What’s in a Name? The Impact of U.S. Audit Partner Identification on Going Concern Audit Report Modifications

49 Pages Posted: 8 Feb 2018 Last revised: 1 Aug 2019

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 and related amendments to its auditing standards regarding the engagement partner and other accounting firms that took part in the audit (PCAOB 2015). The rules require disclosure of the engagement partner’s name and information about other accounting firms on 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. Consistent with a perceived increase in litigation risk, we document an increase in the propensity to issue a going concern report modification in the disclosure regime. Our results are sensitive to auditor type. Specifically, only Big Four auditors exhibit an increase in the going concern modification rate. Our evidence is consistent with Big Four audit partners believing that audit partner identification exposes them to higher litigation risk.

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

Suggested Citation

Abbott, Lawrence and Boland, Colleen M. and Buslepp, William L. and McCarthy, Sean, What’s in a Name? The Impact of U.S. Audit Partner Identification on Going Concern Audit Report Modifications (January 30, 2018). 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

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