scholarly journals Audit Quality: Insights from the Academic Literature

2012 ◽  
Vol 32 (Supplement 1) ◽  
pp. 385-421 ◽  
Author(s):  
W. Robert Knechel ◽  
Gopal V. Krishnan ◽  
Mikhail Pevzner ◽  
Lori B. Shefchik ◽  
Uma K. Velury
Keyword(s):  
Audit Quality ◽  
Academic Research ◽  
Future Research ◽  
The Public ◽  
Academic Literature ◽  
Public Company

SUMMARY This study presents a review of academic research on audit quality. We begin with a review of existing definitions of audit quality and describe general frameworks for establishing audit quality. Next, we summarize research on indicators of audit quality such as inputs, process, and outcomes. Finally, we offer some suggestions for future research. The study should be useful to academics interested in audit quality as well as to the Public Company Accounting Oversight Board (PCAOB) and other regulators.

Does Recent Academic Research Support Changes to Audit Reporting Standards?

2016 ◽  
Vol 30 (2) ◽  
pp. 255-275 ◽  
Author(s):  
Jean Bédard ◽  
Paul Coram ◽  
Reza Espahbodi ◽  
Theodore J. Mock
Keyword(s):  
Financial Reporting ◽  
Academic Research ◽  
Financial Statements ◽  
Future Research ◽  
Research Support ◽  
The Public ◽  
Market Participants ◽  
Information Gap ◽  
Public Company ◽  
Reporting Process

SYNOPSIS The Public Company Accounting Oversight Board (PCAOB), the International Auditing and Assurance Standards Board (IAASB), and the U.K. Financial Reporting Council (FRC) have proposed or approved standards that significantly change the independent auditor's report. These initiatives require the auditor to make additional disclosures intended to close the information gap; that is, the gap between the information users desire and the information available through the audited financial statements, other corporate disclosures, and the auditor's report. They are also intended to improve the relevancy of the auditor's report. We augment prior academic research by providing standard setters with an updated synthesis of relevant research. More importantly, we provide an assessment of whether the changes are likely to close the information gap, which is important to financial market participants and other stakeholders in the audit reporting process. Also, we identify areas where there seems to be a lack of sufficient research. These results are of interest to all stakeholders in the audit reporting process, as the changes to the auditor's report are fundamental. Additionally, our summaries of research on the auditor's report highlight where there is limited research or inconsistent results, which will help academics identify important opportunities for future research.

scholarly journals Auditing Issues with Chinese Reverse Merger Companies Traded in the United States

2012 ◽  
Vol 2 (2) ◽  
pp. 76
Author(s):  
Frederic M. Stiner ◽  
Susan A. Lynn
Keyword(s):  
United States ◽  
Audit Quality ◽  
The United States ◽  
Auditor Independence ◽  
Securities And Exchange Commission ◽  
Future Research ◽  
Chinese Government ◽  
The Public ◽  
Reverse Mergers ◽  
Public Company

Recently there have been two issues related to Chinese companies seeking capital in the United States.   The first issue is frauds that have been perpetrated by companies using reverse mergers in order to go public.   The second issue is fraud in continuing audit engagements when there has been reliance by an American audit firm on a foreign accountant’s audit work.  There is also conflict between the Public Company Accounting Oversight Board (PCAOB) demanding to inspect audit workpapers for companies in China and the Chinese government’s refusal to let the PCAOB see these workpapers.   These issues relate to characteristics of the practice of accounting and auditing in China that threaten auditor independence and audit quality. The paper discusses: (1) issues involving reverse mergers and the response of the Securities and Exchange Commission (SEC) to these issues, (2) issues involving reliance on the work of foreign Certified Public Accountants (CPAs) and the response of the PCAOB to these issues, (3) issues involving conflicts between U.S.  regulatory agencies and the Chinese government over access to audit-related documents, and (4) suggestions for future research.

