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Article
Publication date: 1 March 2003

Christie L. Comunale, Thomas R. Sexton and Stephen C. Gara

The efficiency and the effectiveness of the audit depend in part on the efficiency and the effectiveness of the client inquiry process. This paper presents a model that…

1422

Abstract

The efficiency and the effectiveness of the audit depend in part on the efficiency and the effectiveness of the client inquiry process. This paper presents a model that helps auditors to understand the stages of the client inquiry process and the factors that influence its reliability. The model serves to illuminate the client inquiry process and thereby assist auditors in evaluating the evidence thus obtained. Our model is a multistage communication channel that connects reality, the client’s perception of reality, the client’s representation of reality, the auditor’s perception of reality, and the auditor’s representation of reality. Distortions of reality occur between adjacent stages as the result of the subjectivity, technical incompetence, untrustworthiness, and poor presentation skills of either the client or the auditor. We discuss our model in the context of the analytical review task.

Details

Managerial Auditing Journal, vol. 18 no. 2
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 April 2005

Christie L. Comunale and Thomas R. Sexton

To explore the effects of mandatory auditor rotation and retention on the long‐term market shares of the accounting firms that audit the members of the Standard and Poor's…

3577

Abstract

Purpose

To explore the effects of mandatory auditor rotation and retention on the long‐term market shares of the accounting firms that audit the members of the Standard and Poor's (S&P) 500.

Design/methodology/approach

A Markov model is constructed that depicts the movements of S&P 500 firms in the period 1995 to 1999 among Big 5 accounting firms. Auditor rotation and retention are reflected in the transition probabilities. The impacts of mandatory auditor rotation and retention policies are evaluated by examining the state probabilities after two, five, and nine years.

Findings

The paper finds that mandatory auditor rotation will have substantial effects on long‐term market shares, whereas mandatory auditor retention will have very small effects. It shows that a firm's ability to attract new clients, as opposed to retaining current clients, will be the primary factor in determining the firm's long‐term market share under mandatory auditor rotation.

Research limitations/implications

The paper assumes that S&P 500 firms will continue their reliance on Big 5 firms and that the estimated transition probabilities will remain stable over time.

Practical implications

Excessive market share concentration resulting from such policies should not be a concern of regulators. The paper conjectures that, under mandatory rotation, accounting firms will reallocate resources to attract new clients rather than retain existing clients. This may result in lower audit quality.

Originality/value

Interestingly, over the past 25 years, several bodies have considered mandatory auditor rotation and retention. Surprisingly, the authors have found no studies of the effects of mandatory auditor rotation and retention on audit market share.

Details

Managerial Auditing Journal, vol. 20 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 August 2003

Christie L. Comunale and Thomas R. Sexton

Arthur Andersen’s conviction and its decision not to audit public firms will transform the Big 5 into the Big 4. Meanwhile, other Big 4 firms face investigations that…

1678

Abstract

Arthur Andersen’s conviction and its decision not to audit public firms will transform the Big 5 into the Big 4. Meanwhile, other Big 4 firms face investigations that threaten their future market shares. The article compares the observed post‐scandal shifts in market share with those estimated by a Markov model. It then estimates the year‐by‐year and long‐term market shares that the Big 4 firms would have achieved had they remained untouched by these investigations. The study finds that the absence of Arthur Andersen alone would not have led to excessive market share concentration. It demonstrates how the post‐scandal shifts reveal the impacts of the investigations on the Big 4 firms and provides market share benchmarks against which the firms can evaluate the long‐term effects of the investigations. Finally, the article concludes that a firm’s long‐term gain in market share depends on its ability to retain audit clients.

Details

Managerial Auditing Journal, vol. 18 no. 6/7
Type: Research Article
ISSN: 0268-6902

Keywords

Book part
Publication date: 27 June 2008

Christie L. Comunale, Thomas R. Sexton and Stephen C. Gara

For nearly two decades, accounting educators have debated whether to continue with a preparer approach, or adopt a user perspective, or a blended model in the introductory…

Abstract

For nearly two decades, accounting educators have debated whether to continue with a preparer approach, or adopt a user perspective, or a blended model in the introductory financial accounting course. We examine the extent to which accounting programs have chosen to employ each approach, the factors that influenced their selection, as well as the relative importance of each factor. We also explore institutional and course characteristics associated with the choice of instructional method.

