Deterministic and stochastic auditing is introduced into a model of bank capital regulation. Low-capital banks are audited the most. Safe banks hold less capital than risky banks, so, counterintuitively, safe banks are audited more intensively than risky banks. The importance of auditing by...

In this study, we empirically investigate the relationship between financial and auditing requirements, capital requirements, official supervisory power, and the likelihood of receiving a qualified audit opinion. The sample consists of 71 qualified financial statements and 17,526 unqualified...