An Examination of the Relationship between Audit-Related Risks and the Second Partner Review

Luehlfing, Michael S.; Copley, Paul; Shockley, Randolph A.

doi:10.1177/0148558x9501000104

Cited by 13 publications

(8 citation statements)

References 4 publications

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“…Epps and Messier (2005) find that concurring partner review performance improves when a detailed review instrument is introduced earlier rather than later in the experimental task. In an archival study, Luehlfing et al (1995) find that partner experience is positively associated with the number of hours spent on engagement quality review, but this only holds for two of the three large firms included in their study.…”

Section: Internal Engagement Quality Control Reviewsmentioning

confidence: 90%

Risk Monitoring and Control in Audit Firms: A Research Synthesis

Bedard

Deis

Curtis

et al. 2008

AUDITING: A Journal of Practice &Amp; Theory

172

108

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This paper summarizes the research literature related to audit firm quality control, with a dual purpose: (1) to provide information on the current state of knowledge with regard to the ways in which audit firms monitor and control firm-level risk; and (2) to identify specific areas in which there is currently insufficient research. We review literature on a number of specific topics under the overall heading of firm-level risk monitoring and control, including: client acceptance / continuance procedures, auditor independence (partner and firm rotation, employing former auditors, nonaudit services, partner compensation), electronic decision aids, consultation units, procedures for communicating weaknesses and taking corrective action, and review of engagement activities (including engagement quality reviews, peer reviews, and regulatory inspections). We conclude with a discussion of research relevant to the issue of whether smaller audit firms should be subject to the same level of quality control regulation as larger firms.

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Section: Internal Engagement Quality Control Reviewsmentioning

confidence: 90%

Risk Monitoring and Control in Audit Firms: A Research Synthesis

Bedard

Deis

Curtis

et al. 2008

AUDITING: A Journal of Practice &Amp; Theory

172

108

View full text Add to dashboard Cite

show abstract

“…They also find that the bias reduction effect achieved by the EQ review process is statistically similar to that achieved by additional audit sampling. Luehlfing et al (1995) empirically examine whether EQ review serves as a quality control mechanism for audit-related risks. Using 44 observations obtained from three Big-Four firms, they test the relation between the EQ review hours and the client and auditor characteristics.…”

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

“…It means that the EQ reviewers' efforts should vary depending on the extent of the biases in the auditors' judgments. Luehlfing et al (1995) posit that the EQ review needs to be conducted more extensively when the deficiencies in financial statements (or audit report) are hard to be detected through the normal audit procedures.…”

Section: Eq Reviewer's Response To Potentially Biased Work By the Fie...mentioning

confidence: 99%

CEO Turnover and the Engagement Quality Reviewer’s Audit Effort

Kim

Seol

2021

Journal of Accounting, Auditing & Finance

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Previous literature on the engagement quality (EQ) review argues that EQ reviewers should provide more efforts into the review process when fieldwork auditors’ judgments and conclusions on the financial statements are potentially biased. Little empirical study has been done, however, partly due to the confidentiality of the detailed data on EQ reviewers’ audit hours. The purpose of the article is to shed light on the existing literature by conducting an empirical investigation using a unique actual data set available in Korea. The results show that the EQ review hours are positively associated with CEO turnovers, a proxy for the audit risk, which supports the prediction of the theory on the EQ review. Additional analyses show that such results are stronger under (a) the upward earnings management and (b) the forced CEO turnover. The article extends the existing literature on the EQ review process and enhances the understanding of the engagement-level quality control in the volatile audit environment by providing empirical evidence to the analytic discussions on the EQ review.

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“…Other findings related to EQ review A limited amount of research addresses EQ review issues that were not specifically identified by the PCAOB (Table II). For example, Leuhlfing et al (1995) examine the relationship between various risk factors and the extent of actual EQ reviews performed for clients. They find significant differences across audit firms with client industry the only risk factor that impacted the extent of EQ reviews [7].…”

Section: Engagement Quality Reviewmentioning

confidence: 99%

Engagement quality review: insights from the academic literature

Schneider

Messier

2007

Managerial Auditing Journal

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Purpose -The objective of this research is to identify areas where audit research can assist the Public Company Accounting Oversight Board (PCAOB) in its deliberation of the auditing standard on engagement quality (EQ) review required by the Sarbanes-Oxley Act of 2002. Design/methodology/approach -The approach used in this paper is a review of the literature. Findings -The paper links academic research on EQ review to issues raised by the PCAOB. It also identifies questions for future research. Originality/value -The academic research reviewed in this paper provides important information to the PCAOB staff as it considers EQ review.

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An Examination of the Relationship between Audit-Related Risks and the Second Partner Review

Cited by 13 publications

References 4 publications

Risk Monitoring and Control in Audit Firms: A Research Synthesis

Risk Monitoring and Control in Audit Firms: A Research Synthesis

CEO Turnover and the Engagement Quality Reviewer’s Audit Effort

Engagement quality review: insights from the academic literature

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