PCAOB International Inspections and Audit Quality

2016 ◽  
Vol 92 (5) ◽  
pp. 143-166 ◽  
Author(s):  
Jagan Krishnan ◽  
Jayanthi Krishnan ◽  
Hakjoon Song
Keyword(s):  
Audit Quality ◽  
Value Relevance ◽  
Accounting Firms ◽  
The Public ◽  
Public Company ◽  
Accounting Numbers ◽  
Abnormal Accruals ◽  
Relevance Measure ◽  
The Impact ◽  
First Time

ABSTRACT We investigate the impact of the Public Company Accounting Oversight Board's (PCAOB) first-time inspections of foreign accounting firms by examining abnormal accruals around the inspection year, and the value relevance of accounting numbers around the inspection report date, for their U.S. cross-listed clients. We document lower abnormal accruals in the post-inspection period, and greater value relevance of accounting numbers in the post-report period for clients of the inspected auditors, compared with non-cross-listed clients or clients of non-inspected auditors within the inspected countries. Comparisons of the PCAOB's joint inspections with PCAOB stand-alone inspections indicate that while both experience lower post-inspection abnormal accruals, the former benefit more than the latter. The value relevance measure, in contrast, shows greater increases for the PCAOB stand-alone inspections than for joint inspections. Comparing the inspection effects for auditors with and without deficiency reports, we find no systematic differences for accruals or for value relevance.

The Impact of the PCAOB Triennial Inspection Process on Inspection Year and Non-Inspection Year Audits

2021 ◽  
Author(s):  
Lawrence J. Abbott ◽  
William L Buslepp
Keyword(s):  
Audit Quality ◽  
The Public ◽  
Learned Behavior ◽  
Public Company ◽  
Inspection Process ◽  
One Year ◽  
The Impact

The Public Company Accounting Oversight Board (PCAOB) inspects auditors with fewer than 100 publicly held clients, once every three years (i.e., triennial inspection). In doing so, the PCAOB may inspect any audit engagement within the three-year window, including audits completed only months earlier ("inspection year" audits) and audits with at least a one-year, if not two-year lag ("non-inspection year" audits). We theorize the triennial inspection process affects audit quality levels, whereby auditors impose higher (lower) audit quality during inspection years (non-inspection years). We find clients of triennially inspected auditors have significantly lower levels of accruals during inspection years. Further, this change can be attributed to additional audit effort expended during inspection years. Finally, we find some evidence this is a learned behavior developed after the initial round of inspections. Our evidence suggests auditors opportunistically increase (decrease) audit quality during inspection (non-inspection) years in response to the triennial inspection process.

Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the PCAOB Rulemaking Docket Matter No. 31: PCAOB Release No. 2010-005, Application of the “Failure to Supervise” Provision of the Sarbanes-Oxley Act of 2002 and Solicitation of Comment on Rulemaking Concepts

2011 ◽  
Vol 5 (1) ◽  
pp. C11-C15 ◽  
Author(s):  
Joseph Brazel ◽  
James Bierstaker ◽  
Paul Caster ◽  
Brad Reed
Keyword(s):  
Audit Quality ◽  
Exposure Period ◽  
Public Accounting ◽  
Accounting Firms ◽  
Accounting Firm ◽  
The Public ◽  
Sarbanes Oxley ◽  
Public Company ◽  
Auditing Standards ◽  
Supervision Practices

SUMMARY: Recently, the Public Company Accounting Oversight Board (“PCAOB” or “Board”) issued a release to address, in two ways, issues relating to the responsibilities of a registered public accounting firm and its supervisory personnel with respect to supervision. First, the release reminds registered firms and associated persons of, and highlights the scope of, Section 105(c)(6) of the Sarbanes-Oxley Act of 2002 (“the Act”), which authorizes the Board to impose sanctions on registered public accounting firms and their supervisory personnel for failing to supervise reasonably an associated person who has violated certain laws, rules, or standards. Second, the release discusses and seeks comment on conceptual approaches to rulemaking that might complement the application of Section 105(c)(6) and, through increased accountability, lead to improved supervision practices and, consequently, improved audit quality. The PCAOB provided for a 91-day exposure period (from August 5, 2010, to November 3, 2010) for interested parties to examine and provide comments on the conceptual approaches to rulemaking that might complement the application of Section 105(c)(6). The Auditing Standards Committee of the Auditing Section of the American Accounting Association provided the comments in the letter below to the PCAOB on the PCAOB Release No. 2010-005, Application of the “Failure to Supervise” Provision of the Sarbanes-Oxley Act of 2002 and Solicitation of Comment on Rulemaking Concepts.

