Download or read book Auditor Industry Specialization and Accounting Estimates written by Sarah E. Stein and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines whether auditor competencies developed through industry specialization play a role in monitoring client firms' accounting estimates. Specifically, I focus on asset impairment decisions as a key accounting estimate given managers incentives to hide these losses and the PCAOB's criticisms of auditors' testing in this area. Impairments examined in this study relate to goodwill and intangibles, other long-lived assets, and investment securities. Using the portfolio share approach to measure office-level specialization, I find that client firms engaging industry specialist auditors exhibit a greater propensity to record, and record larger, impairments relative to client firms engaging auditors with less specialization. The results also demonstrate that impairments recognized by clients of specialist auditors are more positively associated with concurrent bad news signals, suggesting that these losses are recognized on a more timely basis. Collectively, this evidence enhances our understanding of the factors affecting auditors' ability to evaluate complex accounting estimates.

Download or read book Annual Accounting and Auditing Workshop written by Kurt Oestriecher and published by John Wiley & Sons. This book was released on 2020-08-20 with total page 416 pages. Available in PDF, EPUB and Kindle. Book excerpt: Are your accounting and auditing skills up-to-date and on-par with industry standards? This guide provides updates on the latest standards, including accounting, auditing, compilation, preparation, and review. It covers important industry changes such as revenue recognition, leases, financial instruments, and SASs, and includes practical applications for each, to help you understand and apply the standards to real-life scenarios. Key topics covered include: Accounting, auditing, and attestation standards updates FASB projects and exposure drafts Private company financial reporting Revenue Recognition Leases, Financial Instruments, Peer Review, Trust Services, Cyber Security, SSAEs Going Concern; Private company financial reporting

Download or read book Audit Industry Specialization written by Keith A. Houghton and published by . This book was released on 2001 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: While auditing literature has investigated the main effect of auditor industry specialization on audit fees and planning decisions, the underlying processes explaining differential pricing between specialists and other auditors are largely unexplored. This study seeks to fill a portion of this gap by examining the interaction between auditor industry specialization and auditee risk. Using data derived from a sample of public sector audits, this study examines distinctions in how different auditors price risk. Building upon the differentiation between "premium" and "discount" specialists investigated in Houghton, Dolley, Jubb and Monroe (2000) and possibly found in DeFond, Francis and Wong (2000), the results of this study demonstrate that, in response to increased auditee risk, premium specialists price risk relatively less than other auditors. In contrast, discount specialists increase fees relatively more than other auditors. These results may reflect differences in the skill sets and work processes that underlie specialization for these two specialist sub-groups. The results are also consistent with increased competencies of premium specialist auditors in the audit of risky clients.

Download or read book Auditor Industry Specialization and the Earnings Response Coefficient written by Jagan Krishnan and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study compares the earnings response coefficients of clients of industry specialist and non-specialist auditors. Prior work (e.g., DeAngelo 1981) has suggested that auditors offer different levels of audit quality, in response to client variations in the demand for different levels of audit quality (Watts and Zimmerman 1986). One component of the quality difference across auditors is industry specialization (Craswell et al. 1995). Empirical evidence on the effect of industry specialization on audit quality proxies such as audit fees, auditor litigation and compliance with accounting standards is mixed. This study examines the hypothesis that industry specialization leads to a better quality of audit by comparing the earnings response coefficients of clients audited by industry specialists with those of clients not audited by industry specialists. Teoh and Wong (1993) argue that audit quality is positively associated with the client's quality of earnings and therefore the earnings response coefficient (ERC), which is the responsiveness of the stock market to information about unexpected earnings. They present evidence that one measure of audit quality, auditors' brand-name (Big 6 or not), is positively associated with the ERC. This paper extends this argument by examining the effect of another facet of audit quality, auditor industry specialization, on the ERC. The results suggest that, after controlling for previously established correlates of the ERC, as well as industry affiliation, clients of industry specialist auditors have higher ERCs than clients of non-specialist auditors.