A Summary of Research and Enforcement Release Evidence on Confirmation Use and Effectiveness

2008 ◽  
Vol 27 (2) ◽  
pp. 253-279 ◽  
Author(s):  
Paul Caster ◽  
Randal J. Elder ◽  
Diane J. Janvrin
Keyword(s):  
Specific Problem ◽  
Academic Research ◽  
Response Rates ◽  
Future Research ◽  
Directional Bias ◽  
The Public ◽  
Public Company ◽  
Audit Evidence ◽  
Research Questions

SUMMARY: Confirmations are extensively used and are often perceived by practitioners to be one of the most persuasive forms of audit evidence. Yet academic research has found limitations that restrict confirmation effectiveness for many management assertions. In addition, a number of problems with false and forged confirmations are identified in Accounting and Auditing Enforcement Releases (AAERs). The Public Company Accounting Oversight Board (PCAOB) and the International Auditing and Assurance Standards Board (IAASB) have put confirmation evidence on their respective agendas. Academic research indicates that receivable confirmations can be effective evidence for the existence assertion. Low response rates, as well as respondent errors and directional bias in detecting errors, are key barriers to confirmation effectiveness. Our review of AAERs identified failure to authenticate responses, collusion between auditee management and customers, and concealed side agreements and special terms as specific problem areas. We also identify a number of research questions for future research.

Conclusion: What academia can contribute to refugee policy

2018 ◽  
Vol 56 (1) ◽  
pp. 146-151 ◽  
Author(s):  
Idean Salehyan
Keyword(s):  
Academic Research ◽  
Forced Migration ◽  
Humanitarian Assistance ◽  
Future Research ◽  
Security Risks ◽  
Individual Level ◽  
The Public ◽  
Level Data ◽  
Potential Risks

This conclusion to the special issue highlights the role of scholars in advancing the public discussion about forced migration. As countries around the world are adopting increasing restrictions on the entry of refugees, academic research can help to dispel some of the myths and apprehensions regarding the risks that forced migration entails. While refugees may be linked to conflict and violence in limited circumstances, the research generally demonstrates that robust international cooperation to manage refugee settlements, provide adequate humanitarian assistance, and integrate refugees into host communities, among other policies, can help to mitigate potential risks. Directions for future research and analysis are also discussed. Forced migration scholars should endeavor to collect more individual-level data; seek to understand factors that exacerbate or reduce security risks associated with cross-border militancy; conduct research on the long-term integration of refugees; and seek to understand the causes and consequences of resettlement and repatriation policies.

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.

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.

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.

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.

scholarly journals Conceptualizing E-Government from Local Government Perspectives

2018 ◽  
Vol 50 (1) ◽  
pp. 56-66 ◽  
Author(s):  
Aroon P. Manoharan ◽  
Alex Ingrams
Keyword(s):  
Information And Communication Technologies ◽  
Local Governments ◽  
Communication Technologies ◽  
Mobile Technologies ◽  
Future Research ◽  
The Public ◽  
Academic Literature ◽  
The Past ◽  
Adoption And Implementation ◽  
Information And Communication

Over the past two decades, governments have used information and communication technologies (ICTs) to integrate their internal functions and improve their delivery of services. Scholars and practitioners have conceptualized these various ICT trends and referred to them collectively as e-government. As the number of citizens using the Internet and mobile technologies increases, the public sector is constantly innovating to keep pace with the changing technologies and citizens’ expectations. This essay reviews the academic literature on e-government among local governments and explores the issues related to its adoption and implementation. Adopting an e-government stages perspective with attention to institutional capacity, the essay examines the factors and determinants of local e-government success. The essay concludes with directions for future research on e-government and innovation in local governments.

Do Strategic Reasoning and Brainstorming Help Auditors Change Their Standard Audit Procedures in Response to Fraud Risk?

2009 ◽  
Vol 84 (3) ◽  
pp. 811-837 ◽  
Author(s):  
Vicky B. Hoffman ◽  
Mark F. Zimbelman
Keyword(s):  
Academic Research ◽  
Strategic Reasoning ◽  
The Public ◽  
Fraud Risk ◽  
Planning Decisions ◽  
Public Company

ABSTRACT: The Public Company Accounting Oversight Board recently reported that its inspections show that auditors fail to effectively modify their standard audit procedures in response to fraud risk. Prior academic research is consistent with this finding. Our study examines the effects of two interventions on auditors' planning decisions in a high-fraud-risk setting: strategic reasoning and brainstorming in groups. Both interventions are predicted to lead auditors to more effectively modify their planned audit procedures. We use a panel of fraud experts to identify effective modifications to the audit plan of a specific fraud case. The experts' recommendations are then used to evaluate the effectiveness of practicing auditors' audit plans with and without the two interventions. We predict and find that each intervention leads to more effective modifications to the standard audit procedures and that the combination of the interventions is not significantly more effective than either intervention used alone.

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