A Decade after Sarbanes-Oxley: The Need for Ongoing Vigilance, Monitoring, and Research

2014 ◽  
Vol 28 (4) ◽  
pp. 917-930 ◽  
Author(s):  
Jeanette M. Franzel
Keyword(s):  
Audit Quality ◽  
Warning Signs ◽  
Regulatory Regime ◽  
Government Accountability ◽  
Public Companies ◽  
The Public ◽  
Sarbanes Oxley ◽  
Public Company ◽  
The Impact ◽  
Audit Independence

SYNOPSIS After more than a decade since passage of the Sarbanes-Oxley Act and the creation of the Public Company Accounting Oversight Board (PCAOB), it is appropriate and necessary to ask questions about the present state of audit quality and evaluate the impact and effectiveness of PCAOB's oversight programs. Written from the viewpoint of a current PCAOB Board member and former Managing Director of the U.S. Government Accountability Office (GAO), this paper discusses the warning signs of serious auditing problems in the years preceding the Act, and the role that the GAO played in analyzing those risks and calling for greater oversight of the accounting profession's auditing public companies. We must be vigilant and continually examine the activities of the auditing profession and the regulatory regime to ensure that audit independence and audit quality remain front and center to ensure investor protection and safeguard the public interest. Academic researchers play a key role in this system of vigilance. This paper provides views on many areas within the auditing profession that would benefit from further research and analysis, as well as opportunities for research that could be useful to the PCAOB as it considers current and future regulatory priorities.

The Impact of PCAOB Auditing Standard No. 5 on Audit Fees and Audit Quality

2012 ◽  
Vol 26 (3) ◽  
pp. 493-511 ◽  
Author(s):  
Dechun Wang ◽  
Jian Zhou
Keyword(s):  
Internal Control ◽  
Audit Quality ◽  
Audit Fees ◽  
Test Sample ◽  
Large Sample ◽  
The Public ◽  
Public Company ◽  
The Impact ◽  
Jel Classifications

SYNOPSIS We investigate the impact of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5 (AS5) on audit fees and audit quality. AS5 supersedes Auditing Standard No. 2 (AS2), and became effective for audits for accelerated filers for fiscal years ending on or after November 15, 2007. Using a large sample of accelerated filers subject to AS5, we find evidence that audit fees decrease upon the adoption of AS5. More importantly, even though AS5 adoption reduces audit fees for our test sample, we find no evidence of a decrease in audit quality. In summary, we document evidence that AS5 improves the efficiency of internal control audits. JEL Classifications: M41.

The Impact of PCAOB Auditing Standard No. 5, the PCAOB Inspection Regime, and the Great Recession on Audit Fees and Audit Quality

2020 ◽  
pp. 0148558X2098220
Author(s):  
Elizabeth S. Johnson ◽  
Kenneth J. Reichelt ◽  
Jared S. Soileau
Keyword(s):  
Great Recession ◽  
Audit Quality ◽  
Audit Fees ◽  
The Public ◽  
The Great Recession ◽  
Audit Firms ◽  
Public Company ◽  
Audit Approach ◽  
The Impact

