Search

The study finds that audit firm specialization, which may refer to firms having a large market share or receiving revenues from a specific industry, leads to increased levels of forecast errors by analysts. Findings also suggest that specialized auditing firms restrict management's ability to manipulate earnings.

ABSTRACT: The purpose of this study is to highlight issues of interest to researchers employing the I/B/E/S earnings and forecast data. I/B/E/S has traditionally provided per share data on a [...]

Managers of organizations establish control systems to reduce the agency costs inherent in those organizations. Control systems include both internal and external control mechanisms, some of which may be viewed as substitutes for each other. We develop a model of the demand for external auditor industry expertise and then examine whether managers substitute such expertise for certain closely related internal control mechanisms in their overall control systems. Using a sample of municipalities, we find evidence that managers who do not hire internal auditors or who hire accounting personnel with low levels of accounting expertise tend to hire external auditors with higher levels of industry expertise. We interpret this to be a conscious trade-off on the part of the managers, which appears to be linked to the costs of hiring the internal mechanisms in question. Keywords: control systems; auditor expertise; internal control; agency costs. Data Availability: Some data used in this study were collected from public sources identified in the manuscript. Contact the authors concerning availability of data that is from nonpublic sources., INTRODUCTION This study examines whether managers of organizations who are required to have independent audits substitute external auditor expertise for certain closely related internal control mechanisms in their overall control [...]

Audits utilizing computerized information systems are more likely to produce misstatements than audits that do not use such systems. Misstatements are not due to computer failures, but are attributable to incorrect manual computations, insufficient internal controls and misapplication of internal controls. These findings were in addition to traditional factors such as faulty judgment., SUMMARY The decade of the 1980s saw a surge in research examining the empirical characteristics of audit differences detected in audit engagements. This paper examines the differential impact of computerization [...]

The process for providing accounting information to the public has not changed much in the last century even though the extent of disclosure has increased significantly. Sundem et al. (1996) suggest that the primary benefit of audited financial statements may not be decision usefulness but the discipline imposed by timely confirmation of previously available information. In general, the value of information from the audited financial statement will decline as the audit report lag (the time period between a company's fiscal year end and the date of the audit report) increases since competitively oriented users may obtain substitute sources of information. Furthermore, the literature on earnings quality and earnings management suggests that unexpected reporting delays may be associated with lower quality information. The purpose of this paper is to extend our understanding about the determinants of audit report lag using a proprietary database containing 226 audit engagements from an international public accounting firm. We examine three previously uninvestigated audit firm factors that potentially influence audit report lag and are controllable by the auditor: (1) incremental audit effort (e.g., hours), (2) the resource allocation of audit team effort measured by rank (partner, manager, or staff), and (3) the provision of nonaudit services (MAS and tax). The results indicate that incremental audit effort, the presence of contentious tax issues, and the use of less experienced audit staff are positively correlated with audit report lag. Further, audit report lag is decreased by the potential synergistic relationship between MAS and audit services. Keywords: audit report lag; earnings quality. Data Availability: Contact the authors concerning data availability., Investors in today's markets are looking to accountants to provide greater information on a more timely basis. At the same time, information technology is dramatically reducing the time it takes [...]

Presents an analysis of the membership of the Auditing Section of the American Accounting Association made by the Communications Committee. Number of members of the Auditing Section who have provided complete demographic data; Information on members of the Executive Committee.