SOX Section 404(b) continues to be of interest to legislators and regulators. Prior studies show that in the initial implementation years of SOX 404, the majority of material weakness (MW) disclosures were “surprise” MWs—i.e., disclosed at year-end, but not in prior quarterly filings (Hermanson and Ye 2009; Munsif, Raghunandan, and Rama 2013). We show that during the years 2010 to 2019, 74 (72) percent of MW disclosures by accelerated (non-accelerated) filers were surprise disclosures. We also find that surprise MWs are more likely to be associated with internal control issues that involve year-end adjustments and/or documentation, procedure, or policy issues. While “early warning” MWs are more likely due to systemic internal control problems, like segregation of duties. Our findings suggest a role for auditors and substantive audit tests in the disclosure of certain types of MWs. Increased auditor emphasis on interim substantive tests may reduce the likelihood of surprise MWs.
{"title":"Early Warnings of SOX 404 Material Weaknesses in Internal Control","authors":"H. Belina, D. Rama","doi":"10.2308/ciia-2021-030","DOIUrl":"https://doi.org/10.2308/ciia-2021-030","url":null,"abstract":"SOX Section 404(b) continues to be of interest to legislators and regulators. Prior studies show that in the initial implementation years of SOX 404, the majority of material weakness (MW) disclosures were “surprise” MWs—i.e., disclosed at year-end, but not in prior quarterly filings (Hermanson and Ye 2009; Munsif, Raghunandan, and Rama 2013). We show that during the years 2010 to 2019, 74 (72) percent of MW disclosures by accelerated (non-accelerated) filers were surprise disclosures. We also find that surprise MWs are more likely to be associated with internal control issues that involve year-end adjustments and/or documentation, procedure, or policy issues. While “early warning” MWs are more likely due to systemic internal control problems, like segregation of duties. Our findings suggest a role for auditors and substantive audit tests in the disclosure of certain types of MWs. Increased auditor emphasis on interim substantive tests may reduce the likelihood of surprise MWs.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2022-05-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45464036","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ting‐Chiao Huang, Chen Chen, S. Kaplan, Yi‐Hung Lin
This article summarizes a study by Huang, Chen, Kaplan, and Lin (2021) which examines whether increases in co-working experience between the lead and concurring audit partners affect engagement audit quality and audit efficiency. The study uses data from Taiwan, where the identities of lead and concurring audit partners are known, and where the role of the concurring partner is different than that of an engagement quality reviewer. This article describes the findings of Huang et al. (2021) and discusses the study’s implications to audits in Taiwan and elsewhere which may be of interest to practitioners, regulators, and academics.
{"title":"Implications of Co-Working Experience between Audit Partners","authors":"Ting‐Chiao Huang, Chen Chen, S. Kaplan, Yi‐Hung Lin","doi":"10.2308/ciia-2021-027","DOIUrl":"https://doi.org/10.2308/ciia-2021-027","url":null,"abstract":"This article summarizes a study by Huang, Chen, Kaplan, and Lin (2021) which examines whether increases in co-working experience between the lead and concurring audit partners affect engagement audit quality and audit efficiency. The study uses data from Taiwan, where the identities of lead and concurring audit partners are known, and where the role of the concurring partner is different than that of an engagement quality reviewer. This article describes the findings of Huang et al. (2021) and discusses the study’s implications to audits in Taiwan and elsewhere which may be of interest to practitioners, regulators, and academics.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2022-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45313523","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Bierstaker, Downey, Rose and Thibodeau (2018) investigate whether using a fraud story as compared to a traditional checklist improves fraud risk assessments in two separate experiments. This article summarizes their findings and discusses practical implications and actionable suggestions for audit practitioners. Specifically, the summary focuses on the capacity of fraud stories to help novice auditors develop knowledge structures that closely resemble the knowledge structures of experts and ultimately to improve experienced auditors’ risk assessments. Importantly, one Big 4 firm that participated in this research has adopted new and innovative fraud training methods based upon the results of this study. This article will discuss these training implications, along with the potential for stories to help auditors improve their fraud-related judgments, and additional considerations for the design of decision aids and knowledge management systems.
