The Sec's Enforcement Actions Against Auditors: An Auditor Reputation and Institutional Theory Perspective

Rollins, Theresa P.; Bremser, Wayne G.

doi:10.1006/cpac.1996.0106

Cited by 56 publications

(47 citation statements)

References 11 publications

(28 reference statements)

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“…We contribute to the extant fraud type literature (e.g. Bonner et al, 1998;Feroz et al, 1991;Rollins and Bremser, 1997) by providing direct evidence on the specific characteristics of fraud that are related to enforcement actions against auditors in China. The analysis of specific financial statement frauds provides additional information on auditors' responsibilities.…”

Section: Discussionmentioning

confidence: 99%

Financial Statement Frauds and Auditor Sanctions: An Analysis of Enforcement Actions in China

2005

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The rising tide of corporate scandals and audit failures has shocked the public, and the integrity of auditors is being increasingly questioned. It is crucial for auditors and regulators to understand the main causes of audit failure and devise preventive measures accordingly. This study analyzes enforcement actions issued by the China Securities Regulatory Commission against auditors in respect of fraudulent financial reporting committed by listed companies in China. We find that auditors are more likely to be sanctioned by the regulators for failing to detect and report material misstatement frauds rather than disclosure frauds. Further analysis of the material misstatements indicates that auditors are more likely to be sanctioned for failing to detect and report revenue-related frauds rather than assets-related frauds. In sum, our results suggest that regulators believe auditors have the responsibility to detect and report frauds that are egregious, transaction-based, and related to accounting earnings. The results contribute to our knowledge of auditors' responsibilities for detecting frauds as perceived by regulators.

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Section: Discussionmentioning

confidence: 99%

Financial Statement Frauds and Auditor Sanctions: An Analysis of Enforcement Actions in China

2005

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“…Rollins & Bremser (1997) The study identified that audit firms improved their peer review ratings over time: firms with a larger number of previous reviews received more favorable ratings.…”

Section: Resultsmentioning

confidence: 99%

“…Nevertheless, conclusions about the effect of external quality controls on audit quality were identified in various research studies. Empirical work on the former peer review system has applied alternative evaluation methods to assess whether reviewed firms provide higher audit quality than non-reviewed firms (Deis & Giroux, 1992;Krishnan & Schauer, 2000;O'Keefe et al, 1994;Rollins & Bremser, 1997). In contrast, research on the PCAOB inspections has used audit client-specific measures to evaluate the extent to which inspection contributes to audit quality (Abbott, Gunny, & Zhang, 2013;Carcello et al, 2011;Gramling, Krishnan, & Zhang, 2011;Offermanns & Peek, 2011).…”

Section: Effect Of Peer Reviews and Inspections On Audit Qualitymentioning

confidence: 99%

“…To draw conclusions about the peer review system's effect on audit quality, various studies have used alternative audit quality measures, and analyzed reviewed audit firms in comparison with non-reviewed firms (Casterella, Jensen, & Knechel, 2009;Deis & Giroux, 1992;Krishnan & Schauer, 2000;Rollins & Bremser, 1997). Deis and Giroux (1992) compared the peer review findings for small CPA firms, which were auditing school districts, with the findings of external quality controls conducted by the Audit Division of the Texas Education Agency, and concluded that peer reviewed audit firms performed higher-quality audits.…”

Section: Effect Of Peer Reviews On Audit Qualitymentioning

confidence: 99%

“…Deis and Giroux (1992) compared the peer review findings for small CPA firms, which were auditing school districts, with the findings of external quality controls conducted by the Audit Division of the Texas Education Agency, and concluded that peer reviewed audit firms performed higher-quality audits. Rollins and Bremser (1997) analyzed whether certain audit firm characteristics were related to enforcement actions against the auditor. In fact, the logistic regression model showed that peer reviewed firms were less likely to receive SEC sanctions than non-reviewed audit firms.…”

Section: Effect Of Peer Reviews On Audit Qualitymentioning

confidence: 99%

See 2 more Smart Citations

From peer review to PCAOB inspections: Regulating for audit quality in the U.S.

Löhlein

2016

Journal of Accounting Literature

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This study reviews the existing literature on the U.S. peer review system and the Public Company Accounting Oversight Board (PCAOB) inspection system to assess our knowledge of audit regulation. The traditional self-regulatory system of the accounting profession came to an end, in 2002, when the PCAOB was established to oversee the audit firms of publicly traded companies. This paper contributes to the controversial debate about self-regulation versus independent regulation by analyzing, categorizing, and comparing the research findings on the peer review system and the PCAOB system along three dimensions: the validity of peer reviews and PCAOB inspections, the recognition of reviews and inspections by decision-makers (e.g. investors, bankers, committees), and the effect of reviews and inspections on audit quality. Synthesizing the research on the regulatory regimes suggests that the notion of external quality control, both through peer reviews and government inspections, is positively linked with an improvement of audit quality. At the same time, the analysis indicates that external users do not seem to recognise peer review and PCAOB reports as very useful instruments for decision-making, which is in line with an identified rather skeptical perception of the audit profession on reviews and inspections. Overall, this study reveals that although the academic literature on peer review and PCAOB inspection is extensive it has not produced definitive conclusions concerning various aspects of audit regulation. This paper shows how this blurred picture is due to conflicting research findings, the dominance of the quantitative research paradigm, and unchallenged assumptions within the literature, and concludes by proposing research opportunities for the future.

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Evidence in development of sustainability reporting: a case of a developing country

2011

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Current development in social accounting presents an interesting phenomenon. Companies are increasingly engaging in sustainability initiatives and reporting their activities in annual reports, company websites and other media of communication. Unlike previous studies, which have mainly used ex post content analysis of annual reports or other published data to study the relationship between disclosure and possible determinants, this study starts with an interview with the local preparer before the data is triangulated to determine the signifi cant possible determinants. The interview fi ndings are interpreted through institutional theory for possible identifi cation of determinants. Initially, the interview fi ndings indicate that all three mechanisms of isomorphism, the coercive, the normative and the mimetic, contribute to Malaysian company sustainability reporting. However, the regression results prove that only a government linked company in the plantation industry, which is large in size, has a signifi cant amount of sustainability reporting. Copyright

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The Sec's Enforcement Actions Against Auditors: An Auditor Reputation and Institutional Theory Perspective

Cited by 56 publications

References 11 publications

Financial Statement Frauds and Auditor Sanctions: An Analysis of Enforcement Actions in China

Financial Statement Frauds and Auditor Sanctions: An Analysis of Enforcement Actions in China

From peer review to PCAOB inspections: Regulating for audit quality in the U.S.

Evidence in development of sustainability reporting: a case of a developing country

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