Auditing-a Journal of Practice & Theory 

About: Auditing-a Journal of Practice & Theory is an academic journal published by American Accounting Association. The journal publishes majorly in the area(s): Audit & Quality audit. It has an ISSN identifier of 0278-0380. Over the lifetime, 515 publications have been published receiving 25474 citations. The journal is also known as: AJPT & Auditing.

Audit Research after Sarbanes‐Oxley

Abstract: The scrutiny auditing received following Enron's failure and the accounting scandals at Worldcom and other companies provides compelling evidence that auditing matters and is important. What is unclear, however, is whether auditing was sufficiently “broken” in the first place to warrant the radical reforms and changes effected by the Sarbanes‐Oxley Act of 2002 (SOX). While there have been some high profile corporate failures and accounting scandals, the number of demonstrated audit failures as evidenced by successful litigation or U.S. Securities and Exchange Commission (SEC) sanctions is quite small and approaches an annual failure rate of close to zero. In addition, our interpretation of the academic research suggests that many of the “solutions” embodied in SOX are not only unlikely to solve the profession's alleged problems; they may well have serious unintended negative consequences. So the disconnect is large between the scientific evidence on audit quality and institutional changes premised on the ...

A Framework for Understanding and Researching Audit Quality

Abstract: June 2011 IAASB Discussion 1. At the June 2011 meeting, the IAASB considered a first draft of the Audit Quality Framework (\" Framework \") paper. The IAASB expressed strong support for a holistic approach to the development of the proposed Framework. Amongst other matters, suggestions were made for the paper to give greater recognition to the dynamism of audit quality (AQ), to recognize the influences of technology and industry circumstances as important additional contextual factors, to further consider the linkages with efficiency and cost, and to reconsider the AQ schematic so that it more effectively articulates the various elements of the Framework and the Framework's dynamism. 2. On the basis of this input and as agreed by the IAASB, the Task Force developed a revised draft of the Framework paper (the \" CAG Draft \" − see Agenda Item 6-F) for purposes of soliciting initial reactions and input from specific stakeholder groups in Q3-Q4 2011. 3. Key highlights of the discussions with stakeholders on the CAG Draft are set out below. representatives of the Task Force met six very experienced academics (four from the U.S., one from Australia, and one from Canada) in Denver on August 7 th to discuss the CAG draft. The meeting was arranged by Board member Bill Kinney, who was one of the participants. The academics seemed genuinely interested in the project and made a number of constructive suggestions as to how the Framework might be improved. A number said they struggled with understanding the current model. An alternative structure was suggested which is more consistent with the way the topic has been treated in a number of recent studies. 1 September 2011 IAASB CAG Meeting 5. Some CAG representatives welcomed the project and were broadly supportive of the CAG draft, with some commenting that it was well balanced and thoughtful. 6. One CAG representative, however, took a different position and criticized the paper for dealing with systemic issues rather than focusing on audit quality at the engagement level. A number of other CAG representatives agreed that poor contextual factors such as weak corporate governance cannot be used as an excuse for a poor quality audit. Several thought that the Framework should focus more on factors that auditors can control. 7. Some CAG representatives expressed concern that too much emphasis was placed on efficiency in the proposed Framework and were of the view that more of …

A Decision Aid for Assessing the Likelihood of Fraudulent Financial Reporting

Abstract: The auditor's responsibility for detecting fraudulent financial reporting is of continuing importance to both the profession and society. The Auditing Standards Board has recently issued SAS No. 82, Consideration of Fraud in a Financial Statement Audit, which makes the auditor's responsibility for the detection of material fraud more explicit without increasing the level of responsibility. Using a sample of 77 fraud engagements and 305 nonfraud engagements, we develop and test a logistic regression model that estimates the likelihood of fraudulent financial reporting for an audit client, conditioned on the presence or absence of several fraud‐risk factors. The significant risk factors included in the final model are: weak internal control environment, rapid company growth, inadequate or inconsistent relative profitability, management places undue emphasis on meeting earnings projections, management lied to the auditors or was overly evasive, the ownership status (public vs. private) of the entity, and an ...

Corporate Governance Research in Accounting and Auditing: Insights, Practice Implications, and Future Research Directions

Abstract: SUMMARY: Over the past two decades, the corporate governance literature in accounting and auditing has grown rapidly. To better understand this body of work, we discuss 12 recent literature review or meta-analysis papers and summarize selected results (i.e., clusters of papers with new and interesting results) from recent empirical research papers, after reviewing the findings of over 250 studies. Our corporate governance focus is primarily on corporate board and audit committee issues. We discuss the major insights from this literature and the practice implications of these findings. In addition, we identify a number of opportunities for future research. In particular, we make suggestions for: (1) improved research paradigms in corporate governance, (2) extensions of existing research, and (3) new or emerging lines of research.

Audit Quality: Insights from the Academic Literature

Abstract: SUMMARY: This study presents a review of academic research on audit quality. We begin with a review of existing definitions of audit quality and describe general frameworks for establishing audit ...