The findings have important implications for audit firms that use information technology to facilitate engagement monitoring. The system improves audit review effectiveness and increases the frequency and timeliness of auditor interaction. The design of an audit support system can impact reviewer effectiveness. When used as a process control, audit support systems can have unintended consequences for auditor behavior and audit team interaction.
Dowling, C., & Leech, S. A. 2014. A Big 4 Firm's Use of Information Technology to Control the Audit Process: How an Audit Support System is Changing Auditor Behavior. Contemporary Accounting Research, 31 (1): 230-252.
This study provides a more complete examination of auditor-client pre-negotiation decisions and negotiation tactics when confronted with an ambiguous accounting issue. Because auditors and clients approach conflict resolution and make negotiation decisions in very different ways, the results should be of interest to auditors.
Bame-Aldred, C. W. and T. Kida. 2007. A Comparison of Auditor and Client Initial Negotiation Positions and Tactics. Accounting, Organizations, and Society 32 (6): 497-511.
This study offers (1) insights into how different types of accountants perceive work-life balance and alternative work arrangements (which are supposed to fix the work-life imbalance) and (2) advice from accountants on how firms can make alternative work arrangements more effective. The findings of this study may be useful to public accounting firms (employers in industry) that wish to understand their employees’ perceptions of work-life balance and potentially implement changes to enhance their employees’ actual work-life balance.
Buchheit, S., D.W. Dalton, N.L. Harp, and C.W. Hollingsworth. 2016. A Contemporary Analysis of Accounting Professionals' Work-Life Balance. Accounting Horizons 30 (1): 41-62.
This paper provides views on many areas within the auditing profession that would benefit from further research and analysis, as well as opportunities for research that could be useful to the PCAOB as it considers current and future regulatory priorities.
Franzel, J. M. 2014. A Decade after Sarbanes-Oxley: The Need for Ongoing Vigilance, Monitoring, and Research. Accounting Horizons 28 (4): 917-930.
This paper is the first to demonstrate the value added that process mining of event logs can play in auditing. Using real data drawn from the purchasing process of a global bank we show that process mining can detect information that is of relevance to internal auditors that was missed when those same auditors examined the same data using traditional analytical procedures. These results can be attributed to two distinct differences/advantages of process mining over the standard audit procedures used by the internal auditors:
The creation of event logs is a complex procedure that may require the use of consultants, but it is likely that ERP vendors will make this process more automated as process mining becomes a vital tool in operational management. Several large audit firms in Europe are beginning to offer process mining as consulting tool and are experimenting with it in external audit engagements.
For more information on this study, please contact Michael Alles.
Jans, M., M. Alles and M. Vasarhelyi. 2014. A Field Study on the Use of Process Mining of Event Logs as an Analytical Procedure in Auditing. The Accounting Review. 89 (5): 1751-1773.
Understanding that auditors allocate greater resources to fraud brainstorming when engagement risk is significant fosters brainstorming of a superior caliber corresponds to stronger regulatory compliance. Auditors report that engagement teams are holding fraud brainstorming sessions earlier in the audit, document more detailed risk assessments, plan more specific procedures, and retain more documentation. These characteristics contribute to adequately addressing increased PCAOB regulatory scrutiny. Additionally, brainstorming sessions are highly regarded when they occur in a face-to-face fashion and are attended by multiple levels of firm personnel—whether that is “core” or “non-core” professionals. Fraud brainstorming sessions are executed less mechanically (as determined by PCAOB inspectors) by using fewer checklists and increase the amount of time auditors prepare for brainstorming sessions.
Dennis, S. A., and K. M. Johnstone. 2016. A Field Survey of Contemporary Brainstorming Practices. Accounting Horizons 30 (4): 449–472.
The results of this study are important for audit firms to consider when determining documentation review processes and standards. The results provide perspective on how auditors approach the review process, and they also provide opportunities for firms to potentially improve processes. The determination that auditors prepare workpapers to meet reviewer preferences, and that this practice can affect both the content and presentation of the workpapers, is relevant for reviewers. This knowledge may allow firms and reviewers to consider if any adjustments should be made to their existing review process. Additionally, it provides evidence on the unique roles of managers and senior associates within the review process.
Fargher, N. L., Mayorga, D. and K. T. Trotman. 2005. A Field-Based Analysis of Audit Workpaper Review. Auditing: A Journal of
Practice & Theory 24 (2): 85-110
Bill Gradison believes that an appropriate and effective way to protect the investor would be to share its wealth of data with protections of confidentiality with outside group, especially of those in academia, to foster research that might shed light on the importance of investor protection and how best to protect investors in the future.
Gradison, B. 2014. A Former PCAOB Board Member Looks to the Past...and to the Future. Accounting Horizons 28 (4): 931-935.
The author shows how the successive incidence of these properties in observed corporate accountability reports can be used to determine whether and how those reports create or destroy value for shareholders and other constituencies. He shows how the hypotheses developed in the skeptical appraisal of corporate accountability reporting section can be used to distinguish across these explanations in observed corporate accountability reports.
Ramanna, K. 2013. A Framework for Research on Corporate Accountability Reporting. Accounting Horizons 27 (2): 409-432.
This study identifies the gap between audit research and audit practice. It recognizes key elements of audit quality and suggests additional research to be performed that could potentially bridge that gap. The research suggested in this study aims to help to comprehensively understand the drivers of audit quality by starting with an analysis of the macro-level inputs of audit quality, and then studying how they influence and shape the micro-level inputs. Further, several reasons are proposed to explain why the use of auditing research is not generally deemed important by audit practitioners, but that cooperation between practitioners, regulators, and scholars would improve overall audit quality.
For more information on this study, please contact Jere R. Francis.
Francis, J.R. A Framework for Understanding and Researching Audit Quality. Auditing, A Journal of Practice and Theory. 30 (2): 125- 152.