Qualified audit opinions in Malta

Purpose - This paper has the objective of identifying the different types of qualifications in auditor's reports of companies in Malta, the extent of multiple and repeated qualifications in such reports and any significant relationships between such main types of qualifications and firm-specific variables. Design/methodology/approach - The study in this small Mediterranean island is designed to investigate the auditor's reports of 419 companies in the period 1997/2000. This is also complemented by an analysis of 12 interviews held with audit partners in different practices. Findings - Results show that 19.9 per cent of sampled companies had a qualified auditor's report. The most common type of qualification was that of limitation-on-scope found in small companies and issued by non-Big Four audit firms. Small companies were also prone to going concern qualifications in view of their more common net liability situations. Disagreement-with-management qualifications were found to be more likely in larger companies and to be mostly issued by Big Four audit firms. Research limitations/implications - The methodology adopted by the study may also be used in similar future studies in other small states and further research could possibly be undertaken on the motivation behind the issuance of such qualifications. Originality/value - The study concludes that Maltese companies, which are as yet all required to be audited irrespective of size, have an apparently high rate of audit qualifications and also that the auditor's reports of non-Big Four audit firms are often deficient or even incompatible with the wording of the International Standards on Auditing.