Section 404 of the Sarbanes-Oxley Act and Auditing Standard No. 2 (PCAOB 2004) require management auditor to report on internal controls over financial reporting. is arguably most controversial element SOX, much debate around costs implementing section has focused auditors' fees (Ernst & Young 2005). In this paper, we examine association between audit control disclosures made pursuant 404. Our sample includes 660 manufacturing firms that have a December 31, 2004 fiscal year-end filed by...

SYNOPSIS: The authors examine the association between chief financial officer (hereafter, CFO) gender and quality of accruals. Based on findings in prior research differences a variety decision settings—risk-taking attitudes, judgments, regulatory compliances—they hypothesize that firms with female CFOs will have higher empirical findings, based sample 1,559 (1,222) 2005 (2004), support this hypothesis. study shows companies lower performance-matched absolute discretionary accruals accrual...

The functioning of corporate audit committees was criticized in recent years by the Treadway Commission, Public Oversight Board, Kirk Panel, and SEC Chairman. In response, NYSE NASD sponsored Blue Ribbon Committee (BRC) on Improving Effectiveness Corporate Audit Committees. BRC Report includes recommendations aimed at strengthening director independence qualifications, highlights role internal auditors assisting governance process. Moreover, first three relate to committee composition:...

Prior research suggests that the Big 4 audit firms are of higher quality than non-Big firms. However, existing tests for an association between firm size and reporting accuracy indirect provide mixed results. Our study extends this line by examining whether exhibit having fewer “audit-reporting errors” in context issuing going-concern modified reports. analyses examine both types errors (i.e., type I errors—modified opinions rendered to subsequently viable clients; II errors—unmodified...

The SEC and legislators have expressed concerns that independence may be negatively impacted if auditors perform significant nonaudit services for their audit clients, providing lucrative to clients make it more likely will “see things the client's way.” Such are particularly salient in context of issues involve auditor judgment, as case reporting decisions related going-concern uncertainties financially stressed clients. In this study we examine association between magnitude fees report...

The number of audit committee meetings is the only publicly available quantitative signal about diligence committees, and private sector bodies Securities Exchange Commission (SEC) officials have emphasized need for frequent committee. Prior research indicates that associated with many “good” outcomes related to financial reporting, but there little empirical evidence determinants diligence. In this paper we examine association between firm characteristics as a proxy Our sample includes 319...

This study extends current literature related to nonaudit services by investigating internal audit outsourcing the external auditor. We posit that certain types of (i.e., those which are nonroutine, and thus tend be nonrecurring in nature) unlikely lead economic bonding, while offering significant potential for improvements coverage scope when provided Alternatively, routine tasks is more likely as well potentially threatening auditor independence. Our results consistent with firms...

The intense legislative and media scrutiny after a series of high-profile corporate failures, coupled with the paradigm shift in regulation auditing profession brought forth by Sarbanes-Oxley Act, suggests that auditors' decisions would be more conservative period December 2001. Based on analyses 226 financially stressed companies entered bankruptcy during from 2000 to 2003, we find auditors are likely issue going-concern modified audit opinions Since post-December 2001 coincides recovery...

SUMMARY: Legislators, regulators, and the media have expressed concerns that auditors “lowball” fees for initial-year audits such fee discounts can lead to reduced audit quality. We hypothesize will be less likely in post-SOX period than pre-SOX period. Using both fee-levels fee-changes models, we find Big 4 clients receive of about 24 percent 2001; this finding is consistent with results from many prior studies examined various periods SOX. However, 2005–2006 pay an premium around 16...

ABSTRACT The Advisory Committee on the Auditing Profession (ACAP), formed by U.S. Department of Treasury, has recommended that all public companies be required to have shareholder ratification auditor selection. Using data from 1,382 firms for year ending December 31, 2006, we find audit fees are higher in with voting ratification. We also started having a vote pay than stopped vote. In second part our study, selection (1) subsequent restatements less likely and (2) abnormal accruals lower....

This study examines companies' costs to comply with SOX 404 and identifies factors that are associated these costs. can be classified into three categories: internal labor costs, external consulting technology expenses, auditor attestation charges. While prior research has examined audit fees 404, we examine both total 404. Based on a sample of companies voluntarily disclosed cost information during the period from January 2003 September 2005, find mean (median) compliance for Section is...