{"title":"Fraud Risk Assessment: A Story Based Approach Outperforms the Checklist","authors":"J. Bierstaker, D. Downey, Jake Rose, J. Thibodeau","doi":"10.2308/ciia-2022-002","DOIUrl":"https://doi.org/10.2308/ciia-2022-002","url":null,"abstract":"Bierstaker, Downey, Rose and Thibodeau (2018) investigate whether using a fraud story as compared to a traditional checklist improves fraud risk assessments in two separate experiments. This article summarizes their findings and discusses practical implications and actionable suggestions for audit practitioners. Specifically, the summary focuses on the capacity of fraud stories to help novice auditors develop knowledge structures that closely resemble the knowledge structures of experts and ultimately to improve experienced auditors’ risk assessments. Importantly, one Big 4 firm that participated in this research has adopted new and innovative fraud training methods based upon the results of this study. This article will discuss these training implications, along with the potential for stories to help auditors improve their fraud-related judgments, and additional considerations for the design of decision aids and knowledge management systems.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2022-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47621153","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article summarizes Sidgman, Brown, and Brazel (2021) which demonstrates that, when multitasking, the performance of audit teams communicating in-person is greater than the performance of teams using computer-mediated communication (discussion boards and chatrooms). In the audit setting, multitasking is unavoidable and pervasive and in-person communication is not always an option. To facilitate multitasking, engagement team communications have extended beyond in-person interactions to computer-mediated communication (CMC) technologies. However, little is known about the performance of multitasking teams under these alternative modes of communication (in-person, discussion boards, and chatrooms). Contrary to expectations, the authors find that experimental participants’ familiarity with, and preference for, chatroom features (which are like text messaging) may have offset the benefits previously attributed to discussion boards (which are similar to email). This finding is timely, given the pandemic-induced environment of remote and hybrid work, as it informs practitioners on audit teams’ multitasking effectiveness while using CMC.
{"title":"Can Your Audit Team Effectively Multitask? It Might Depend on How they Communicate","authors":"Joseph F. Brazel, Veena L. Brown, Juergen Sidgman","doi":"10.2308/ciia-2021-032","DOIUrl":"https://doi.org/10.2308/ciia-2021-032","url":null,"abstract":"This article summarizes Sidgman, Brown, and Brazel (2021) which demonstrates that, when multitasking, the performance of audit teams communicating in-person is greater than the performance of teams using computer-mediated communication (discussion boards and chatrooms). In the audit setting, multitasking is unavoidable and pervasive and in-person communication is not always an option. To facilitate multitasking, engagement team communications have extended beyond in-person interactions to computer-mediated communication (CMC) technologies. However, little is known about the performance of multitasking teams under these alternative modes of communication (in-person, discussion boards, and chatrooms). Contrary to expectations, the authors find that experimental participants’ familiarity with, and preference for, chatroom features (which are like text messaging) may have offset the benefits previously attributed to discussion boards (which are similar to email). This finding is timely, given the pandemic-induced environment of remote and hybrid work, as it informs practitioners on audit teams’ multitasking effectiveness while using CMC.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49268425","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Current Issues in Auditing: Collaborations with Practitioners","authors":"Denise Dickins, Keith Urtel","doi":"10.2308/ciia-10787","DOIUrl":"https://doi.org/10.2308/ciia-10787","url":null,"abstract":"","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2022-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45024445","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article summarizes Knechel, Thomas, and Driskill (2020), conceptualizing financial auditing as an economic service. In contrast to the production of tangible goods, a central characteristic of economic services is substantial customer/client participation in the production process. Financial auditing is an intensive collaborative network service due to the multiple parties involved in the production and consumption of the resulting output. This introduces significant heterogeneity and complexity into the planning and conduct of the audit, the resulting audit output, and perceptions of audit quality. While the independence of the auditor is necessary, ignoring the essential nature of auditor-client cooperation may generate unexpected costs which impair audit quality. The multitude of parties involved in an audit creates tension between audit quality and audit efficiency and makes objective definitions of audit quality difficult. Excessive standardization of the audit process may not increase audit quality.
