What's in a Name? Initial Evidence of U.S. Audit Partner Identification Using Difference-in-Differences Analyses PDF Download
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Author: Lauren M. Cunningham
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We investigate changes in the quality and cost of audit services surrounding PCAOB Rule 3211, which requires disclosure of audit partner names in Form AP. To isolate changes due to Rule 3211 from other confounding factors, we use difference-in-differences analyses with separate control groups, including a group of companies that disclosed partner identities prior to Rule 3211. Our study also incorporates several measures from prior literature to proxy for various dimensions of audit quality. Evidence from the difference-in-differences analyses reveals that any immediate impact of Rule 3211 on audit quality or fees is limited to specific dimensions of audit quality, specific control groups, and/or specific company characteristics. We reach this conclusion after considering alternative research designs and evaluating confidence intervals for statistically insignificant coefficients. We caution that our findings only provide initial evidence and further research is necessary to evaluate other potential impacts of Rule 3211.
Author: Lauren M. Cunningham
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We investigate changes in the quality and cost of audit services surrounding PCAOB Rule 3211, which requires disclosure of audit partner names in Form AP. To isolate changes due to Rule 3211 from other confounding factors, we use difference-in-differences analyses with separate control groups, including a group of companies that disclosed partner identities prior to Rule 3211. Our study also incorporates several measures from prior literature to proxy for various dimensions of audit quality. Evidence from the difference-in-differences analyses reveals that any immediate impact of Rule 3211 on audit quality or fees is limited to specific dimensions of audit quality, specific control groups, and/or specific company characteristics. We reach this conclusion after considering alternative research designs and evaluating confidence intervals for statistically insignificant coefficients. We caution that our findings only provide initial evidence and further research is necessary to evaluate other potential impacts of Rule 3211.
Author: Lawrence Abbott
Publisher:
ISBN:
Category :
Languages : en
Pages : 49
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Book Description
After a lengthy and protracted debate, the Public Company Accounting Oversight Board (PCAOB) adopted new rules and related amendments to its auditing standards regarding the engagement partner and other accounting firms that took part in the audit (PCAOB 2015). The rules require disclosure of the engagement partner's name and information about other accounting firms on new PCAOB Form AP, Auditor Reporting of Certain Audit Participants. We investigate the impact of this regulation on auditor behavior in the context of the auditor's going concern report modification propensity. Consistent with a perceived increase in litigation risk, we document an increase in the propensity to issue a going concern report modification in the disclosure regime. Our results are sensitive to auditor type. Specifically, only Big Four auditors exhibit an increase in the going concern modification rate. Our evidence is consistent with Big Four audit partners believing that audit partner identification exposes them to higher litigation risk.
Author: Wally Smieliauskas
Publisher: Routledge
ISBN: 0429854129
Category : Business & Economics
Languages : en
Pages : 269
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Book Description
Auditing has become an essential component in market societies and the need for auditing skills has risen in line with globalization. This textbook provides a comprehensive overview of the role of financial statement auditing in contemporary society, including the auditor’s role in evaluating the financial reporting of an auditee—a topic of central concern in the recent comprehensive review of the auditing profession in the Brydon Report (2019). The experienced authors provide insight into auditing research to help readers understand its function, regulation, and role in theory and practice. With focus on private sector financial statement auditing and its regulation, the book includes perspectives on social theory, history, and the importance of professional standards. The thought-provoking final chapter challenges students to consider the effectiveness of auditing in evaluating increasingly risky and complex accounting estimates involving assumptions about future events. A fundamental approach to auditing theory, this textbook will be useful reading for advanced undergraduate and postgraduate students across business and accounting fields.
Author: Mai Dao
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The debate concerning the recent regulation in the United States mandating accounting firms to disclose engagement partners' identity is ongoing. We examine the impact of the Public Company Accounting Oversight Board's (PCAOB) requirement of disclosing engagement partners' names on Form AP on the quality of audit engagements. Using two measures of audit quality (abnormal accruals and the probability of detecting material weaknesses in internal control), we find that disclosing engagement partners' names is associated with a lower level of abnormal accruals and a higher probability of accounting firms detecting material weaknesses in internal control. Our study extends the contemporary research on the disclosure of engagement partners' identification by providing additional evidence to the literature on this issue in the U.S. setting. Our study also provides evidence supporting the PCAOB's perception that this disclosure leads to higher audit quality.
