Does Increased Audit Partner Tenure Reduce Audit Quality
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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.
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.
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.
The Auditor
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Author : Nellie Gertsson
language : sv
Publisher: Linköping University Electronic Press
Release Date : 2021-02-24
The Auditor written by Nellie Gertsson and has been published by Linköping University Electronic Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-02-24 with categories.
The overall purpose of this licentiate dissertation is to advance our understanding of the auditor by creating a concept of the auditor through focusing on auditors' own perceptions and understandings of their work in relation to boundary-setting forces. The audit profession, the audit firm, the client, society, regulations, and the market are all boundary-setting forces that influence the work of auditors and how auditors perceive and understand their work. The concept of the auditor consists of who the auditor is and what the auditor does; this concept is shaped interactively by the boundary-setting forces, that exist in the auditors’ environment and by the auditors themselves, through the view auditors have of themselves and their environment. The boundary-setting forces have in recent decades undergone significant and rapid changes; for example, increased commercialization as well as significant regulatory changes, which are expected to have influenced the concept of the auditor. The concept of the auditor therefor needs to be explored to understand who today’s auditor is and what today's auditor does. This licentiate dissertation consists of three appended papers and a comprehensive summary. The appended papers constitute the basis for discussing who the auditor is and what the auditor does, thereby contributing to the concept of the auditor. This dissertation uses boundaries in exploring the concept of the auditor, since it is when the auditor encounters the boundaries of being an auditor that the auditor’s conception of an auditor becomes clear. This dissertation has a mixed-methods design based on survey and interview data. The results of this dissertation show that there are several characteristics that define who the auditor is. The auditor: is highly driven by professional valuesis less driven by business valuesis genuinely interested in auditor workis resistant to stress, heavy workload, and work–life balance issuesis admiring the audit profession and perceiving it as highly professionalis perceiving professional values in adding value to the client, i.e., in the business activitiesis enjoying adding value to the clientis more motivated by contributing to the client than to societyhas high social skills and broad knowledge The results of this dissertation also show that the work of the auditor in the "grey area" between auditing and consulting comprises several activities. The auditor: adds value to the client by being available and engaged, by providing mental support and family mediation, by informing and discussing, by giving tips, advice, and suggestions, by explaining, answering questions, raising questions, and questioning, and by customizing, operating, developing, and contributing expertise to the clientconducts a wide range of services, also related to the private and personal matters of the clienthas counselling, pedagogical, coaching and/or developmental roles Det övergripande syftet med denna licentiatavhandling är att främja vår förståelse för revisorn genom att skapa ett begrepp för revisorn baserat på revisorers egna uppfattningar och förståelser av deras arbete i förhållande till gränssättande krafter. Revisorsprofessionen, revisionsbyrån, klienten, samhället, regleringar och marknaden är alla gränssättande krafter som påverkar revisorers arbete och hur revisorer uppfattar och förstår sitt arbete. Revisorsbegreppet består av vem revisorn är och vad revisorn gör, och formas interaktivt av de gränssättande krafter som finns i revisorernas omgivning och av revisorer själva genom deras syn på sig själva och sin omgivning. De gränssättande krafterna har under de senaste decennierna genomgått betydande och snabba förändringar, med till exempel ökad kommersialisering samt betydande regleringsändringar, vilket förväntas ha påverkat revisorsbegreppet. Således måste begreppet för revisorn utforskas för att förstå vem dagens revisor är och vad dagens revisor gör. Denna licentiatavhandling består av tre artiklar och en kappa. De bifogade artiklarna utgör grunden för diskussionen om vem revisorn är och vad revisorn gör, och bidrar därmed till begreppet för revisorn. Denna avhandling använder gränser för att utforska revisorsbegreppet, eftersom det är när revisorn möter gränsen för att vara revisor, som revisorns uppfattning om en revisor blir tydlig. En design med blandad metod används och det empiriska materialet består av enkät- och intervjudata. Resultaten av denna avhandling visar att det finns flera faktorer som definierar vem revisorn är. Revisorn: är starkt driven av professionella värdenär mindre driven av affärsvärdenär genuint intresserad av arbetet som revisorär motståndskraftig mot stress, arbetsbelastning och obalans mellan arbete och privatlivbeundrar professionen och uppfattar revisionsyrket som mycket professionelltser professionella värden i att skapa mervärde till klientertycker om att skapa mervärde till klientenär mer motiverad av att bidra till klienten än samhällethar höga sociala färdigheter och bred kunskap Resultaten av denna avhandling visar också att revisorns arbete i den gråa zonen mellan revision och konsultation omfattar flera aktiviteter. Revisorn: tillför mervärde för klienten genom att vara tillgänglig, engagerad, ett mentalt stöd och en familjemedlare och genom att informera, diskutera, ge tips, råd och förslag, förklara, svara på frågor, ställa frågor och ifrågasätta, klientanpassa, agera, utveckla, och bidra med expertis till kunden.bedriver ett brett utbud av tjänster, även relaterade till klientens privata och personliga frågor.kan ha en terapeutisk, pedagogisk, coachande och/eller utvecklande roll
The Routledge Companion To Auditing
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Author : David Hay
language : en
Publisher: Routledge
Release Date : 2014-09-15
The Routledge Companion To Auditing written by David Hay and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-09-15 with Business & Economics categories.
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.
Auditing Assurance Services
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Author : Aasmund Eilifsen
language : en
Publisher:
Release Date : 2010
Auditing Assurance Services written by Aasmund Eilifsen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Auditing categories.
Written by Aasmund Eilifsen, this book focuses on auditing and assurance services. It is aimed at students undergoing higher education and college and university undergraduates.
Regulation And The Accounting Profession
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Author : John W. Buckley
language : en
Publisher: Belmont, Calif. : Lifetime Learning Publications
Release Date : 1980
Regulation And The Accounting Profession written by John W. Buckley and has been published by Belmont, Calif. : Lifetime Learning Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1980 with Accounting categories.
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.
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 Firm Tenure And Audit Quality
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Author : Li Zheng Brooks
language : en
Publisher:
Release Date : 2013
Audit Firm Tenure And Audit Quality written by Li Zheng Brooks 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.
We propose that audit quality is likely to increase in the earlier years due to a Learning Effect and in later years it decreases due to a Bonding Effect. Adopting a quadratic model, we find that the average turning point is between 12 to 16 years for a large sample of U.S. firms. With an average tenure of 9 years in our sample, these findings imply that mandatory auditor firm rotation may not be necessary. Further, we find that the turning point varies by auditor - it is longer for non-Big N auditors, non-specialist auditors, and auditors with high client importance, and the deterioration of audit quality exists in low litigation industries only, consistent with the Bonding Effect explanation. Moreover, we find the turning point gets longer in the post-SOX period. Our results have implications for the current debate on mandatory audit firm rotation.