Public Accounting Experience and the Remediation of Material Internal Control Weaknesses
50 Pages Posted: 20 Apr 2017
Date Written: April 19, 2017
Our study investigates the potential benefits of public accounting experience to auditee companies. We find companies hire more employees with public accounting experience after they receive adverse opinions on their internal controls. This result is particularly strong for companies whose material internal control weaknesses are related to personnel issues. We also find that internal control opinions improve significantly after companies hire more employees with public accounting experience. We conclude that employees with prior experience in public accounting help companies to improve their internal controls over financial reporting.
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