{"title":"Financial auditing as an economic service","authors":"Matthew Driskill, W. Knechel, E. Thomas","doi":"10.2308/ciia-2021-021","DOIUrl":"https://doi.org/10.2308/ciia-2021-021","url":null,"abstract":"This article summarizes Knechel, Thomas, and Driskill (2020), conceptualizing financial auditing as an economic service. In contrast to the production of tangible goods, a central characteristic of economic services is substantial customer/client participation in the production process. Financial auditing is an intensive collaborative network service due to the multiple parties involved in the production and consumption of the resulting output. This introduces significant heterogeneity and complexity into the planning and conduct of the audit, the resulting audit output, and perceptions of audit quality. While the independence of the auditor is necessary, ignoring the essential nature of auditor-client cooperation may generate unexpected costs which impair audit quality. The multitude of parties involved in an audit creates tension between audit quality and audit efficiency and makes objective definitions of audit quality difficult. Excessive standardization of the audit process may not increase audit quality.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2022-02-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49493439","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
S. Bhattacharjee, Kimberly K. Moreno, Nicole S. Wright
This article summarizes the published study “The Impact of Benchmark Set Composition on Auditors’ Level 3 Fair Value Judgments” (Bhattacharjee, Moreno and Wright 2019), which examines how auditors’ judgments of the reasonableness of a client’s discount rate for a Level 3 investment are impacted by client-provided benchmarks. In two experiments, the authors find that audit seniors’ and managers’ judgments of a client-preferred discount rate for an investment are inappropriately influenced by the set of peer companies provided by the client as justification. Managers are less susceptible than seniors, likely due to highly developed knowledge structures. Results suggest that providing structured audit guidance to the seniors for conducting analyses somewhat reduces but does not eliminate this effect. The study’s findings have implications for other auditing contexts using benchmarking such as goodwill impairment, inventory obsolescence, and valuation estimates and for audit firms when auditing complex estimates and determining staffing of audit engagements.
本文总结了已发表的研究“基准集组成对审计师3级公允价值判断的影响”（Bhattacharjee，Moreno and Wright 2019），该研究考察了审计师对客户3级投资折现率合理性的判断如何受到客户提供的基准的影响。在两个实验中，作者发现审计高级人员和管理人员对客户偏好的投资贴现率的判断不适当地受到客户提供的一组同行公司的影响。管理者比老年人更不容易受到影响，这可能是由于高度发达的知识结构。结果表明，为老年人进行分析提供结构化的审计指导在一定程度上减少了但并没有消除这种影响。该研究的发现对使用基准的其他审计环境（如商誉减值、存货过时和估值估计）以及审计公司在审计复杂估计和确定审计业务人员配置时都有影响。
{"title":"How Do Client-Provided Benchmarking Data Impact Auditors’ Evaluations of Level 3 Fair Value Discount Rate Assumptions?","authors":"S. Bhattacharjee, Kimberly K. Moreno, Nicole S. Wright","doi":"10.2308/ciia-2021-019","DOIUrl":"https://doi.org/10.2308/ciia-2021-019","url":null,"abstract":"This article summarizes the published study “The Impact of Benchmark Set Composition on Auditors’ Level 3 Fair Value Judgments” (Bhattacharjee, Moreno and Wright 2019), which examines how auditors’ judgments of the reasonableness of a client’s discount rate for a Level 3 investment are impacted by client-provided benchmarks. In two experiments, the authors find that audit seniors’ and managers’ judgments of a client-preferred discount rate for an investment are inappropriately influenced by the set of peer companies provided by the client as justification. Managers are less susceptible than seniors, likely due to highly developed knowledge structures. Results suggest that providing structured audit guidance to the seniors for conducting analyses somewhat reduces but does not eliminate this effect. The study’s findings have implications for other auditing contexts using benchmarking such as goodwill impairment, inventory obsolescence, and valuation estimates and for audit firms when auditing complex estimates and determining staffing of audit engagements.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2021-11-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48143257","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Interviews with a sample of women in auditing reveal that they experienced women-to-women bullying throughout their public accounting careers. We define these aggressive behaviors in an accounting context and identify theoretical explanations. Since university accounting programs and accounting firms alike share responsibility for preparing and developing new accountants, we also present the interviewee’s recommendations for the academy and the profession to reduce woman-to-woman social aggression. The recommendations can also address communication and interpersonal issues beyond gender-on-gender bullying.