SUMMARY Internal control reporting continues to be of significant interest regulators and legislators, as evidenced by the internal control-related requirements Dodd-Frank Act (2010) JOBS (2012) exempt smaller firms from Section 404. We extend prior research on association between weaknesses audit report lag (1) using data 2008 2009, (2) comparing accelerated non-accelerated filers, (3) examining impact remediation previously disclosed problems. find that in 2008, increase presence material...

Casterella, Francis, Lewis, and Walker (CFLW 2004) find, using survey data from 1993, that (1) there is a Big 6 industry specialization audit fee premium in the small client segment of U.S. market, but (2) fees decrease for large companies as becomes increasingly relative to an auditor's clientele. In this study, we first replicate confirm results CFLW (2004), SEC filings fiscal 2000 2001. post-SOX period, find related continue hold 2004 not 2003—suggesting 2003 perhaps unique year due flux...

Following enactment of the Sarbanes-Oxley Act (SOX) 2002, Big 4 auditors claimed to have a more conservative policy regarding client retention and acceptance decisions. In this paper, we examine resignations audit firms in periods before after SOX. We find that resigned from clients 2003 than 2001, group had significantly lower measures financial stress. Our results are robust adjustments for differences bankruptcy probability between 2001. also relative increases fees charged by successor...

SYNOPSIS We provide a brief overview of corporate governance in India, including description Indian contextual differences (as compared to the U.S. and elsewhere) discussion major events contributing evolution India's governance/accounting/auditing practices since economic deregulation 1991. also offer an agenda for future research on important issues, briefly address accounting practice implications.

SYNOPSIS: In this study, we examine audit fees for SEC registrants that remediate previously disclosed material weaknesses in internal control. We find remediating firms have lower when compared to continue report However, the pay, year of remediation as well one and two years subsequent remediation, a significant fee premium clean Section 404 reports each first four years. Firms had an adverse only year, but remediated problems three four, pay 32 (21) percent third (fourth) The results,...

The purpose of this paper is to survey, organize, and evaluate extant research on service-learning provide guidance both educators researchers. Because little has been written about in academic accounting, the cited comes primarily from other disciplines. Our literature survey divided into two sections: (1) student outcomes related intellectual skills, (2) personal outcomes. After surveying literature, we synthesize results offer for interested using make suggestions how accounting...

In FRR No. 68, the SEC (2003b) updated rules related to disclosure of fees paid independent auditor by requiring more detailed information about nonaudit fees. The (2002, 2003b) asserted that partition into categories audit-related, tax, and other would be useful for investors in assessing auditor's independence voting on ratifying auditor. suggested view audit-related tax services favorably than “other” services. this paper we test SEC's assertions examining shareholder ratification votes,...

SUMMARY: Regulators and legislators have focused significant attention on financial statement restatements in recent years, the U.S. Securities Exchange Commission (SEC) users view as audit failures. The SEC (2000, 2003a) suggests that shareholder voting auditor ratification will be impacted by perceptions of quality. In this paper we examine ratifications 2005 or 2006 following restatement announcements registrants. We find shareholders are more likely to vote against after a when compared...

This paper examines the market for audit services when incumbent auditor of an SEC registrant has resigned from engagement. While many previous studies changes have examined dismissals by client, only a few specifically focused on resignations. Auditor resignations constitute unique setting because they may indicate increased likelihood possible future losses to new auditor, and provide opportunity test demand-and-supply side incentives in services. Results analyses 156 control sample 375...

Audited financial statements can be viewed as the product of negotiations between a company's management and its auditor. Relative power these two parties is major factor that determines outcome negotiation. This study examines impact auditor tenure, importance client to an audit partner, nonaudit purchases, prior firm experience personnel on perceptions about their ability persuade in context accounting disagreement. We obtained responses survey from 124 CPAs industry who are employed CEOs,...

Gender diversity in corporate boards and the functioning of compensation committees are two issues that have caught attention legislators regulators many countries. Using data from 5,630 observations public companies United States, we find firm board characteristics associated with presence females on committee. However, female committee is not significantly CEO pay (as a proportion shareholder wealth increase). We then discuss related to research gender boards, offer some suggestions for...