Audit Partner Identification and Audit Quality
Lee, K.K., Levine, C.B. Audit partner identification and audit quality. Rev Account Stud 25, 778–809 (2020). https://doi.org/10.1007/s11142-020-09533-0
Posted: 18 Sep 2019 Last revised: 28 Mar 2022
Date Written: March 2020
Abstract
This paper studies the effects of disclosing the audit engagement partner's identity on individual and partnership incentives and overall audit quality. We model a collective decision problem, incorporating individual engagement partners' preferences with the partnership's choice of internal quality control. In our model, disclosure of the individual engagement partner (on Form AP) influences the probability that clients observe individual partners' past performance. While Form AP disclosure increases individual partners' incentives to provide high quality audits for a given level of internal quality control within the partnership, it may simultaneously decrease the partnership's incentives to maintain good internal quality control systems, leading to a net degradation in audit quality. Our paper also demonstrates that the level of external audit oversight is critical in determining whether Form AP disclosure enhances audit quality.
Keywords: Audit, Engagement Partner, Audit Transparency, Partner Naming, Audit Quality
JEL Classification: M41, M42, M48
Suggested Citation: Suggested Citation