Audit Partner Tenure
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Audit Partner Tenure Audit Firm Tenure And Discretionary Accruals
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Author : Chih-Ying Chen
language : en
Publisher:
Release Date : 2013
Audit Partner Tenure Audit Firm Tenure And Discretionary Accruals written by Chih-Ying Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
Mandatory audit partner rotation has been adopted in certain countries while audit firm rotation is still being debated in many places. Most of the extant research on the relation between auditor tenure and earnings quality provides evidence at the audit firm level. However, since audit firm tenure is correlated with partner tenure and audit firm rotation is more costly than partner rotation, it is important to know whether earnings quality is related to audit firm tenure, partner tenure, or both. We investigate this issue using a sample of Taiwanese companies for which the audit report must be signed by two partners with their names disclosed in the report. Using performance adjusted discretionary accruals as a proxy for earnings quality, we find that the absolute and positive values of discretionary accruals decrease significantly with partner tenure. After controlling for partner tenure, we find that absolute discretionary accruals decrease significantly with audit firm tenure. Our findings are not consistent with the arguments that earnings quality decreases with extended audit partner tenure and that audit firm rotation in addition to partner rotation would improve earnings quality. Our results are robust to alternative ways of measuring partner tenure under the dual signature system. However, since the audit reports do not disclose which partner is responsible for maintaining the auditor-client relationship, measurement errors in partner tenure remain an issue that cannot be fully addressed in the context of our study.
Audit Partner Tenure
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Author : Roger Simnet
language : en
Publisher:
Release Date : 1998*
Audit Partner Tenure written by Roger Simnet and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998* with categories.
Does Increased Audit Partner Tenure Reduce Audit Quality
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Author : Jerry L. Turner
language : en
Publisher:
Release Date : 2008
Does Increased Audit Partner Tenure Reduce Audit Quality written by Jerry L. Turner and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
The Sarbanes-Oxley Act of 2002 requires the lead audit or coordinating partner and the reviewing partner to rotate off the audit every five years so the engagement can be viewed quot;with fresh and skeptical eyes.quot; Using data obtained from actual audits by multiple U.S. offices of three large international audit firms, we examine whether there is a relationship between evidence of reduced audit quality, measured by estimated discretionary accruals, and audit partner tenure with a specific client. We find that estimated discretionary accruals are significantly and negatively associated with the lead audit partner's tenure with a specific client. Thus, audit quality appears to increase with increased partner tenure. After controlling for client size and engagement risk, we find audit partner tenure significantly and negatively associated with estimated discretionary accruals only for small clients with partner tenure of greater than seven years, regardless of risk level. We also find that tenure is not significantly associated with estimated discretionary accruals for large clients. This suggests that as partner tenure increases, auditors of small client firms become less willing to accept more aggressive financial statement assertions by managers, and that partner tenure does not affect audit quality for large clients or for shorter-tenure smaller clients. Our results relating to audit partner tenure are consistent with the conclusions about audit firm tenure by Geiger and Raghunandan (2002); Johnson, Khurana, and Reynolds (2002);Myers, Myers, and Omer (2003); and Nagy (2005) and extend their findings by focusing on individual audit partners rather than on audit firms.
On The Economics Of Audit Partner Tenure And Rotation
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Author : Brandon Gipper
language : en
Publisher:
Release Date : 2017
On The Economics Of Audit Partner Tenure And Rotation written by Brandon Gipper and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with Audited financial statements categories.
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.
Audit Partner Tenure And Internal Control Reporting Quality
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Author : Brian Fitzgerald
language : en
Publisher:
Release Date : 2017
Audit Partner Tenure And Internal Control Reporting Quality written by Brian Fitzgerald and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
This study examines the effects of audit partner tenure and audit partner changes on internal control reporting quality for large U.S. not-for-profit (NFP) organizations. Regulators contend that audit partners lose their objectivity over successive audits, reducing audit quality. A large body of research has examined this issue, primarily in non-U.S. jurisdictions, with mixed results. We examine the associations between audit partner tenure and audit partner changes and the incidence of reported internal control deficiencies (ICDs), the quality of internal control reports (following PCAOB audit quality indicators), and the severity of reported ICDs. We find negative associations between audit partner tenure and the incidence of reported ICDs, the quality of internal control reports, and the severity of reported ICDs. Together, these findings indicate that internal control reporting quality deteriorates with audit partner tenure. However, we find no association between audit partner changes and internal control reporting, which is consistent with partners lacking client specific knowledge in their first year with a client. Finally, we find no association between either audit partner tenure or changes and the likelihood of remediation. Our findings contribute large-sample U.S. evidence on the association between audit partner tenure and internal control reporting quality and provide useful information to government regulators, NFP boards charged with the oversight of the external auditor and internal controls, and NFP stakeholders.