Our results indicate that one-third of programs employ the user perspective, and one-fifth the traditional preparer approach, while nearly half use a blend of the two. Programs using the preparer approach tend to focus on the accounting major (e.g., performance and career goals). In contrast, user approach institutions appear to emphasize performance issues and career paths of non-accounting majors.

Details

Advances in Accounting Education
Type: Book
ISBN: 978-1-84950-519-2

Book part
Publication date: 30 September 2019

Christie L. Comunale, Charles A. Barragato and Denise Buhrau

In this study, we examine the role of temporal framing in the context of tax audit risk. Using construal-level theory, we propose that compared with an every-year frame…

Abstract

In this study, we examine the role of temporal framing in the context of tax audit risk. Using construal-level theory, we propose that compared with an every-year frame (e.g., 1.5 million returns are audited every year), framing audit risk in an everyday frame (e.g., 4,000 returns are audited every day) will make audit risk seem more likely and thus increase taxpayer compliance. We test whether perceived fairness of the tax system, an individual difference variable related to tax compliance, moderates the effect of temporal framing on behavioral intentions. The results show that communicating risk in a day frame rather than a year frame increases compliance for taxpayers who perceive the tax system as unfair but not for taxpayers who perceive the tax system as fair. Increasing compliance among taxpayers who perceive the tax system as unfair is crucial, as they are less likely to be compliant. Thus, framing audit risk can assist in increasing taxpayer compliance.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-83867-346-8

Keywords

Book part
Publication date: 10 August 2005

Christie L. Comunale, Thomas R. Sexton and Terry L. Sincich

This chapter introduces linguistic delivery style to auditing research, demonstrates how linguistic delivery style relates to client credibility, and shows how linguistic…

Abstract

This chapter introduces linguistic delivery style to auditing research, demonstrates how linguistic delivery style relates to client credibility, and shows how linguistic delivery style and client credibility influences auditors’ judgment. Two hundred auditors participated in an analytical procedures task. The results indicate that high client credibility and powerful linguistic delivery style increase the auditor's assessed likelihood that the explanation accounts for the fluctuation and decrease their intent to perform additional testing. Moreover, powerless linguistic delivery style from an otherwise high credibility client leads to auditor judgments and intentions that are indistinguishable from those that arise from a low credibility client. Finally, evidence indicates that linguistic delivery style is a fourth component of credibility.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-0-76231-218-4

Article
Publication date: 1 July 2006

Christie L. Comunale, Thomas R. Sexton and Stephen C. Gara

To investigate how accounting majors have reacted to recent accounting scandals and to evaluate the extent to which they are familiar with the scandals, the effects of the…

6266

Abstract

Purpose

To investigate how accounting majors have reacted to recent accounting scandals and to evaluate the extent to which they are familiar with the scandals, the effects of the scandals on their opinions of accountants and corporate managers, and the consequent influences on the student's educational and career plans.

Design/methodology/approach

In total 105 accounting majors at two institutions were surveyed. Forsyth's ethics position questionnaire was used to evaluate the student's ethical orientation. The survey instrument also measures student demographic data, the student's knowledge of the profession and the scandals, and how the scandals affected the student's opinions and plans. The data are analyzed using linear regression.

Findings

Accounting students are generally knowledgeable about the scandals but seem to know considerably less about the accounting profession. Accounting students lowered their opinions of corporate managers more than that of accountants. Accounting students also express an increased interest in majoring in accounting and seeking a position in the profession, but express less interest in working for a Big 4 firm. Students scoring higher on the idealism scale tended to lower their opinions of accountants more than that of corporate managers.

Research limitations/implications

The results represent a case study only. It is believed that the conclusions may apply to other student populations.

Practical implications

The results can guide educators to prepare interventions that help students to avoid ethical crises.

Originality/value

The paper introduces ethical orientation in explaining how students react to ethical crises. The results enable accounting educators to understand what students feel and how and why they react to such events.

Details

Managerial Auditing Journal, vol. 21 no. 6
Type: Research Article
ISSN: 0268-6902

Keywords

Book part
Publication date: 10 August 2005

Abstract

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-0-76231-218-4

Content available
Book part
Publication date: 10 August 2005

Abstract

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-0-76231-218-4

Book part
Publication date: 30 September 2003

Abstract

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-84950-231-3

1 – 10 of 13