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Mandatory Partner Rotation And Audit Quality
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Book Synopsis Mandatory Partner Rotation and Audit Quality by : Brant Christensen
Download or read book Mandatory Partner Rotation and Audit Quality written by Brant Christensen and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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
Book Synopsis The Effect of Mandatory Audit Partner Rotation on Audit Quality by : Luthson Fraaij
Download or read book The Effect of Mandatory Audit Partner Rotation on Audit Quality written by Luthson Fraaij and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Audit Partner Tenure by : Roger Simnet
Download or read book Audit Partner Tenure written by Roger Simnet and published by . This book was released on 1998* with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Routledge Companion to Auditing by : David Hay
Download or read book The Routledge Companion to Auditing written by David Hay and published by Routledge. This book was released on 2014-09-15 with total page 387 pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditing has been a subject of some controversy, and there have been repeated attempts at reforming its practice globally. This comprehensive companion surveys the state of the discipline, including emerging and cutting-edge trends. It covers the most important and controversial issues, including auditing ethics, auditor independence, social and environmental accounting as well as the future of the field. This handbook is vital reading for legislators, regulators, professionals, commentators, students and researchers involved with auditing and accounting. The collection will also prove an ideal starting place for researchers from other fields looking to break into this vital subject.
Book Synopsis Discussion of 'Mandatory Audit-Partner Rotation, Audit Quality and Market Perception by : Linda Smith Bamber
Download or read book Discussion of 'Mandatory Audit-Partner Rotation, Audit Quality and Market Perception written by Linda Smith Bamber and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We discuss the Chi, Huang, Liao, and Xie (2009) study of the effects of mandatory audit partner rotation, and then identify areas where we see the greatest potential for future research on audit partner rotation and audit quality. First, we discuss how Chi et al. (2009) fits in the context of the extant literature, and we review challenges of examining audit partner rotation versus audit firm rotation. Second, we consider the study's research design. As Chi et al. suggest, the Taiwanese data provide an opportunity to address a research question that cannot be similarly addressed in a North American context. But the data and research design carry their own set of problems, including issues of statistical power. Third, we consider measures of audit quality. Interpreting the study as providing evidence on audit quality assumes not only that audit quality and earnings quality are the same, but also that abnormal accruals and ERCs are good measures of earnings quality, and by extension, audit quality. While such arguments are common in the archival audit literature, we believe it is time to move beyond these generic proxies. Our discussion concludes with suggestions for future research.
Book Synopsis Public Accounting Firms by : Jeanette M. Franzel
Download or read book Public Accounting Firms written by Jeanette M. Franzel and published by DIANE Publishing. This book was released on 2004-03 with total page 102 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following major failures in corp. financial reporting, the Sarbanes-Oxley Act of 2002 was enacted to protect investors through requirements intended to improve the accuracy and reliability of corp. disclosures and to restore investor confidence. The act strengthened auditor independence and improved audit quality. Mandatory audit firm rotation (setting a limit on the period of years a public accounting (PA) firm may audit a particular company's financial statements) was considered as a reform to enhance auditor independence and audit quality during the hearings that preceded the act, but it was not included in the act. This report studies the potential effects of requiring rotation of the PA firms that audit public companies registered with the SEC.
Book Synopsis Partner Rotation and PCAOB Inspections by : Amanda Winn
Download or read book Partner Rotation and PCAOB Inspections written by Amanda Winn and published by . This book was released on 2014 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine the joint effects of two current audit regulations, mandatory partner rotation and PCAOB inspections, on audit quality. In doing so, I respond to Congress's call for research about the effects of the 2002 Sarbanes-Oxley Act's reforms on audit quality. In an experiment using experienced professional auditors, auditors decrease effort in the year prior to mandatory partner rotation and increase effort when there is a high risk of PCAOB inspection. When auditors anticipate both mandatory partner rotation and a high risk of PCAOB inspection, the effect of PCAOB inspection risk mitigates the decrease in effort from mandatory partner rotation, such that the net change in effort is not statistically different from zero. Additionally, partner rotation causes partners to reduce time spent on activities likely to enhance audit quality in favor of documentation. I find no evidence that partner rotation or PCAOB inspections affect auditors' independence, as measured by the magnitude of proposed audit adjustments. Regulators can consider whether required PCAOB inspections may perform the same external review function as the "fresh eyes" of mandatory firm rotation as they debate additional reforms.