Author: Brant Christensen
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Although mandatory partner rotation has existed in the U.S. in some form since the 1970s, insufficient U.S. partner-specific data has limited researchers' ability to examine the costs and benefits of mandatory U.S. partner rotation in the current audit environment. Using proprietary data from a large international audit firm, I investigate the effect of mandatory lead partner rotation in the U.S. on three proxies for audit quality: audit fees, identifying and reporting a material control weakness, and providing a modified audit opinion. Controlling for client- and audit-specific characteristics, I provide evidence that mandatory rotation of the lead engagement partner increases audit quality in the year of rotation among larger audit offices only; audit quality is lower in the year of mandatory lead partner rotation in smaller offices. Further, rotation increases audit quality when the incoming lead engagement partner has the requisite industry expertise, but decreases audit quality when the lead partner lacks such expertise. Additional analyses show that mandatory concurring partner rotation has a similar, albeit weaker effect on audit quality. My results are robust to various proxies for audit quality, time periods, and model specifications. These findings provide evidence on the costs and benefits of partner rotation and informs practitioners, academics, and regulators as to the consequences of mandatory partner rotation in the U.S. The electronic version of this dissertation is accessible from http://hdl.handle.net/1969.1/155494
Author: Henry Laurion
Publisher:
ISBN:
Category :
Languages : en
Pages : 60
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Book Description
We investigate the effects of audit partner rotation among U.S. publicly listed firms, utilizing the fact that audit partners are periodically copied by name in public correspondence between issuers and the SEC. Relative to non-rotation firms, we find no evidence of a change in the frequency of misstatements following the partner rotation; however, there is an increase in the frequency of restatement discoveries and announcements. We also find an increase in deferred tax valuation allowances. Overall, the results provide some evidence suggesting that U.S. partner rotations support a fresh look at the audit engagement.
Author: Tamara A. Lambert
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
We explore potential effects of a new Public Accounting Oversight Board (PCAOB) rule that requires disclosure of the external audit partner's identity. By manipulating the presence or absence of audit partner disclosure (APD), we examine how investors might react to APD and the mechanism behind such reaction. We find that prospective investors are less likely to invest in a peer firm linked to a restating firm via APD than when the link is only through audit firm and industry. This effect is mediated by investors' restatement likelihood assessments. Our study makes several contributions. First, we add empirical evidence to the emerging debate on the impact of APD to U.S. markets. Second, we experimentally demonstrate investor information contagion and provide support for one mechanism (speculated by archival-based literature) through which it works. Finally, we provide evidence that investors attribute more blame to partners for a negative outcome due to APD.
Author: Hye Seung (Grace) Lee
Publisher:
ISBN:
Category :
Languages : en
Pages : 54
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Book Description
This paper examines the demand and supply side factors associated with audit partner selection and assignment in the United States. First, we examine whether audit partner gender and experience are associated with board and management gender and experience. Second, we investigate whether engagement audit quality varies with audit partner gender and experience, controlling for selection effects. The results indicate that companies with more gender-diverse boards of directors and top management teams are more likely to have a female lead audit partner. In addition, the experience of the client's board is positively associated with the experience of the lead audit partner. In terms of audit quality, we find that higher audit fees are positively associated with female and more experienced audit partners. The results also provide weak evidence that audit partner gender is associated with audit quality as measured by abnormal accruals and restatements. We do not find an association between partner experience and audit quality. Our results shed light on the important role that partner characteristics play in the demand and supply side of audit quality. Partner characteristics also have implications for future research on the audit assignment process in the U.S., particularly in light of the new availability of audit partner identities in the PCAOB Form AP filings.
Author: United States Government Accountability Office
Publisher: Lulu.com
ISBN: 0359536395
Category : Reference
Languages : en
Pages : 234
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Book Description
Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.
Author: National Research Council
Publisher: National Academies Press
ISBN: 0309142393
Category : Law
Languages : en
Pages : 348
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Book Description
Scores of talented and dedicated people serve the forensic science community, performing vitally important work. However, they are often constrained by lack of adequate resources, sound policies, and national support. It is clear that change and advancements, both systematic and scientific, are needed in a number of forensic science disciplines to ensure the reliability of work, establish enforceable standards, and promote best practices with consistent application. Strengthening Forensic Science in the United States: A Path Forward provides a detailed plan for addressing these needs and suggests the creation of a new government entity, the National Institute of Forensic Science, to establish and enforce standards within the forensic science community. The benefits of improving and regulating the forensic science disciplines are clear: assisting law enforcement officials, enhancing homeland security, and reducing the risk of wrongful conviction and exoneration. Strengthening Forensic Science in the United States gives a full account of what is needed to advance the forensic science disciplines, including upgrading of systems and organizational structures, better training, widespread adoption of uniform and enforceable best practices, and mandatory certification and accreditation programs. While this book provides an essential call-to-action for congress and policy makers, it also serves as a vital tool for law enforcement agencies, criminal prosecutors and attorneys, and forensic science educators.
