balance of labor in the fields of administration and audit has a significant impact on revenues and both factors are important in this respect. However, effectiveness of personnel employed in the field of audit is 3 times higher than the effectiveness of administrative personnel. The model indicates that at the given stage of development, increased labor in the field of administration worsens the labor structure and adversely affects profitability of audit companies.