Initial Evidence of U.S. Audit Partner Identification in Form AP Shows Limited Impact on Audit Quality

This article summarizes a study (Cunningham, Li, Stein, and Wright 2019) in which we examine the initial impact of Form AP partner disclosure on audit quality. One difficulty with studying the effect of Form AP is that general time trends likely occurred even in the absence of partner disclosure. Our study addresses this concern by comparing two groups of audits: those experiencing partner name disclosure for the first time (treatment) and those not subject to the same shock (control). If Form AP was effective at driving immediate improvement in audit quality, any change for the treatment group should be greater than the control group. We conclude that audit quality appears to improve year-over-year; however, significant differences do not exist between these two groups in most of our tests, suggesting that partner disclosure does not explain these general trends. Further research is necessary to evaluate other potential impacts of Form AP.