We investigate the coinciding effects of the implementation of Auditing Standard No. 5 (AS5), the change in the Public Company Accounting Oversight Board’s (PCAOB) inspection regime, and the Great Recession on the audit fees and audit quality of accelerated filers. AS5 took effect in November 2007 and promulgated a top-down, risk-based audit approach to SOX 404(b) audits of accelerated filers. Concurrently, the PCAOB adopted a stricter approach to its inspections of audit firms, which encouraged them to improve audit quality and reduce audit fees. Moreover, the Great Recession pressured audit firms to reduce fees. We find that, following the three events, audit fees decreased and quality increased for accelerated filers. We also find that audit fees and audit quality increased for non-accelerated filers, although these filers were not directly affected by AS5.

scholarly journals Contraception and Sexsual Activity as Factor Influenced Leucorrhea

2017 ◽  
Vol 5 (3) ◽  
pp. 371
Author(s):  
Sari Priyanti
Keyword(s):  
Hormonal Contraception ◽  
Cross Sectional Study ◽  
Childbearing Age ◽  
Cross Sectional ◽  
The Public ◽  
First Sexual Intercourse ◽  
Number Of Children ◽  
Study Population ◽  
The Impact ◽  
First Time

ABSTRACTCervical cancer was non communicable desease that worries the public and causes an increase mortality in women. One of the first sign causes of cervical cancer is occourrence of Leucorrhoe. The incidence of Leucorrhoe in women Indonesia by 90% of which >75% of women experience once of leucorrhoe and experience ≥ 2 times by 25%. Leucorrhoe should not be considered an ordinary thing because can be caused to itchy on genetalia, pain during sexsual, infection  can be caused odema on genetalia, hot like burned on vagina even the impact if not treated promptly will caused infertility and cancer. Aims of study was to analyze factors of influenced on Leucorrhoe incident. Design of study was cross sectional study. Population was women of childbearing age who use contraceptives in the karang jeruk village, Jatirejo sub district, Mojokerto district in March of 2017. Sample in this study was 33 people. Data analyze with logistic regresion. Result of study showed contraceptive and sexsual activity has significant influenced with leucorrhoe (PR = 10.000; 95% CI= 1,732-57,722 dan PR=8,750; 95% CI=1,466-52,232). Suggestion: should be married and have first sexual intercourse for the first time at the age of  ≥ 20 years, limit the number of children not more than 2 as the greater the number of children the greater the risk of Leucorrhoe, and not using hormonal contraception for a along time that more than 2 years. Keywords: contraceptive,sexsual activity, leucorrhoe

scholarly journals The Effect of Independence and Integrity on Audit Quality: Is There A Moderating Role for E-Audit?

2021 ◽  
Vol 23 (3) ◽  
Author(s):  
Diza Dianeke Budi Prabowo ◽  
Dwi Suhartini
Keyword(s):  
Industrial Revolution ◽  
Audit Quality ◽  
Practical Implication ◽  
Financial Statements ◽  
Auditor Independence ◽  
Audit Process ◽  
Accounting Firms ◽  
Audit Reports ◽  
The Impact

The financial statements must be reliable and become a benchmark in considering an audit decision on the financial statements. In order for this to be achieved, independence and integrity is required in carrying out the audit process. E-Audit helps overcome challenges in the industrial revolution 4.0 and prevent fraud. This research aims of testing and analyzing the role of e-audit in moderating the impact of auditor independence and integrity on audit quality. The data was collected through a questionnaire distributed to auditors at Public Accounting Firms in Surabaya. There are 36 respondents involved. The data were analyzed using SmartPLS. The results showed that auditor independence positively effect audit quality, auditor integrity positively effect audit quality; e-audit does non moderate the effect of auditor independence on audit quality; ande-Audit negatively moderates the effect of auditor integrity on audit quality. The practical implication of this research is that when determining high audit quality, independent auditors should at least increase their independence and integrity so that the resulting audit reports are of high quality and can be a reference for decision makers.