Download or read book Auditor Industry Specialization Chapter 15 written by Debra C. Jeter and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: As audit quality is paramount in returning the profession to the “priesthood” in the wake of accounting scandals such as Enron and bank failures, perhaps the most important question with respect to industry specialization is whether or not industry specialists provide truly superior quality audits. Research in industry specialization by auditors has focused to date primarily on addressing this question; the pricing of audits by specialists is a related issue also examined in a number of studies. Research suggests that specialists are associated with higher earnings quality for their auditees, whether due to intervention in the reporting process, or because management anticipates such intervention and constrains opportunistic earnings management. The role of industry specialization in audit pricing has been frequently addressed in the literature, and yet remains largely unresolved. Some studies present evidence of specialist premiums, while others find no premiums or premiums only for certain subsets of clients. In its 2003 report, the GAO expressed some concern that auditor choice was limited for large national and multinational companies requiring industry-specific expertise, noting that an auditor who audits a number of smaller companies within an industry may not have the necessary expertise to handle the larger clients in that industry. Most researchers, however, find little evidence of adverse impacts such as oligopolistic pricing as a result of the increased audit market concentration resulting from the audit firm mergers and demise of Arthur Andersen. Industry specialization, if pursued as a means of enhancing the knowledge and understanding necessary to conduct superior audits, should result in benefits to both client and auditor. Industry specialists may be able to provide higher levels of assurance because they are more likely to assess risks, and to detect financial reporting errors and irregularities, and are thus equipped to deliver better planned and more effective audits.

Download or read book Annual Update for Accountants and Auditors 2020 written by Kurt Oestriecher and published by John Wiley & Sons. This book was released on 2020-10-29 with total page 305 pages. Available in PDF, EPUB and Kindle. Book excerpt: Keep abreast of the fast-paced changes in accounting and auditing with relevant pronouncements, exposure drafts, and other guidance recently issued in the accounting, auditing, compilation, preparation, and review arenas. This book will help accountants and financial managers sort through the most recent accounting and auditing complexities so they can identify and apply recently issued FASB, PCAOB, and AICPA standards and guidance. New topics covered include: Revenue recognition Leases Financial instruments Intangible assets Consolidation Business combinations Recently issued SAS No. 134–140 Auditing interpretations Recently proposed SSAE standards Overview of SSARS guidance

Download or read book Auditor Industry Specialization written by and published by . This book was released on 2000 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Auditor Industry Specialization and Evidence of Cost Efficiencies in Homogenous Industries written by Kenneth L. Bills and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the audit pricing effects when auditors specialize in industries conducive to transferable audit processes. Our results indicate that specialists charge incrementally lower audit fees in industries with homogenous operations and in industries with both homogenous operations and complex accounting practices. Moreover, we discover that audit quality is no lower for clients audited by these specialists offering fee discounts, consistent with our conclusion that the reduction in fees indicates cost efficiencies rather than lower quality audits. Our results are somewhat surprising given they suggest auditors pass along cost savings to the client in certain settings. However, further analysis indicates that the shared economies of scale only occur in a subsample of client firms with relatively high bargaining power. When considered in conjunction with prior research using a survivorship approach, our results indicate that certain industries lend themselves to specialization because auditors generate cost-based competitive advantages without compromising service quality.

Download or read book Auditing Estimates and Other Soft Accounting Information written by Michael J. Ramos and published by American Institute of Certified Public Accountants (AICPA). This book was released on 1998 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Does Auditor Industry Specialization Improve Audit Quality written by Miguel Minutti-Meza and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines whether auditor industry specialization, measured using the auditor's within-industry market share, improves audit quality and results in a fee premium. After matching clients of specialist and non-specialist auditors on a number of dimensions, as well as only on industry and size, there is no evidence of differences in commonly used audit-quality proxies between these two groups of auditors. Moreover, there is no consistent evidence of a specialist fee premium. The matched-sample results are confirmed by including client fixed effects in the main models, examining a sample of clients that switched auditors, and using an alternative proxy that aims to capture the auditor's industry knowledge. The combined evidence in this study suggests that the auditor's within-industry market share is not a reliable indicator of audit quality. Nevertheless, these findings do not imply that industry knowledge is not important for auditors, but that the methodology used in extant archival studies to examine this issue does not fully parse out the effects of auditor industry specialization from client characteristics.