Book Synopsis Mandatory Audit-Partner Rotation, Audit Quality and Market Perception by : Wuchun Chi
Download or read book Mandatory Audit-Partner Rotation, Audit Quality and Market Perception written by Wuchun Chi and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the effectiveness of mandatory audit-partner rotation in promoting audit quality and perceptions of audit quality using audit data from Taiwan, where a five-year audit-partner rotation became de facto mandatory in 2004. We identify a sample of companies in 2004 whose audit partners were subject to mandatory rotation and compare this mandatory rotation sample with three benchmark samples: (1) companies in 2004 whose audit partners were not subject to mandatory rotation, (2) companies in the mandatory rotation sample one year ago in 2003, and (3) companies in years before 2003 whose audit partners were voluntarily rotated. Using both absolute and signed abnormal accruals as proxies for audit quality, we find no evidence that mandatory audit-partner rotation enhances audit quality. In addition, we use the earnings response coefficient as a proxy for investor perceptions of audit quality and find no consistent evidence that mandatory audit-partner rotation enhances perceived audit quality. Taken together, our findings are inconsistent with the belief that mandatory audit-partner rotation enhances audit quality or perceptions of audit quality.
Author :United States. General Accounting Office Publisher :DIANE Publishing ISBN 13 :1428937056 Total Pages :167 pages Book Rating :4.4/5 (289 download)
Book Synopsis Mandatory audit firm rotation study study questionaires, responses, and summary of respondents' comments. by : United States. General Accounting Office
Download or read book Mandatory audit firm rotation study study questionaires, responses, and summary of respondents' comments. written by United States. General Accounting Office and published by DIANE Publishing. This book was released on 2004 with total page 167 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis On the Economics of Audit Partner Tenure and Rotation by : Brandon Gipper
Download or read book On the Economics of Audit Partner Tenure and Rotation written by Brandon Gipper and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides the first partner tenure and rotation analysis for a large cross-section of U.S. publicly listed firms over an extended period. We analyze the effects on audit quality as well as economic tradeoffs related to partner tenure and rotation with respect to audit hours and fees. On average, we find no evidence for audit quality declines over the tenure cycle and little support for fresh-look benefits after rotations. Nevertheless, partner rotations have significant economic consequences. We find increases in audit fees and decreases in audit hours over the tenure cycle, which differ by partner experience, client size, and competitiveness of the local audit market. More generally, our findings are consistent with efforts by the audit firms to minimize disruptions and audit failures around mandatory rotations. We also analyze special circumstances, such as audit firm switches and early partner rotations, and show that they are more disruptive than mandatory rotations, and also more likely to exhibit audit quality effects.
Book Synopsis Mandatory Job Rotation and Audit Quality in Audit Firms by : Rita Azzi
Download or read book Mandatory Job Rotation and Audit Quality in Audit Firms written by Rita Azzi and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis examines the mandatory job rotation and audit quality in audit firms, stressing on the relationship between the rotation policy and its impact on the auditor quality. Does audit firm rotation affect audit quality? And how does the long term auditor clients' relationship affects the auditor quality? In order to answer the above questions we make a full study relative to local versus international audit firms and the services provided by them, taking into consideration several factors that affects the auditor quality such as seniority, long term relationship and turnover rate. This study was supported by a questionnaire addressed to 50 auditors distributed between local and international firms with an analysis over the results. However, this analysis mentioned that auditors working in the international firm where there is a rotation policy are more satisfied than those working in local firms. We conclude also that rotation and the long term relationship are directly related to audit quality.
Book Synopsis Regulation and the Accounting Profession by : John W. Buckley
Download or read book Regulation and the Accounting Profession written by John W. Buckley and published by Belmont, Calif. : Lifetime Learning Publications. This book was released on 1980 with total page 266 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis External Audit Arrangements at Central Banks by : Mr.Atilla Arda
Download or read book External Audit Arrangements at Central Banks written by Mr.Atilla Arda and published by International Monetary Fund. This book was released on 2018-09-11 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper takes stock of external audit arrangements at central banks. Its focus is on the annual audit of central bank financial statements, as well as legal and institutional measures that support audit quality and independence. The paper outlines good practices in these areas and provides a summary of actual practices observed based on a review of audited financial statements and central bank legislation. While the audit frameworks for central banks differ depending on their legal and institutional circumstances, central banks’ external audits increasingly follow international standards. Most of them are audited by auditors with international affiliations and embrace modern governance structures that provide for audit oversight. However, the paper also notes that a sizeable number of central banks do not publish the audit results in a timely manner, which leaves room for improvement in transparency practices.
