Non-CPAs and Office Audit Quality

Accounting Horizons, Forthcoming

46 Pages Posted: 10 May 2017 Last revised: 24 Feb 2020

See all articles by Matthew Sherwood

Matthew Sherwood

University of Massachusetts Amherst - Isenberg School of Management

Albert Nagy

John Carroll University - Boler School of Business

Ally Zimmerman

Florida State University - Department of Accounting

Date Written: February 12, 2020

Abstract

During the time surrounding the Sarbanes-Oxley Act of 2002, the Big 4 firms either spun-off or downsized their consulting practices. However, in recent years, consulting service lines of the large accounting firms have seen a dramatic resurgence and growth. Regulators have taken notice and expressed concern over this renewed focus on consulting. The accounting firms claim that such services enhance audit quality, mainly due to the prominent role of non-accounting specialists in today’s external audit function. This study examines whether the availability of non-CPAs in U.S. Big 4 firm offices is associated with audit quality. We find that greater access to non-CPAs in the office is associated with higher audit quality and conclude that office audit quality is not just a function of audit-specific human resources but also the availability of non-CPAs to support audit engagement teams.

Keywords: audit quality, consulting focus, non-audit services, audit firm offices, use of specialists, audit pricing

JEL Classification: M42

Suggested Citation

Sherwood, Matthew and Nagy, Albert and Zimmerman, Aleksandra, Non-CPAs and Office Audit Quality (February 12, 2020). Accounting Horizons, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2933106 or http://dx.doi.org/10.2139/ssrn.2933106

Matthew Sherwood

University of Massachusetts Amherst - Isenberg School of Management ( email )

Amherst, MA 01003-4910
United States

Albert Nagy

John Carroll University - Boler School of Business ( email )

University Heights, OH 44118-4581
United States

Aleksandra Zimmerman (Contact Author)

Florida State University - Department of Accounting ( email )

Rovetta Business Bldg. (RBA)
College of Business
Tallahassee, FL 32306-1110
United States

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