The effect of the financial crisis on audit quality: European evidence

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maria I. Kyriakou
Keyword(s):  
Financial Crisis ◽  
Audit Quality ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Cross Sectional ◽  
Accounting Firms ◽  
Content Type ◽  
Financial Firms ◽  
The Impact ◽  
Big Four

Purpose This paper aims to examine the impact of the recent financial crisis on audit quality by analysing discretionary accruals. Design/methodology/approach This study considers a sample of German, French, Italian and Spanish non-financial firms from 2005 to 2013 to investigate the auditor’s independence. It uses a cross-sectional and time-series ordinary least squares regression model to control for other predictors of the auditor’s independence when the financial crisis produces a decrease in audit quality. Findings The proportion of the non-financial firms having lower audit quality was higher during the financial crisis. In addition, during the crisis auditors were less likely to provide a higher audit quality for these non-financial firms. The level of audit quality returned to normal levels during the post-crisis years when the crisis had ceased. Originality/value These findings contribute to the literature on the impact of economic and financial changes on audit quality. In addition, this research finds that the Big Four accounting firms provide a higher audit quality in different circumstances from non-Big Four accounting firms, and that audit quality decreased during the crisis and returned to normal in the post-crisis period.

Hiring Auditors with a Part II Quality Control Report: An Opportunity for Increased Earnings Management or Lower Audit Fees?

2020 ◽  
Vol 5 (1) ◽  
pp. 73-93
Author(s):  
Jared Eutsler ◽  
D. Kip Holderness ◽  
Megan M. Jones
Keyword(s):  
Quality Control ◽  
Audit Quality ◽  
Audit Fees ◽  
Data Availability ◽  
Fiscal Year ◽  
The Public ◽  
Audit Firms ◽  
Public Company ◽  
General Demand ◽  
Systemic Quality

ABSTRACT The Public Company Accounting Oversight Board's (PCAOB) Part II inspection reports, which disclose systemic quality control issues that auditors fail to remediate, signal poor audit quality for triennially inspected audit firms. Auditors that receive a Part II inspection report typically experience a decrease in clients, which demonstrates a general demand for audit quality. However, some companies hire auditors that receive Part II inspection reports. We examine potential reasons for hiring these audit firms. We find that relative to companies that switch to auditors without Part II reports, companies that switch to auditors with Part II reports have higher discretionary accruals in the first fiscal year after the switch, which indicates lower audit quality and a heightened risk for future fraud. We find no difference in audit fees. Our results suggest that PCAOB Part II inspection reports may signal low-quality auditors to companies that desire low-quality audits. Data Availability: Data are available from the public sources cited in the text.

scholarly journals Collective benefits in traffic during mega events via the use of information technologies

2017 ◽  
Vol 14 (129) ◽  
pp. 20161041 ◽  
Author(s):  
Yanyan Xu ◽  
Marta C. González
Keyword(s):  
Travel Time ◽  
Information Technologies ◽  
Travel Demand ◽  
Collective Good ◽  
Large Cities ◽  
The Public ◽  
The Impact ◽  
First Time ◽  
Integrate Data ◽  
Expected Increase

Information technologies today can inform each of us about the route with the shortest time, but they do not contain incentives to manage travellers such that we all get collective benefits in travel times. To that end we need travel demand estimates and target strategies to reduce the traffic volume from the congested roads during peak hours in a feasible way. During large events, the traffic inconveniences in large cities are unusually high, yet temporary, and the entire population may be more willing to adopt collective recommendations for collective benefits in traffic. In this paper, we integrate, for the first time, big data resources to estimate the impact of events on traffic and propose target strategies for collective good at the urban scale. In the context of the Olympic Games in Rio de Janeiro, we first predict the expected increase in traffic. To that end, we integrate data from mobile phones, Airbnb, Waze and transit information, with game schedules and expected attendance in each venue. Next, we evaluate different route choice scenarios for drivers during the peak hours. Finally, we gather information on the trips that contribute the most to the global congestion which could be redirected from vehicles to transit. Interestingly, we show that (i) following new route alternatives during the event with individual shortest times can save more collective travel time than keeping the routine routes used before the event, uncovering the positive value of information technologies during events; (ii) with only a small proportion of people selected from specific areas switching from driving to public transport, the collective travel time can be reduced to a great extent. Results are presented online for evaluation by the public and policymakers ( www.flows-rio2016.com (last accessed 3 September 2017)).

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