Book Synopsis Audit Partner Rotation, Earnings Quality and Earnings Conservatism by : Jane Hamilton
Download or read book Audit Partner Rotation, Earnings Quality and Earnings Conservatism written by Jane Hamilton and published by . This book was released on 2005 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide evidence of an association between audit partner rotation and the quality of earnings. It is a requirement for Australian firms that the engagement partner be identified by name in the annual report. Using a sample of 3,621 firm-years between 1998 and 2003, we show that audit partner changes most likely reflecting partner rotation (i.e., they are not due to a switch of audit firm) are associated with lower signed unexpected accruals, and that for Big 5 clients this relation is driven by smaller positive unexpected accruals following partner changes. This result is consistent with more conservative reporting following a rotation of audit partner, and this interpretation is further supported by evidence suggesting a significant increase in the asymmetrically timely recognition of economic losses when firms have a change of audit partner. Our tests also show that these effects occur predominantly among clients of Big 5 audit firms, and that any effect is concentrated in the latter part of our sample period, when partner rotation was a professional requirement. We therefore conclude that audit partner rotation is associated with incrementally greater conservatism in financial reporting, but only in circumstances where the ability of client firms to resist partner rotation is reduced by mandatory partner rotation requirements.
Book Synopsis Mandatory Audit Rotation by : Kathleen Harris
Download or read book Mandatory Audit Rotation written by Kathleen Harris and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates whether mandatory auditor rotation rules are associated with changes in audit quality using available data from three countries that have adopted mandatory auditor rotation (MAR) rules. Consistent with prior literature, I assume that earnings management measures capture the various methods employed by corporate insiders to exercise their discretion to manage earnings that is not constrained by the audit firm. The more discretion, ceteris paribus, in earnings, the lower the audit quality. First, I investigate the debonding effect of an MAR policy. Debonding describes the effect that is often the primary motivation for adopting MAR rules. That is, end the possibility of long-term audit engagements and the economic bond of audit firms to their clients will be broken (by enhancing auditor independence and objectivity). In the sample after adoption of MAR rules, the data show evidence of less earnings management, less managing to earnings targets, and more timely loss recognition compared to the sample before adopting MAR rules. From these results, I conclude that audit markets appear to improve, on average, from enactment of MAR rules. I then investigate the allowed discretion in the year before and the year after auditor changes in which rotation rules have been adopted (termed the low client-specific knowledge effect). I find evidence of lower audit quality in both years. These results highlight the importance, particularly to regulators of audit markets, of considering ways to mitigate the erosion of audit quality when making the transition to new auditors under MAR rules (e.g., the use of detailed handover files between predecessor and successor audit firms or "four-eyes principle" in years of initial audits).
Book Synopsis Audit Regulations, Audit Market Structure, and Financial Reporting Quality by : Christopher Bleibtreu
Download or read book Audit Regulations, Audit Market Structure, and Financial Reporting Quality written by Christopher Bleibtreu and published by . This book was released on 2021-11-24 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audit Regulations, Audit Market Structure, and Financial Reporting Quality provides a structured overview of the empirical and analytical literature on the effects of audit market regulations. After a short introduction, the monograph is organized as follows. Chapter II addresses the structure of the audit markets of industrialized countries. First presenting an overview of the concentration metrics used to describe the structure of an audit market or a market segment, then providing the empirical findings on audit market concentration at the national level and presenting an overview of the main reasons that led to the currently high degree of concentration. Chapter III summarizes the reasons why regulators worldwide consider a high degree of concentration to be a concern. In particular, it reviews the regulator's assumption that a high degree of concentration inevitably leads to a low degree of competition and to the corresponding effects of low audit quality and high audit fees. It also provides an overview of the empirical findings on the association between concentration and audit quality and fees, respectively. Chapter IV introduces the mandatory audit firm rotation, the prohibition on the joint supply of audit and non-audit services, and joint audits as examples for regulations that are likely to have both incentive and market structure effects. Chapter V summarizes the empirical findings on the effects of these regulations on audit quality and market structure. Chapter VI summarizes models that regard the market structure as given. The results from these models show that the effects of regulations are not straightforward, but depend on various factors related to the auditor, the client, and the legal environment. Chapter VII gives an overview of analytical research that simultaneously considers incentive effects and market structure effects. It also provides a brief overview of industrial organization models that seem suitable to expand the models applied to investigate the effects of audit regulations. Chapter VIII concludes and highlights avenues for future research.
Book Synopsis Auditing, Trust and Governance by : Reiner Quick
Download or read book Auditing, Trust and Governance written by Reiner Quick and published by Routledge. This book was released on 2007-10-31 with total page 381 pages. Available in PDF, EPUB and Kindle. Book excerpt: The reputation of corporate reporting has been in crisis. Trust in the process of financial accounting and auditing has been undermined by a series of high profile scandals involving major corporations, including Enron, Parmalat, Ahold, and Worldcom. In response, regulators and practitioners world-wide have put forward a series of initiatives to re
