This synthesis covers academic research on the use of valuation, tax, information technology (IT), and forensic specialists on audit engagements. The importance and role of specialists on audit engagements have recently increased, and specialist use has garnered significant attention from regulators and academics. Given the PCAOB’s (2017b) recent proposal to revise auditing standards regarding specialists’ involvement, it is important to review the specialist literature as a whole. By integrating research across these four domains, I identify commonalities and differences related to: (1) factors associated with the use of specialists on audit engagements (including the nature, timing, and extent of use); (2) factors impacting auditors’ interactions with specialists (including specialists contracted by the auditor or management); and (3) outcomes associated with the use of specialists. This integrated analysis of the specialist literatures shows variation in the use of specialists, and various factors affecting both if and how they are involved and whether auditors use specialists internal or external to the audit firm. Additionally, research has sometimes (but not always) linked specialist involvement to higher audit quality. The commonalities and areas of variation identified are informative to audit research and practice, particularly as regulators and audit firms look to improve the quality of audits using specialists. Throughout the synthesis, I also provide a number of directions for future research.
Research generally finds positive audit and tax outcomes associated with auditor-provided tax services (APTS), attributing knowledge sharing (KS) between tax and audit as the underlying cause, but not observing it. This study contributes to the APTS literature by investigating experienced audit and tax professionals’ perspectives about when and how KS occurs. Results imply that KS occurs in two phases, and is enhanced or inhibited by multiple factors related to knowledge relevance, motivation, opportunities, and culture. First, audit and tax personnel often share client information and their domain expertise while interacting during the audit, which enables identifying potentially valuable APTS. Second, further KS can occur during/following APTS performance, and APTS results may be shared back to benefit the audit. Our evidence shows that key factors may vary across phases, underscoring the importance of considering the full APTS process. Based on our findings, we suggest a number of future research opportunities.
We survey highly-experienced professionals from local accounting firms regarding the adoption of and perceived benefits from data visualization in audit practice. Although the majority of respondents have minimal experience with data visualization, local-firm partners have positive perceptions regarding the value that visualization can have on audit quality and client-related benefits. These perceptions are affected by visualization technology usage: perceived audit quality benefits increase with usage but client benefit perceptions decrease with usage. These results are consistent with competing models of technology adoption. In total, whether one labels a firm a ‘laggard’ or a ‘rational non-adopter’ of visualization technology appears to be driven by whether the firm seeks to adopt technology in order to improve audit quality or to add value for their clients.
Drawing on prior research and source credibility theory, this study examines nonprofessional investors' acquisition and evaluation of component auditor use as disclosed in Form AP, and whether and how this evaluation influences their investment decisions. I find that very few investors voluntarily access component auditor information. When asked to review the Form AP, investors perceive the audit team as more trustworthy when a component auditor is not used, leading them to perceive the audited financial statements as more reliable. However, the perceived competence of the audit team and investment behavior are not affected by component auditor use. Regulators express concerns regarding component auditor use, but results suggest that while investors share some concerns about the audit, their concerns are not significant enough to influence investment behavior, which complements archival research. Results also suggest that component auditor use could have an unintended consequence for the lead auditor's responsibility for the audit.
The “gig” economy has exploded as more consumers purchase products and services from gig businesses and more workers pursue gig employment. This case uses a fictional gig company, HungryHound (HH), mirroring services provided by Grubhub, DoorDash, and UberEats, to expose students to the complexities of gig businesses and to areas requiring judgment in the revenue recognition standard. Specifically, students determine the appropriate revenue treatment among varying alternatives and apply the guidance in identifying the customer(s), determining principal and/or agent classifications, and reporting the financial statement effect for transactions. Completion of the case requires critical thinking in evaluating and applying ambiguous revenue guidance. Students also learn about current variation in accounting treatments among gig companies. The case is designed to give instructors flexibility, where case deliverables can be used together or as standalone assignments and can be deployed in an undergraduate or graduate intermediate accounting course or capstone course.
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