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The importance of auditors blowing the whistle when they encounter a situation of perceived wrongdoing cannot be overstated. Unfortunately, however, the initial report of wrongdoing is often insufficient to remedy the situation. Thus, this chapter investigates auditors’ whistleblowing persistence, measured as the number of times an auditor is willing to repeatedly report the wrongdoing, if he/she is not satisfied with the initial and/or subsequent responses received. Specifically, this chapter examines auditors’ persistence when reporting the wrongdoing of a peer auditor on the same audit team. Results show communication medium utilized within the audit team (instant message vs video) and client importance (high vs low) influence persistence in a 2 × 2 experiment. The manipulation for communication medium uses actual prerecorded videos and instant messages. Results related to one of our four hypotheses show that whistleblowing persistence is affected by client importance; that is, auditors are more likely to persist in reporting when working on a less important client. Furthermore, the findings suggest that client importance and communication medium interact such that communication medium affects persistence on more important clients, but not less important clients. Specifically, when working on a more important client, auditors are more likely to persist in reporting when interacting with their peers via video compared to via instant message. Given that whistleblowing persistence is often necessary to obtain a satisfactory resolution to the issue at hand, our results suggest avenues to encourage whistleblowing persistence should be further explored.

The process performed during a financial statement audit is critical but is unobservable to external stakeholders. This can create challenges in assessing the quality of individual audit engagements. This study’s objective is to introduce and investigate an archival measure based on publicly available information that proxies for audit process ineffectiveness.

We proxy for audit process ineffectiveness using errors in the audit report. We examine audit reports to identify errors because the audit report represents the auditor’s primary communication with financial statement users and is subject to rigorous preparation and review. We first examine if typical factors influencing audit process ineffectiveness are associated with audit report errors. We then examine whether audit reports containing errors are associated with audit quality measures.

We find that errors are more likely to be present in audit reports when time pressure exists and less likely when auditors exert more effort and when audit engagement risk is higher. Results also show that errors in audit reports are positively associated with financial reporting misstatements, measured by subsequently disclosed Big R restatements and out-of-period adjustments.

Collectively, our evidence suggests that an audit report containing an error is a suitable proxy for audit process ineffectiveness. This proxy has audit quality implications because inattentiveness in one area of the audit process could indicate inattentiveness in another area.

This case examines critical ethical accounting practice issues surrounding a request for proposal for audit services at Aviary Corporation based on a real Securities and Exchange Commission enforcement action. Audit and tax partners at Western Accounting Firm, a large international public accounting firm, used confidential information obtained from the company’s Chief Audit Officer to modify their proposal for audit services. In response to their actions, the Securities and Exchange Commission fined the auditing firm, the partners, and the Chief Audit Executive. The authors used publicly available information and adopted fictitious names to develop a teaching case that instructors can implement in a variety of accounting and ethics classes to increase students’ understanding of professional codes of conduct and independence guidance.

This study aims to identify the intellectual structure of expanded audit reporting (EAR), offers a quantitative summation of prominent themes, contributors and knowledge gaps and provides suggestions for further research.

This research uses various bibliometric techniques, including co-word and co-citation analysis for EAR science mapping, based on 123 papers from Scopus Database between 1991 and 2022.

The results show EAR research is focused on Audit Quality; Auditor Liability and Litigation; Communicative Value and Readability; Audit Fees; and Disclosure. Regarding EAR research, Brasel et al. (2016), article is the most cited paper, Bédard J. is the most cited author, Laval University is the most influential university, The Accounting Review is the most cited journal and USA is the leading country. Furthermore, the results show that in common law countries, in which shareholder rights and litigation risk is high, topics such as disclosure quality and audit litigation have been addressed more; and in civil legal system countries, which usually favor stakeholders’ rights, topics of gender diversity or corporate governance have been more studied.

This research has practical implications for standard setters and regulators, who can identify important, overlooked and emerging issues and consider them in future policies and standards.

This paper contributes to the literature by providing a more objective and comprehensive status of the accounting research on EAR, identifying the gaps in the literature and proposing a direction for future research to continue the discussion on the value-relevance of EAR to achieve more transparency and less audit expectation gap.

This study aims to provide evidence on how the issuance of a nonreliance restatement affects non-restating clients of the same audit office.

To test the effect of restatement issuance on office-level quality, this study runs regressions using both input- and output-based measures of audit quality.

This study finds that in the years where one or more clients of an audit office issue a restatement, audit effort is lower for non-restating clients of the same office. When two or more clients issue a restatement, other clients are charged lower audit fees, file later and are more likely to experience an audit failure.

This study contributes to the literature on office-level audit quality and provides an explanation for the longitudinal correlation of office-level audit failures.

This paper aims to understand the impact of big data on the UAE audit profession. Mainly exploring whether the emergence of big data threatens the reliability of audit standards and whether audit standards need to be improved. Also, exploring the impact of big data on the collection of audit evidence.

Semistructured interviews were used to collect data, mainly targeting the audit-related workers of the Big Four and Non-Big Four audit firms in the UAE. Thematic analysis is adopted to analyze the original data, and the main factors affecting the audit standard and audit evidence collection.

