Impact of the disclosure of audit engagement partners on audit quality: Evidence from the USA

Dao, Mai; Xu, Hongkang; Liu, Long

doi:10.1111/ijau.12149

Cited by 25 publications

(21 citation statements)

References 50 publications

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“…Therefore, increasing the reputational capital at stake might be a good mechanism to motivate auditors to improve their due care practices. For example, Burke, Hoitash, and Hoitash (2019) argue that holding partners more accountable through identity disclosure filings (i.e., Form AP) increases their due care, as evidenced by lower abnormal accruals and higher likelihood of internal weakness detection (Dao, Xu, & Liu, 2019). In this regard, the PCAOB's investigative and disciplinary role serves well as a “threat” to the auditors.…”

Section: Research Resultsmentioning

confidence: 99%

Examining PCAOB disciplinary orders on small audit firms: Evidence from 2005 to 2018

2020

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The purpose of this paper is to improve our understanding of small U.S. domestic audit firms and the quality of their audits. We use hand collected data from the Public Company Accounting Oversight Board's (PCAOB) website and provide an analysis based on 171 settled disciplinary orders issued to 150 small audit firms over the sample period from 2005 to 2018. We identify some key compliance issues associated with audits performed by small audit firms such as lack of due professional care, impaired auditor independence and inadequate engagement quality reviews. Our findings also indicate that risky clients (i.e., clients associated with disciplinary orders) pay higher audit fees and are less likely to receive a going concern opinion than peer clients not associated with a disciplinary order. Further, we discuss the implications of our research for practitioners, regulators and researchers in an attempt to enhance the overall health of the audit market.

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Section: Research Resultsmentioning

confidence: 99%

Examining PCAOB disciplinary orders on small audit firms: Evidence from 2005 to 2018

2020

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“…The data were gathered using a questionnaire; it consists of 12 questions regarding the research factors adopted from previous studies. For instance, AIS includes 4 adapted from Ayoub, Potdar, Rudra, and Luong (2020) and (Napitupulu, 2018), organizational culture include 4 items adapted from Gonzá lez-Rodrí guez, Martí n-Samper, Kö seoglu, and Okumus (2019) , Adeinat Iman and Abdulfatah Fatheia (2019), and Di Stefano, Scrima, and Parry (2019); and internal audit quality items adapted from Agyei-Mensah Ben (2019), Dao, Xu, and Liu (2019), and Beck, Gunn, and Hallman (2019). The respondents were asked to test their insight into the five-point Likert-scale research frameworks in which 5 symbolized 'strongly agree,' 4 symbolized 'agree,' 3 symbolized 'Neutral,' 2 symbolized 'Disagree,' and 1 symbolized 'Strongly disagree.'…”

Section: Methodsmentioning

confidence: 99%

Impact of Accounting Information System on Internal Audit Quality: Mediating Role of Organizational Culture

Alawaqleh

2020

IJFR

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This study advances the Accounting Information System (AIS) study by exploring the relationship between the AIS internal audit quality. It develops a model based on literature and considers one significant variable of mediation that is organizational culture. The AIS is expected to influence internal audit quality in different contexts, particularly in developing countries. The research model validated using AMOS and SPSS version 25. Based on a sample of 183 internal auditors in Jordanian industrial SMEs, empirical findings support the relationship between AIS and internal audit quality; however, the impact is direct while the organizational culture partially mediates this relationship. The results indicate that the AIS help enhance internal auditors' quality and the organizational culture, ultimately improving internal audit quality. The implications are useful for academics, administrators, and policymakers interested in evaluating the impact of intervening variables on the AIS and the internal audit quality relationship.

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“…According to the theory of source credibility, revealing engagement partners' names increases the public confidence of the quality of financial information and leads to an upsurge in the quality of audit in appearance (King et al, 2012). The PCAOB in the USA adopted the final rule that requires accounting firms to disclose engagement partners' names in a new PCAOB form AP for all public company audits on or after January 31, 2017, and this disclosure leads to a greater sense of accountability among partners, and thus to higher audit credibility (Dao et al, 2019).…”

Section: Improved Auditor Communicationmentioning

confidence: 99%

An investigation of the credibility of and confidence in audit value: evidence from a developing country

Akther

2021

ARJ

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Purpose This study aims to investigate the factors that enhance the credibility of and confidence in audit value. Design/methodology/approach Data were collected from 254 institutional investors through a questionnaire survey and were analyzed using partial least squares structural equation modelling (PLS-SEM). Findings The findings reveal that the two influential predictors of enhanced credibility and confidence are perceived auditor independence and improved auditor communication. Factors related to auditor–client affiliation, such as restrictions on providing non-audit services, mandatory auditor rotation and the presence of effective audit committees, are identified as creating the perceived independence. Improved auditor communication is linked with improving the audit report and ensuring audit education, thus creating more sophisticated users who better understand the scope and purpose of an audit. Furthermore, independent audit oversight acts as a moderator in the relationship between perceived auditor independence, improved auditor communication and enhanced credibility. Enhanced credibility can lead to greater confidence in audit value. Originality/value In the wake of the global financial crisis and loss of confidence in the role of auditors, this study investigates the factors that can enhance the credibility of and confidence in audit value, especially in a non-Anglo-American setting. This study is unique in terms of methodological development, as it uses a higher-order Type II reflective–formative model using PLS-SEM.

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Impact of the disclosure of audit engagement partners on audit quality: Evidence from the USA

Cited by 25 publications

References 50 publications

Examining PCAOB disciplinary orders on small audit firms: Evidence from 2005 to 2018

Examining PCAOB disciplinary orders on small audit firms: Evidence from 2005 to 2018

Impact of Accounting Information System on Internal Audit Quality: Mediating Role of Organizational Culture

An investigation of the credibility of and confidence in audit value: evidence from a developing country

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