Don't Make Me Look Bad: How the Audit Market Penalizes Auditors for Doing Their Job

Cowle, Elizabeth N.; Rowe, Stephen P.

doi:10.2139/ssrn.3228321

Cited by 9 publications

(5 citation statements)

References 40 publications

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“…Therefore, the dataset is a pooled cross-sectional dataset with both crosssectional and time series information. Prior research employed the pooled cross-sect ional technique to exploit the entire available sample (Cowle & Rowe, 2022;Rickmann, 2022). In fact, pooled cross-sectional data permits the consol idated use of the full dataset and thus yields more pre cise statistical estimates than do the yearly subsample estimates (Finkelstein & Hambrick, 1990;Geletkanycz & Hambrick, 1997).…”

Section: Sample Selectionmentioning

confidence: 99%

Effects of human capital on revenues: evidence from professional service organizations in Taiwan

Yang,

Lin,

Chen

2024

IJAEFA

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This paper specifies a trans-log revenue function to estimate the relationship between service revenue outputs and three key human capital inputs, including formal education, work experience, and professional training. Using a Taiwanese pooled cross-sectional sample of 22,875 observations over the period 1992-2021, we divide the total sample into international and non-international audit firms based on their total audit revenues. We find that the average partial effects (APEs) on revenues are much higher for international than for non-international audit firms, suggesting that audit firm size affects audit firms’ financial performance. We also find that investments in both formal education and work experience significantly contribute to the growth of service revenues (but if such investments are beyond the optimal level, they may contribute to the reduction of revenues) and that such growth is much larger for international than for non-international audit firms. Although we find that, in our statistical analysis, professional training contributes to the reduction of service revenues, our graphical analysis justifies this intriguing finding, which is attributed to a lagged return on professional training investments. In theory, human capital suggests that professional training is a needed process to raise future service revenues. Overall, our findings shed light on the APEs of human capital inputs on revenue generation and have practical implications for regulators and practitioners to understand how and to what extent human capital can make a positive contribution to the growth of audit firms’ revenues.

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Section: Sample Selectionmentioning

confidence: 99%

Effects of human capital on revenues: evidence from professional service organizations in Taiwan

Yang,

Lin,

Chen

2024

IJAEFA

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“…Yönetişim ölçütlerinin oluşturulmasını ve planlama faaliyetlerinin sunulmasını metin tabanlı çalışma şekli ve raporlama yaklaşımları engellemektedir. Çağdaş bir iç denetimin planlanması, temelinde, büyük veri ve bilgi kirliliği ile oluşan aşırı ve gereksiz bilgi yükünü yönetmek ciddi sorun haline gelmiştir (Cowle & Rowe, 2019).…”

Section: Araştirma Problemi̇ Ve Li̇teratürdeki̇ çAğdaş Deneti̇m Zorlu...unclassified

Yapay Zekâ Algori̇tmalari İle Dönüşen Deneti̇m Araçlari Üzeri̇ne Bi̇r Değerlendi̇rme

Efe

TUNÇBİLEK²

2023

Denetişim

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Yapay zekâ (YZ) uygulamalarıyla birlikte gelişen yenilikçi teknolojiler nedeniyle Sayıştay ve teftiş mekanizmaları dahil olmak üzere tüm iç ve dış denetim mesleğinin bir bütün olarak bir zorluk ile karşı karşıya olduğu söylenebilir. Bu zorlukların bir kısmı yeni fırsatlarla birlikte üstesinden gelinmesi gereken engelleri ve riskleri barındırabilmektedir. Veri analitiği araç ve tekniklerini denetim otomasyon yazılımlarıyla birlikte kullanmak dahil olmak üzere iç denetimde teknolojiden yararlanmada daha etkin ve verimli bir iş yapma ihtiyacı vardır. Büyük veri zorluğundan dolayı yavaş işleyen denetim, örneklemeye dayalı denetim planlamasına dayanan denetimin maliyet ve risklerinin artması denetim görevlerini hızlandırmak için otomasyonun gerekli olduğunun birer göstergeleridirler. Bu çalışma, YZ ile birlikte gelişen riskleri ve fırsatları dengeleyecek şekilde denetim süreçleri bağlamındaki otomasyon çözümlerini incelemektedir. Genel olarak piyasada kullanılan akıllı denetim uygulamaları ve özelde ise AuditMap.ai örneği üzerinden YZ tabanlı denetim otomasyon uygulamalarının denetçinin yerine geçerek değil, aslında insan merkezli denetim planlama, programlama, yürütme, test, raporlama ve izleme süreçlerine değer katarak denetim sürecine yardımcı olunduğu ortaya konulmaktadır.

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“…My point was that, in some firms, unscrupulous rainmakers advance more rapidly than an equally talented, but conscientious employee. To the extent that career ladders and markets advance unprincipled individuals and firms ahead of their more-principled competitors (Cowle and Rowe, 2019), an industry's leaders develop a vested interest in resisting reform. Highly placed, but unscrupulous rainmakers must be expected to lobby for accounting standards that protect the rents they and their firms earn from abetting deceitful behavior.…”

Section: A Information Risk: How Far Can We Trust Accountants?mentioning

confidence: 99%

Masters of Illusion: Bank and Regulatory Accounting for Losses in Distressed Banks

Kane

2020

INET Working Paper Series

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This essay is part of a larger work on the history of Federal Reserve policymaking entitled Banking on Bull. The study seeks to explain why the instruments of central banking inevitably break down over time. A big part of the explanation is that policymakers want accounting measures of bank net worth to be flexible enough to allow bankers and regulators to slow the release of adverse information about distressed banks, particularly very large ones. Modern regulatory frameworks focus on maintaining what can be described as the adequacy of accounting capital. But this framework is bull, because in tough times, bank accountants know how to make losses disappear.

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Don't Make Me Look Bad: How the Audit Market Penalizes Auditors for Doing Their Job

Cited by 9 publications

References 40 publications

Effects of human capital on revenues: evidence from professional service organizations in Taiwan

Effects of human capital on revenues: evidence from professional service organizations in Taiwan

Yapay Zekâ Algori̇tmalari İle Dönüşen Deneti̇m Araçlari Üzeri̇ne Bi̇r Değerlendi̇rme

Masters of Illusion: Bank and Regulatory Accounting for Losses in Distressed Banks

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