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Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms
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| Zeitschriftentitel: | Review of Accounting and Finance |
|---|---|
| Personen und Körperschaften: | , , |
| In: | Review of Accounting and Finance, 16, 2017, 4, S. 478-496 |
| Format: | E-Article |
| Sprache: | Englisch |
| veröffentlicht: |
Emerald
|
| Schlagwörter: |
| author_facet |
Chang, C. Janie Luo, Yan Zhou, Linying Chang, C. Janie Luo, Yan Zhou, Linying |
|---|---|
| author |
Chang, C. Janie Luo, Yan Zhou, Linying |
| spellingShingle |
Chang, C. Janie Luo, Yan Zhou, Linying Review of Accounting and Finance Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms General Economics, Econometrics and Finance Finance Accounting |
| author_sort |
chang, c. janie |
| spelling |
Chang, C. Janie Luo, Yan Zhou, Linying 1475-7702 Emerald General Economics, Econometrics and Finance Finance Accounting http://dx.doi.org/10.1108/raf-03-2017-0050 <jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The purpose of this study is to examine the impact of workloads at public accounting firms on the likelihood of an audit deficiency being identified during a triennial inspection by the Public Company Accounting Oversight Board (PCAOB).</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>Using the human resource information disclosed in PCAOB inspection reports, this study constructs two firm-specific workload measures: the ratio of issuer clients to audit partners; and the ratio of issuer clients to professional staff. Firm-level audit deficiency is measured at three levels of severity: Do any of the audit engagements inspected by the PCAOB reveal an audit deficiency? Are any of the identified audit deficiencies directly related to the auditors’ failure to identify a departure from GAAP in the client’s financial statement? Are any of the identified audit deficiencies associated with a significant adjustment or restatement in the client’s subsequent period financial statements? This study uses logistic regression to examine the association between audit deficiency and the workload of public accounting firms.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The empirical evidence suggests that the workload of public accounting firms is positively associated with the likelihood of a deficient audit, auditor’s failure to identify client’s GAAP departure and/or an audit deficiency resulting in a significant adjustment or even a restatement of the client’s financial statements in the subsequent period.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>This study is among the first to investigate the impact of firm workload on deficient audits.</jats:p> </jats:sec> Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms Review of Accounting and Finance |
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Review of Accounting and Finance |
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| title |
Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_unstemmed |
Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_full |
Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_fullStr |
Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_full_unstemmed |
Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_short |
Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_sort |
audit deficiency and auditor workload: evidence from pcaob triennially inspected firms |
| topic |
General Economics, Econometrics and Finance Finance Accounting |
| url |
http://dx.doi.org/10.1108/raf-03-2017-0050 |
| publishDate |
2017 |
| physical |
478-496 |
| description |
<jats:sec>
<jats:title content-type="abstract-subheading">Purpose</jats:title>
<jats:p>The purpose of this study is to examine the impact of workloads at public accounting firms on the likelihood of an audit deficiency being identified during a triennial inspection by the Public Company Accounting Oversight Board (PCAOB).</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title>
<jats:p>Using the human resource information disclosed in PCAOB inspection reports, this study constructs two firm-specific workload measures: the ratio of issuer clients to audit partners; and the ratio of issuer clients to professional staff. Firm-level audit deficiency is measured at three levels of severity: Do any of the audit engagements inspected by the PCAOB reveal an audit deficiency? Are any of the identified audit deficiencies directly related to the auditors’ failure to identify a departure from GAAP in the client’s financial statement? Are any of the identified audit deficiencies associated with a significant adjustment or restatement in the client’s subsequent period financial statements? This study uses logistic regression to examine the association between audit deficiency and the workload of public accounting firms.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Findings</jats:title>
<jats:p>The empirical evidence suggests that the workload of public accounting firms is positively associated with the likelihood of a deficient audit, auditor’s failure to identify client’s GAAP departure and/or an audit deficiency resulting in a significant adjustment or even a restatement of the client’s financial statements in the subsequent period.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Originality/value</jats:title>
<jats:p>This study is among the first to investigate the impact of firm workload on deficient audits.</jats:p>
</jats:sec> |
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| description | <jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The purpose of this study is to examine the impact of workloads at public accounting firms on the likelihood of an audit deficiency being identified during a triennial inspection by the Public Company Accounting Oversight Board (PCAOB).</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>Using the human resource information disclosed in PCAOB inspection reports, this study constructs two firm-specific workload measures: the ratio of issuer clients to audit partners; and the ratio of issuer clients to professional staff. Firm-level audit deficiency is measured at three levels of severity: Do any of the audit engagements inspected by the PCAOB reveal an audit deficiency? Are any of the identified audit deficiencies directly related to the auditors’ failure to identify a departure from GAAP in the client’s financial statement? Are any of the identified audit deficiencies associated with a significant adjustment or restatement in the client’s subsequent period financial statements? This study uses logistic regression to examine the association between audit deficiency and the workload of public accounting firms.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The empirical evidence suggests that the workload of public accounting firms is positively associated with the likelihood of a deficient audit, auditor’s failure to identify client’s GAAP departure and/or an audit deficiency resulting in a significant adjustment or even a restatement of the client’s financial statements in the subsequent period.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>This study is among the first to investigate the impact of firm workload on deficient audits.</jats:p> </jats:sec> |
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| spelling | Chang, C. Janie Luo, Yan Zhou, Linying 1475-7702 Emerald General Economics, Econometrics and Finance Finance Accounting http://dx.doi.org/10.1108/raf-03-2017-0050 <jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The purpose of this study is to examine the impact of workloads at public accounting firms on the likelihood of an audit deficiency being identified during a triennial inspection by the Public Company Accounting Oversight Board (PCAOB).</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>Using the human resource information disclosed in PCAOB inspection reports, this study constructs two firm-specific workload measures: the ratio of issuer clients to audit partners; and the ratio of issuer clients to professional staff. Firm-level audit deficiency is measured at three levels of severity: Do any of the audit engagements inspected by the PCAOB reveal an audit deficiency? Are any of the identified audit deficiencies directly related to the auditors’ failure to identify a departure from GAAP in the client’s financial statement? Are any of the identified audit deficiencies associated with a significant adjustment or restatement in the client’s subsequent period financial statements? This study uses logistic regression to examine the association between audit deficiency and the workload of public accounting firms.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The empirical evidence suggests that the workload of public accounting firms is positively associated with the likelihood of a deficient audit, auditor’s failure to identify client’s GAAP departure and/or an audit deficiency resulting in a significant adjustment or even a restatement of the client’s financial statements in the subsequent period.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>This study is among the first to investigate the impact of firm workload on deficient audits.</jats:p> </jats:sec> Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms Review of Accounting and Finance |
| spellingShingle | Chang, C. Janie, Luo, Yan, Zhou, Linying, Review of Accounting and Finance, Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms, General Economics, Econometrics and Finance, Finance, Accounting |
| title | Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_full | Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_fullStr | Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_full_unstemmed | Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_short | Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| title_sort | audit deficiency and auditor workload: evidence from pcaob triennially inspected firms |
| title_unstemmed | Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms |
| topic | General Economics, Econometrics and Finance, Finance, Accounting |
| url | http://dx.doi.org/10.1108/raf-03-2017-0050 |