PCAOB Enforcements: A Review of the First Three Years

Gilbertson, David L.; Herron, Terri L.

doi:10.2308/ciia.2009.3.2.a15

Cited by 15 publications

(18 citation statements)

References 8 publications

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“…The PCAOB is authorized to conduct disciplinary proceedings, impose sanctions, and communicate inspection results to other regulatory agencies (Ege et al, 2019;. The PCAOB has demonstrated its power to impose sanctions for violations of standards detected via inspections by revoking the registration of audit firms and censuring, suspending, or barring auditors (Gilbertson & Herron, 2009;PCAOB, 2011).…”

Section: Introductionmentioning

confidence: 99%

PCAOB Inspections and Audit Fees: An Analysis of Inspection Rounds of Small Audit Firms

Vanstraelen

Zou

2020

European Accounting Review

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This study investigates the impact on audit pricing of PCAOB inspection outcomes on the quality control systems of small audit firms. Quality control deficiencies (QCDs) provide a strong signal about audit quality, which is expected to lead to price changing. We first document that audit fees in the pre-inspection period were higher for small audit firms without QCDs, implying that quality differences were already partially known and priced in the market. Next, we find evidence that in the post-inspection period audit fees further increase for firms without QCDs, while there is limited evidence for fee increases for firms with remediated QCDs, suggesting changes in audit firm reputation. Interestingly, we do not find support for fee changes for audit firms with disclosed quality control deficiencies. Finally, the magnitude of change in audit fees decreases over time. Collectively, these findings contribute to our understanding of audit quality differences amongst small audit firms and the functioning of the small audit firm market.

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Section: Introductionmentioning

confidence: 99%

PCAOB Inspections and Audit Fees: An Analysis of Inspection Rounds of Small Audit Firms

Vanstraelen

Zou

2020

European Accounting Review

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“…We are interested in disciplinary orders because they represent the most egregious cases of audit firm misconduct (Gilbertson & Herron, 2009), so they are more useful than routine inspection reports for deriving inferences about small audit firm quality. An additional weakness of inspection reports is that they omit quality control criticisms if firms satisfactorily resolve these concerns within 12 months of the date of the inspection report.…”

Section: Introductionmentioning

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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“…The disclosure of the PCAOB reports on audit firms deficiencies has a negative effect on audit firms (Daugherty et al, 2011), and appeared more sever for the smaller audit firms (Gilbertson & Herron, 2009). Gramling et al (2011) find that firms with inspection deficiencies are less likely to receive on going-concern opinions.…”

Section: H3c: the Institutional Aspectmentioning

confidence: 99%

The Impact of the H3C on Auditor Independence in French Context

Azibi¹,

Tondeur²,

Azibi³

2017

JMS

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The H3C was created by the LSF Act of 2003 (LSF) to regulate the auditing profession in France. It is considered as an external control authority. The auditor independence is considered as the first preoccupation of this new authority. This paper focuses on the impact of the H3C on auditor independence in France context from 2002 to 2007. The first hypothesis is related to the establishment of the H3C and auditor independence and the second deals with the relation between the start of the inspection program and the auditor independence. Our data was obtained from Thomson Financial Data for 140 enterprises. The empirical results show that the auditor independence increases only after the creation of the H3C. Contrary to this result, the auditors' independence did not increase significantly after the announcement of the inspection process because the inspection process started in 2007.

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PCAOB Enforcements: A Review of the First Three Years

Cited by 15 publications

References 8 publications

PCAOB Inspections and Audit Fees: An Analysis of Inspection Rounds of Small Audit Firms

PCAOB Inspections and Audit Fees: An Analysis of Inspection Rounds of Small Audit Firms

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

The Impact of the H3C on Auditor Independence in French Context

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