{"title":"Woman-to-Woman Workplace Bullying in the Audit Field","authors":"Kimberly Tribou, Dr. Mary Anna Kidd","doi":"10.2308/ciia-2020-047","DOIUrl":"https://doi.org/10.2308/ciia-2020-047","url":null,"abstract":"Interviews with a sample of women in auditing reveal that they experienced women-to-women bullying throughout their public accounting careers. We define these aggressive behaviors in an accounting context and identify theoretical explanations. Since university accounting programs and accounting firms alike share responsibility for preparing and developing new accountants, we also present the interviewee’s recommendations for the academy and the profession to reduce woman-to-woman social aggression. The recommendations can also address communication and interpersonal issues beyond gender-on-gender bullying.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2021-10-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47761336","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
John R. Lauck, Stephen J. Perreault, Joseph R. Rakestraw, J. Wainberg
This article summarizes a study (Lauck, Perreault, Rakestraw, and Wainberg 2020) in which we examine best practices for auditors conducting client inquiry. We find that reminding client-employees about the statutory protections available for public company whistleblowers and conducting fraud inquires later in the day are two strategies that increase the likelihood that a client-employee will disclose suspected fraud to an external auditor during the client fraud inquiries required by auditing standards. Although not specifically investigated, our findings may also hold for fraud examination or forensic accounting interview scenarios.
本文总结了一项研究(Lauck, Perreault, Rakestraw, and Wainberg 2020)，其中我们研究了审计人员进行客户咨询的最佳实践。我们发现，提醒客户雇员关于上市公司举报人可获得的法定保护以及在当天晚些时候进行欺诈调查是两种策略，这两种策略增加了客户雇员在审计标准要求的客户欺诈调查期间向外部审计师披露可疑欺诈行为的可能性。虽然没有特别调查，但我们的发现也可能适用于欺诈检查或法务会计面试场景。
{"title":"PRACTITIONER SUMMARY How Auditor’ Fraud Inquiry Strategies Can Increase the Likelihood of Whistleblowing","authors":"John R. Lauck, Stephen J. Perreault, Joseph R. Rakestraw, J. Wainberg","doi":"10.2308/ciia-2021-022","DOIUrl":"https://doi.org/10.2308/ciia-2021-022","url":null,"abstract":"This article summarizes a study (Lauck, Perreault, Rakestraw, and Wainberg 2020) in which we examine best practices for auditors conducting client inquiry. We find that reminding client-employees about the statutory protections available for public company whistleblowers and conducting fraud inquires later in the day are two strategies that increase the likelihood that a client-employee will disclose suspected fraud to an external auditor during the client fraud inquiries required by auditing standards. Although not specifically investigated, our findings may also hold for fraud examination or forensic accounting interview scenarios.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2021-10-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45361318","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jimmy Carmenate, Cori O. Crews, Vineeta D. Sharma, J. Sparger
Recent research by Sharma, Sharma, Tanyi, and Cheng (2020) provides new insight into directors serving on multiple public company audit committees. Specifically, they investigate how an individual audit committee director serving on multiple audit committees is related to companies’ cost of equity capital. Their evidence suggests that serving on multiple audit committees is viewed positively by investors up to a certain point, but beyond that point investors become concerned. This turning point, on average, is 3.5 audit committees for retired directors and 1.5 audit committees for directors in full-time employment. These results have implications for numerous stakeholders including investors, proxy advisors, boards, nominating committees, stock exchanges, and policymakers. They also have implications for future research.
{"title":"How Many Simultaneous Audit Committee Memberships Are Too Many?","authors":"Jimmy Carmenate, Cori O. Crews, Vineeta D. Sharma, J. Sparger","doi":"10.2308/ciia-2021-009","DOIUrl":"https://doi.org/10.2308/ciia-2021-009","url":null,"abstract":"Recent research by Sharma, Sharma, Tanyi, and Cheng (2020) provides new insight into directors serving on multiple public company audit committees. Specifically, they investigate how an individual audit committee director serving on multiple audit committees is related to companies’ cost of equity capital. Their evidence suggests that serving on multiple audit committees is viewed positively by investors up to a certain point, but beyond that point investors become concerned. This turning point, on average, is 3.5 audit committees for retired directors and 1.5 audit committees for directors in full-time employment. These results have implications for numerous stakeholders including investors, proxy advisors, boards, nominating committees, stock exchanges, and policymakers. They also have implications for future research.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2021-09-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48682375","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：