Abstract

http://ssrn.com/abstract=1855797
 
 

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Client Engagement Risks and the Auditor Search Period


Samer Khalil


American University of Beirut - New York Office

Jeffrey R. Cohen


Boston College - Department of Accounting

Kenneth B. Schwartz


Boston College

May 31, 2011

Accounting Horizons, Forthcoming

Abstract:     
This paper investigates whether client engagement risks lengthen the client acceptance phase for audit firms and result in a longer auditor search period for their clients. Using a sample of auditor resignations over the period 2003-2008, we document that the auditor search period is longer for firms associated with client business risk (financial distress) and audit risk (internal control weaknesses or management integrity issues), while it is shorter for firms representing reduced auditor business risk (auditor industry specialization). These findings highlight the importance of client risk assessment and explain audit firms’ response to perceived client risks.

Number of Pages in PDF File: 27

Keywords: Client acceptance, auditor search period, audit risk

JEL Classification: M41

Accepted Paper Series


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Date posted: May 31, 2011 ; Last revised: July 25, 2011

Suggested Citation

Khalil, Samer and Cohen, Jeffrey R. and Schwartz, Kenneth B., Client Engagement Risks and the Auditor Search Period (May 31, 2011). Accounting Horizons, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1855797

Contact Information

Samer K. Khalil (Contact Author)
American University of Beirut - New York Office ( email )
Suliman S. Olayan School of Business
P.O.Box 11-0236
Beirut 1107 2020, Riad El-Solh
Lebanon
Jeffrey R. Cohen
Boston College - Department of Accounting ( email )
Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-3165 (Phone)
617-552-2097 (Fax)
Kenneth B. Schwartz
Boston College ( email )
Carroll School of Accounting
Chestnut Hill, MA 02167
United States
617-552-3942 (Phone)
617-552-2097 (Fax)
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