Work

Public Oversight of Audit Firms: The Slippery Slope of Enforcing Regulation

Year: 2018

Type: article

Abstract: This study uses the slippery-slope framework to understand how an oversight regulator’s enforcement style influences audit firm compliance. Using data from interviews with audit regulators and audit partners, we find that partners perceive the regulator’s enforcement style has shifted from being more collaborative to being more coercive. A consequence of this shift is that partners believe the development of trust between the two parties has been inhibited and a forced compliance climate has emerged. In response, firms have mandated strategies to increase the visibility of compliance, such as increasing mandatory use of checklists. Audit partners express some concern that oversight of the profession has resulted in firms adapting their audit process in ways aimed at minimising inspection risk and not necessarily improving audit quality.

Source: Abacus

DOI: 10.1111/abac.12130

Authors: Carlin Dowling, W. Robert Knechel, Robyn Moroney

Institutions: The University of Melbourne, University of Florida, Monash University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

Funder: Australian Research Council