U.S. Audit Partner Identification and Auditor Reporting

Journal of Accounting and Public Policy Forthcoming

Posted: 8 Feb 2018 Last revised: 5 Oct 2021

See all articles by Lawrence Abbott

Lawrence Abbott

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business

Colleen M. Boland

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business

William L. Buslepp

Louisiana State University, Baton Rouge - Department of Accounting

Sean McCarthy

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business

Date Written: January 30, 2018

Abstract

After a lengthy and protracted debate, the Public Company Accounting Oversight Board (PCAOB) adopted new rules requiring disclosure of the engagement partner’s name and information about other accounting firms on the new PCAOB Form AP, Auditor Reporting of Certain Audit Participants. We investigate the impact of this regulation on auditor behavior in the context of the auditor’s going concern report modification propensity. We document an increase in the propensity to issue a going concern report modification in the disclosure regime, accompanied by a corresponding increase in the Type I (‘false positives’) error rate. Thus, an unintended consequence of Rule 3211 is the potential reduction in the audit report's informativeness. Conceivably, a more significant repercussion is that going concern modifications can hasten bankruptcy for firms since financial institutions may be reluctant to lend money to firms with modified audit reports. An unjustified increase in the going concern modification rate as evinced in our paper may make U.S. capital markets potentially less attractive to young, upstart, albeit financially-distressed, companies.

Keywords: Audit partner identification; Auditor Reporting, Going Concern Opinion

JEL Classification: M42, M48

Suggested Citation

Abbott, Lawrence and Boland, Colleen M. and Buslepp, William L. and McCarthy, Sean, U.S. Audit Partner Identification and Auditor Reporting (January 30, 2018). Journal of Accounting and Public Policy Forthcoming, Available at SSRN: https://ssrn.com/abstract=3113890 or http://dx.doi.org/10.2139/ssrn.3113890

Lawrence Abbott

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business ( email )

P.O. Box 742
3202 N. Maryland Ave.
Milwaukee, WI 53201-0742
United States

Colleen M. Boland (Contact Author)

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business ( email )

P.O. Box 742
3202 N. Maryland Ave.
Milwaukee, WI 53201-0742
United States

William L. Buslepp

Louisiana State University, Baton Rouge - Department of Accounting ( email )

E.J. Ourso College of Business Administration
2800 Business Education Complex
Baton Rouge, LA 70803
United States

Sean McCarthy

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business ( email )

P.O. Box 742
3202 N. Maryland Ave.
Milwaukee, WI 53201-0742
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
1,896
PlumX Metrics