SUMMARY Using Japanese data, we investigate whether there is a positive association between audit team composition based on the number of senior auditors, assistant auditors, and other professional staff on the audit team and audit fees and a variety of commonly used measures of audit quality (likelihood of issuing a going concern opinion and a first-time going concern opinion for a sample of financially distressed companies, the absolute value of discretionary and working capital accruals). We find that the number of senior auditors, assistant auditors, and other professional staff on the audit team are positively associated with audit fees. We find that the number of senior auditors on the audit team has a positive association with audit quality. However, the number of assistant auditors and other professional staff on the audit team are not significantly associated with any of our audit quality measures. JEL Classifications: M41; M42. Data Availability: All data are publicly available from the sources indicated in the paper.

We investigate whether an audit partner's gender is associated with the likelihood of issuing a going-concern opinion for a financially distressed client. Our analysis is based on data for a sample of Australian listed companies for the period 2003-2011. Our results from unrestricted and propensity scorematched samples and a Heckman two-stage model indicate that female audit partners are less likely to issue a going-concern opinion for financially distressed clients. Our findings provide evidence of differential audit outcomes depending on the gender of the audit partner, thus implying that audit partner gender affects the decision-making processes used when making the audit reporting decision. These behavioural differences have the potential to influence perceptions of financial reporting and audit quality.

This study investigates the impact of CLERP 9 on auditor independence and audit quality. Audit quality is measured by performance‐adjusted discretionary accruals and the auditor's propensity to issue a going‐concern opinion for a financially distressed company. The results show a significant and positive association between auditor‐provided non‐audit services (NAS) fees and the propensity to issue a going‐concern opinion for a financially distressed company post‐CLERP 9, but an insignificant association pre‐CLERP 9. The results show a significant and positive association between NAS fees and the performance‐adjusted absolute value of discretionary accruals pre‐CLERP 9, but this significant association was mitigated by the introduction of CLERP 9. To address the potential impact of the level of abnormal NAS fees on auditor independence, the analysis is extended by incorporating predictions of abnormal NAS fees. Abnormal NAS fees are significantly and negatively associated with the propensity to issue a going‐concern opinion for a financially distressed company and positively associated with discretionary accruals pre‐CLERP 9, but they are not significant post‐CLERP 9. The results provide evidence of improved audit quality after the implementation of CLERP 9. The results will be useful to regulators for the justification of regulatory changes. The findings provide evidence of the effectiveness of regulatory changes, specifically the CLERP 9, on the improvement of auditor independence and audit quality.

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