Download or read book Accounting Oversight and Unintentional Errors in Complex Estimates written by and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines estimation accuracy using a unique purchase accounting setting where the accounting model itself prevents and deters acquirers from using financial statement estimates to manage current period earnings upwards. This setting (i.e., ASC 310-30 Loans and Debt Securities Acquired with Deteriorated Credit Quality) controls for several earnings management opportunities present in other settings with observable estimation errors; therefore, observed estimation errors in this setting enable cleaner tests of unintentional errors (i.e., mistakes) in reported estimates. Using data from ASC 310-30 disclosures, I analyze ex post realizations of estimates of expected future cash flows. As predicted, results show that three forms of accounting oversight - manager accounting expertise, audit committee accounting expertise, and auditor industry specialization - are each individually associated with more accurate estimates. Additionally, these variables interact such that auditor industry specialization is associated with more accurate estimates when either manager accounting expertise is present or audit committee accounting expertise is higher, but not when both manager accounting expertise is absent and audit committee accounting expertise is lower. This suggests audit committees moderate interactions between auditors and managers and implies that auditors function more effectively when audit committees understand complex accounting issues.

Download or read book Codification of Statements on Auditing Standards 2019 written by AICPA and published by John Wiley & Sons. This book was released on 2019-06-28 with total page 1607 pages. Available in PDF, EPUB and Kindle. Book excerpt: This 2019 edition delivers the current Statements on Auditing Standards (SASs) and related interpretations in a codified format, giving accountants the most up-to-date information, they need to conduct successful audits and provide high-quality services to their clients. Issued directly from the AICPA, this authoritative guidance is essential to fully understand the requirements associated with an audit. This edition includes the following new standards: SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements SAS No. 135, Omnibus Statement on Auditing Standards—2019 SAS No. 134 is a suite of auditor reporting standards that includes a new AU-C section 701, Communicating Key Audit Matters in the Independent Auditor’s Report, and replaces AU-C sections 700, 705, and 706. SAS No. 134, which also amends various other AU-C sections, addresses the auditor’s responsibility to form an opinion on the financial statements and the form and content of the auditor’s report issued because of an audit of financial statements. It also addresses the auditor’s responsibilities, and the form and content of the auditor’s report, when the auditor concludes that a modification to the auditor’s opinion on the financial statements is necessary, and when additional communications are necessary in the auditor’s report. SAS No. 135 is intended to more closely align ASB guidance with the PCAOB's standards by primarily amending AU-C section 260, Communications With Those Charged With Governance, AU-C section 550, Related Parties, and AU-C section 240, Consideration of Fraud in a Financial Statement Audit. This codification is fully indexed and arranged by subject. The codified standards and related interpretations are vital to practitioners performing audits.

Download or read book Audit of Accounting Estimates written by and published by . This book was released on 1987 with total page 9 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Auditor Industry Specialization written by Ankita Singhvi and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Industry Specialization by Auditors written by Chris E. Hogan and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Dramatic changes in recent years in the audit market suggest the timeliness of an investigation of trends in auditor concentration and an extension of prior research (e.g., Danos and Eichenseher 1982). In recent press, large audit firms have claimed that specialization is a goal of increasing importance. Peat Marwick, for example, has restructured along industry lines, claiming to be recruiting professionals for national teams of multidisciplinary experts organized to quot;focus on the same industry to serve clients optimally.quot; On the other hand, litigation concerns might prompt auditors to diversify their risks by diversifying their clientele.In this study, we examine trends in industry specialization from 1976 to 1993 and the industry factors which may affect specialization; whether market share increases are greater for audit firms classified as specialists; and whether the nation?s largest audit firms have increased their market share in the industries which they have identified as their focus industries. We find evidence that concentration levels have increased over this period, consistent with the claims of the large audit firms. We find that auditor concentration levels are high in regulated industries, in more concentrated industries and in industries experiencing rapid growth, but lower in industries with a high risk of litigation. Levels of concentration have increased over time in nonregulated industries providing evidence that scale economies or superior efficiencies of heavy-involvement auditors are not limited to regulated industries but extend to nonregulated industries as well. We also find that for the audit firms classified as market leaders at the beginning of the year, market share has increased over time, whereas market share has declined for firms with a smaller share at the beginning of the year. This suggests that there are returns to investing in specialization.

Download or read book Intangible Assets Values Measures and Risks written by John R.M. Hand and published by OUP Oxford. This book was released on 2003-02-20 with total page 558 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Government Auditing Standards 2018 Revision written by United States Government Accountability Office and published by Lulu.com. This book was released on 2019-03-24 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.