Audit Partner Tenure And Reported Internal Control Reporting Quality
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Author : Brian Fitzgerald
language : en
Publisher:
Release Date : 2018
Audit Partner Tenure And Reported Internal Control Reporting Quality written by Brian Fitzgerald and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
This study examines the effects of audit partner tenure and audit partner changes on internal control reporting quality for large U.S. not-for-profit (NFP) organizations. Regulators contend that audit partners lose their objectivity over successive audits, reducing audit quality. A large body of research has examined this issue, primarily in non-U.S. jurisdictions, with mixed results. We examine the associations between audit partner tenure and audit partner changes and the incidence of reported internal control deficiencies (ICDs), the quality of internal control reports (following PCAOB audit quality indicators), and the severity of reported ICDs. We find negative associations between audit partner tenure and the incidence of reported ICDs, the quality of internal control reports, and the severity of reported ICDs. Together, these findings indicate that internal control reporting quality deteriorates with audit partner tenure. However, we find no association between audit partner changes and internal control reporting, which is consistent with partners lacking client specific knowledge in their first year with a client. Finally, we find no association between either audit partner tenure or changes and the likelihood of remediation. Our findings contribute large-sample U.S. evidence on the association between audit partner tenure and internal control reporting quality and provide useful information to government regulators, NFP boards charged with the oversight of the external auditor and internal controls, and NFP stakeholders.
The Effects Of Firm Market Value On Audit Partner Tenure And Firm Profitability
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Author : Mao-Chang Wang
language : en
Publisher:
Release Date : 2010
The Effects Of Firm Market Value On Audit Partner Tenure And Firm Profitability written by Mao-Chang Wang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
This study investigates the effects audit partner tenure and firm profitability on the market value of the firm. This study extends Ohlson's model by examining audit partner tenure, and the interaction between residual earnings per share and audit partner tenure on firm value. This issue is particularly important in light of regulations requiring audit partner rotation in the United States, Taiwan and other countries. The model is tested using large internationally listed companies in Taiwan. The findings on average do not support audit partner rotation in Taiwan.
Auditor Tenure And Audit Quality
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Author : Chun-sŏ Yi
language : en
Publisher:
Release Date : 2015
Auditor Tenure And Audit Quality written by Chun-sŏ Yi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Auditing Teams
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Author : Mara Cameran
language : en
Publisher: Routledge
Release Date : 2017-03-31
Auditing Teams written by Mara Cameran and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-03-31 with Business & Economics categories.
The recent audit failures which have rocked financial markets worldwide have accentuated the need for a better understanding of the link between risk, control and audit quality; as well as emphasising the need to open the "black box" of the ways auditing firms actually function. Reflecting these imperatives, Auditing Teams unravels the organizational and management issues in audit firms that are key to achieving effectiveness in service provision. Specifically, this key research reflects upon the relevance and dynamics of auditing teams and their impact on auditing quality, and specifically responding to the recent claim from regulators which highlights auditing team characteristics as the source of wide variations in quality. By leveraging different perspectives – auditing, management accounting, organization and psychology – to investigate auditing teams and basing on evidence collected from the professional world, this book will provide a unique insight into the role of auditing teams on audit quality. It will be of great interest to scholars and advanced students in auditing, as well as to practitioners and regulators in the field.
Does Auditor Tenure Matter Audit Partner Rotation And Industry Specialization In The U S
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Author : Danielle Sarah Lazerson
language : en
Publisher:
Release Date : 2020
Does Auditor Tenure Matter Audit Partner Rotation And Industry Specialization In The U S written by Danielle Sarah Lazerson and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.