Audit Partner Assignments and Audit Quality in the United States

Lee, Hye Seung; Nagy, Albert L.; Zimmerman, Aleksandra B.

doi:10.2308/accr-52218

Cited by 130 publications

(95 citation statements)

References 69 publications

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“…Therefore, female subjects have a tendency to propose relatively smaller adjustments than male subjects do. This result contrasts with research showing that female auditors generally perform better in ethical and moral reasoning (Bailey, Scott, & Thoma, ; Hottegindre, Loison, & Farjaudon, ), as well as current research presenting the positive effects of female auditors on measures of audit quality (Al‐Dhamari & Chandren, ; Cameran, Ditillo, & Pettinicchio, ; Hardies, Breesch, & Branson, ; Ittonen, Vähämma, & Vähämma, ; Lee, Nagy, & Zimmermann, ).…”

Section: Resultscontrasting

confidence: 94%

Real effects of reporting key audit matters on auditors' judgment and choice of action

Asbahr

Ruhnke

2019

Int J Auditing

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This experimental study analyzes whether reporting an accounting estimate as a key audit matter (KAM) can influence auditor judgment about the accounting estimate and the corresponding action. We find that skeptical action in the form of proposed adjustment amounts is significantly lower when the accounting estimate is reported as a KAM. Thus, the disclosure of a KAM can serve as a moral license to waive an adjustment. Taking into account that the KAM disclosure does not affect auditors' skeptical judgments in the form of a reasonableness assessment of the accounting estimate, our results indicate the existence of a judgment–action gap. Furthermore, implicit client pressure does not enlarge the moral licensing effect of the KAM disclosure. We also find evidence that audit effort is not affected by reporting a KAM. Overall, our study contributes to the current debate about the audit reporting model by showing that reporting a KAM might have unintended “real effects” on auditors' actions.

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Section: Resultscontrasting

confidence: 94%

Real effects of reporting key audit matters on auditors' judgment and choice of action

Asbahr

Ruhnke

2019

Int J Auditing

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“…Women tend to be more cautious, conservative, and risk-averse. Lee et al (2018) argued that partner assignment is not random and is based on client preference. As a result, firms that engage female auditors can expect that their claims will be met with more considerable skepticism and their activities will be more closely monitored.…”

Section: Gendermentioning

confidence: 99%

Understanding the Mechanism of Workload Distribution Among Auditors in BPK RI in Relation to Gender: An Exploratory Study

Suhud¹

2019

ASSRJ

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The purpose of this study is to provide a relevant conceptual model of the mechanism of workload distribution among auditors in BPK RI in relation to gender. The exploratory research was conducted to achieve its research objectives with six respondents are chosen for this study. Thematic analysis with coding technique, document analysis, and observation are used to collect and analyze the data. The result shows that there is no regulation which explains explicitly in detail about the working mechanism of the auditor when carrying out the auditing task. Also, the researcher did not find an explanation of how the procedure for distributing workload to the auditor after the audit team was determined. It means that the mechanism of workload distribution among auditors implements in the field with the non-technical guideline. Another finding shows that BPK RI does not differentiate treatment of auditors based on gender. Male and female employees have the same rights and obligations as auditors. However, in practice in the field, there are still differences in treatment between male and female auditors, especially related to the distribution of workload when conducting the audit tasks. However, the difference in treatment does not affect the amount of compensation they receive and does not affect their career development opportunities. Finally, the researcher offers a conceptual model to answer the objective of this research.

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“…In general, using going concern opinions and abnormal accruals as indicators of audit quality, these studies find mixed evidence that auditor gender affects audit quality. Recently, with the release of engagement lead auditors names by Public Company Accounting Oversight Board (PCAOB), a number of studies have started to examine the relation between auditor gender and audit quality in the U.S. context (Lee, Nagy and Zimmerman 2019;Burke, Hoitash, and Hoitash 2019). However, using abnormal accruals, restatements, and audit delays as proxies for audit quality, these studies also provide mixed evidence that auditor gender affects audit quality.…”

Section: Introductionmentioning

confidence: 99%

“…Second, this study provides evidence of gender difference in audit quality using a different proxy for audit quality, notably accounting conservatism. Recent studies in the U.S. context have focused on abnormal accruals, restatements, and audit delay as proxies for audit quality (Lee et al 2019;Burke et al 2019). Further, prior studies in the international setting have used going-concern opinions and abnormal accruals (Chin and Chi 2008;Hardies, Breesch, and Branson 2016;Hossain, Chapple, and Monroe 2016;and Karjalainen, Niskanen, and Niskanen 2018;Ittonen, Vahamaa and Vahamaa, 2013;Garcia-Blandon, Argiles-Bosh, and Ravenda 2019).…”

Section: Introductionmentioning

confidence: 99%

Audit Partner Gender and the Reporting of Conservative Earnings

Akono¹

2020

Preprint

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This study examines whether the association between auditor gender and accounting conservatism. We predict that clients audited by female partners will exhibit a different degree of accounting conservatism relative to those audited by male partners because of inherent different levels of risk aversion between men and women. The results obtained using the Basu (1997) measure of accounting conservatism indicate that engagements audited by female audit partners are associated with less conservative earnings than those audited by male audit partners in general. Next, these results vary across client importance and litigation risk. In particular, female auditors are less conservative for clients that are less important to the audit firm, but there is no gender difference in conservatism for more important clients. Further, female auditors are less conservative in low litigation risk settings, but there is no gender difference in conservatism when the threat of legal liability is high. These findings are robust to controlling to the inclusion of various control variables and are supported partially using alternative measures of conservatism and after partial control for potential endogeneity in the choice of the gender of an audit partner. Collectively, the results in this study have the potential to provide additional evidence on the important role audit partner characteristics pay in the production of conservative accounting reports.

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Audit Partner Assignments and Audit Quality in the United States

Cited by 130 publications

References 69 publications

Real effects of reporting key audit matters on auditors' judgment and choice of action

Real effects of reporting key audit matters on auditors' judgment and choice of action

Understanding the Mechanism of Workload Distribution Among Auditors in BPK RI in Relation to Gender: An Exploratory Study

Audit Partner Gender and the Reporting of Conservative Earnings

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