This study found that the reliability of audit standards and the way audit evidence is collected can be affected by big data. It concludes that audit standards need to be improved and strengthened to include detailed essential elements associated with big data to ensure audit reliability, legitimacy and regularity. The results also identify the impact of big data on audit evidence in terms of adequacy, appropriateness, authenticity, consistency and reliability, as well as the impact on the validity and completeness of evidence collection. The research highlights the importance of big data skills and knowledge education, the contribution and challenges of big data to auditing, and the use of big data in future auditing.

This research provides specific empirical evidence from both Big Four and Non-Big Four audit firms in the UAE, which is lacking in the literature on the use of big data technology by auditors to assist audit works in UAE. It may serve as a reference for other researchers or those interested in relevant research.

This study aims to examine how new regulation changes for the auditor’s report, so-called key audit matters (KAMs), influence tax avoidance.

This study uses data from firms listed on the Omani capital market over the period 2012–2019 and analyzes these data using pooled panel data regression with a robust standard error. It uses two common proxies for tax avoidance and two measures for the KAMs disclosure requirement.

This study finds a sharp decrease in the effective tax rate following the introduction of KAMs disclosure and the issuance of more KAMs in audit reports. This result is supported by several robustness checks. In an additional analysis, the authors observe interesting results, indicating that real earnings management mediates this association, while the audit committee plays a moderating role. The authors do not find a moderating effect of Big4 on this association, but find discrepancies within the Big4 firms in relation to this moderating effect.

The results of this study indicate that although the introduction of the KAMs disclosure requirement may have positive consequences, it may also lead to unintended negative consequences. This conclusion has not been comprehensively reported in literature.

This paper aims to examine how the allocation of audit hours to the year-round procedures, based on the risk of material misstatements in financial statements, impacts audit quality.

Using a data set on audit hours spent on year-round and year-end procedures, the authors build an empirical model for testing the effectiveness of year-round auditing of Korean public firms during the period of 2014–2018.

The initial tests do not show that proportionate increases in year-round procedures increase audit quality. However, after the authors control for the risk of material misstatements, the authors find that proportionate increases in year-round audit hours generally increase audit quality, except for high-risk firms where audit quality increases only as year-end hours proportionately increase. For high-risk firms, the results suggest that increases in year-round audit procedures occur at the cost of the essential year-end work. Similarly, except for high-risk firms, the authors find that the allocation of more audit effort to year-round procedures improves audit efficiency.

To the best of the authors’ knowledge, this study provides some of the first empirical evidence showing how a risk-based approach to allocating audit effort over the duration of an audit can impact audit quality and efficiency. Regulatory bodies, such as the International Auditing and Assurance Standards Board and Public Company Accounting Oversight Board, which consider the proper allocation of audit hours as a key audit quality indicator, should find the results useful.

This study aims to examine whether the newly available auditor tenure information is associated with non-GAAP earnings, as the recent requirement to disclose the initial year of auditor-client relationship in audit reports may give the impression that longer auditor tenure may be related to lower audit quality.

Using a sample of firm-quarters from 2017 to 2020, the authors conduct both univariate and regression analyses. We use hand-collected data for auditor tenure, SEC comment letters, and non-GAAP variables.

First, the authors find that the likelihood of disclosing non-GAAP earnings monotonically increases with auditor tenure on a univariate basis. Second, auditor tenure is negatively associated with aggressive non-GAAP reporting. Third, the authors document evidence of aggressive reporting in general; that is, items excluded in calculating non-GAAP earnings are associated with future performance. However, the association declines with longer auditor tenure. Finally, the authors report evidence that the likelihood of receiving an SEC comment letter that contains non-GAAP comments decreases with longer auditor tenure.

The results show that regulators need to consider both GAAP and non-GAAP disclosures’ costs and benefits when enacting auditor tenure regulation. Investors can benefit from the findings in evaluating the quality of non-GAAP earnings. The findings are also relevant to the SEC when allocating limited resources in monitoring non-GAAP reporting.

To the best of the authors’ knowledge, this is the first study showing that auditor tenure is associated with the quality of non-GAAP earnings. Given that financial reporting quality should be understood as a comprehensive system comprising both mandatory and voluntary disclosures, this study complements the literature that examines the effect of auditor tenure on financial reporting quality using GAAP reporting.

The purpose of this study is to investigate the impact of audit committee characteristics on firm performance. In particular, the authors employ the random-effects variant of the Hunter–Schmidt meta-analyze procedure to analyze the effects of key audit committee attributes, namely audit committee independence, audit committee expertise, audit committee size, audit committee meeting along with big four impact on firm performance. The authors hope to gain a better understanding of the function of audit committees in enhancing firm performance and to uncover potential discrepancies in prior findings due to varying economic levels or performance metrics.

This study uses the Hunter–Schmidt method to conduct a meta-analysis of 39 previous studies published between 2012 and 2022 to investigate the relationship between audit committee characteristics and firm performance.

The results indicate that audit committee independence, expertise, size and affiliation with the big four have a significant and positive effect on firm performance, while audit committee meetings have a non-significant effect. Furthermore, findings suggest that companies should carefully consider the contextual factors that may impact the effectiveness of their corporate governance structures, such as economic level, when designing and implementing governance mechanisms.

This study is significant as it is the first to combine and analyze previous research on this topic and highlights the importance of certain audit committee characteristics in enhancing financial reporting quality and corporate governance.