Auditor size and internal control reporting differences in nonprofit healthcare organizations
Journal of Public Budgeting, Accounting & Financial Management
ISSN: 1096-3367
Article publication date: 1 March 2013
Abstract
We investigate whether auditor size is associated with the disclosure of internal control exceptions among Circular A-133 audits of nonprofit healthcare organizations. Our analysis is motivated by recent growth and transparency concerns within the sector. Using a sample of 1,180 audit reports from 2004 to 2008, we find evidence that audits performed by Big 4 firms are less likely to disclose internal control weaknesses than those performed by smaller firms. Additional analyses indicate this relation only remains statistically significant for a subsample of small organizations, possibly due to greater selectivity or lower efforts by the Big 4 auditors. We discuss the implications of these findings from an audit quality, market dominance, and client size perspective. The results are relevant to hospital financial managers seeking high quality audits at low cost.
Citation
López, D.M., Rich, K.T. and Smith, P.C. (2013), "Auditor size and internal control reporting differences in nonprofit healthcare organizations", Journal of Public Budgeting, Accounting & Financial Management, Vol. 25 No. 1, pp. 41-68. https://doi.org/10.1108/JPBAFM-25-01-2013-B003
Publisher
:Emerald Publishing Limited
Copyright © 2013 by PrAcademics Press