D. Jordan Lowe and Philip M.J. Reckers
During the last several years, a stream of research has evolved that investigates the influence of outcome information on evaluation judgments in an auditor legal liability…
Abstract
During the last several years, a stream of research has evolved that investigates the influence of outcome information on evaluation judgments in an auditor legal liability context. These studies have included judges and jurors and have utilized different cases and scenarios. Our objective in this paper is to review and discuss insights from this stream of research. This research consists of three phases. Phase 1 focuses on the robust manifestation of outcome effects in an audit legal liability context, Phase 2 examines the effectiveness of selected mitigation strategies in moderating outcome effects, and Phase 3 begins the process of developing a preliminary theoretical framework. We also discuss future research that could be done to better understand outcome effects and to test operational responses and proposed remedies.
Eric N Johnson, D Jordan Lowe and Philip M.J Reckers
Prior research has documented the existence of a white male culture in large public accounting firms that has long dominated most aspects of these firms. This culture has arguably…
Abstract
Prior research has documented the existence of a white male culture in large public accounting firms that has long dominated most aspects of these firms. This culture has arguably resulted in systematic workplace bias against females and minorities and their exclusion from opportunities for advancement. The accounting profession, led by the Big Five firms, has recently focused efforts on developing a new “diversity culture” intended to make the workplace more accessible to and supportive of all personnel. This exploratory study examines the current impact of race and gender on the performance evaluation judgments of audit seniors representing one Big Five firm. The results indicate that, under some circumstances, the job performance and career prospects of females (both non-white and white) were rated as high as, or higher than, those of white males. The implications of these findings for the profession and future research are discussed.
Sandra K. Gates, D. Jordan Lowe and Philip M.J. Reckers
To determine the effect of audit firm rotation and/or audit partner rotation on individuals' confidence in the quality of audited financial statements.
Abstract
Purpose
To determine the effect of audit firm rotation and/or audit partner rotation on individuals' confidence in the quality of audited financial statements.
Design/methodology/approach
Two separate behavioral studies were conducted with participants from the business and legal community (MBA and law students). In each study, one‐way analysis of variance was conducted using a between‐subjects approach. The independent measure was auditor rotation; the dependent measure was participants' responses to questions regarding company earnings. Because an experimental approach was utilized, the stimulus materials excluded potentially relevant information for this task. In addition, the participants were not held accountable for their decisions, nor was there any explicit motivation provided. Future research could explore other richer more complex case scenarios that provides some explicit motivation for participants.
Findings
Results revealed that even in an environment of strong controls for corporate governance, audit firm rotation incrementally influenced individuals' confidence in financial statements. However, audit partner rotation did not have a similar effect.
Originality/value
Little if any research examines both audit firm rotation and audit partner rotation. This research fills this void by addressing both concepts. The results suggest that rotating the audit firm will, contrary to GAO assumptions, better advance the goal to enhance auditor independence and audit quality and to restore investor confidence in the capital markets.
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Kimberly E. Frank, D. Jordan Lowe and James K. Smith
The expectation gap has been presumed to be caused by the differing perceptions of the accounting profession and third parties regarding the profession’s role, responsibilities…
Abstract
The expectation gap has been presumed to be caused by the differing perceptions of the accounting profession and third parties regarding the profession’s role, responsibilities, and related performance. Prior research regarding the expectation gap has focused on diverging perceptions of different groups (i.e. financial analysts, bank loan officers, small business owners, and auditors). While this research has identified an expectation gap between auditors and certain third parties, it has neglected examining the perceptions of judicial third parties. This absence is somewhat ironic given the role that jurors and judges play in determining auditors’ legal liability. This void is filled by comparing jurors’, auditors’, and accounting students’ attitudes towards the accounting profession. Results reveal a large divergence in perceptions of auditors and jurors regarding their expectations of the accounting profession. However, accounting students responded in a manner very similar to practicing auditors.
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Janet A. Samuels, D. Jordan Lowe and Catherine A. Finger
The supply of accounting majors has not kept pace with the increasing demand for accounting graduates. One way of increasing the number of qualified accountants, while maintaining…
Abstract
The supply of accounting majors has not kept pace with the increasing demand for accounting graduates. One way of increasing the number of qualified accountants, while maintaining desired quality, is through a non-degree program such as the Post-Baccalaureate Certificate in Accountancy. A certificate program addresses the needs of students who already have a bachelor's degree in another discipline and want to gain accounting knowledge. The purpose of this chapter is to assist accounting administrators and faculty in deciding whether a similar program would be feasible and beneficial for their school. We describe the benefits of a certificate program, which include the potential for increased enrollments and an enhanced learning environment. We discuss design alternatives and implementation issues in terms of our program and other certificate programs in the United States. We also discuss the needs and characteristics of certificate students currently enrolled in our program.
Sakhr Bani-Khaled and Carlos Pinho
This study aims to examine the impact of client information technology (IT) capabilities on audit report lag and audit fees in Jordanian companies listed on the Amman Stock…
Abstract
Purpose
This study aims to examine the impact of client information technology (IT) capabilities on audit report lag and audit fees in Jordanian companies listed on the Amman Stock Exchange (ASE) during the COVID-19 pandemic.
Design/methodology/approach
This study analysed financial and non-financial data from 72 Jordanian public shareholding companies listed on the ASE between 2014 and 2021. Using fixed- and random-effects models, the authors examined the impact of client IT capabilities on audit report lag and audit fees. The authors also examined how the COVID-19 pandemic might affect audit report lag and audit fees. The analysis incorporated various control variables specific to the Jordanian context to ensure accuracy.
Findings
Empirical evidence indicates that client IT capabilities do not significantly impact audit report lag and audit fees. In contrast, the COVID-19 pandemic has positively impacted audit report lag and audit fees, leading to an increase in audit report lag of 60 to 67 days and an increase in audit fees of approximately 15%. It is worth noting that these effects are more pronounced when influenced by factors including return on assets, company losses and audits conducted by the Big 4 firms.
Research limitations/implications
The scope of this study, which focuses on Jordanian firms, may limit the generalisability of the findings to other contexts. Reliance on aggregate IT infrastructure and software assets as proxies for IT capabilities might not fully capture their multifaceted nature, overlooking the qualitative aspects crucial for audit outcomes. Furthermore, excluding external factors such as governmental regulations underscores the need for future research to explore the nuanced interplay between IT capabilities, internal control systems and regulatory environments, enriching our understanding of audit practices.
Originality/value
This study contributes to auditing literature by examining the interplay between IT capabilities and audit processes during the COVID-19 pandemic in Jordan. This study highlights the unexpected finding that IT capabilities have minimal impact on audit report lags and fees, opening new avenues for research on how pandemics and similar crises can reshape auditing practices and influence regulatory policies in an evolving economic environment.
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Alexandra L. Ferrentino, Meghan L. Maliga, Richard A. Bernardi and Susan M. Bosco
This research provides accounting-ethics authors and administrators with a benchmark for accounting-ethics research. While Bernardi and Bean (2010) considered publications in…
Abstract
This research provides accounting-ethics authors and administrators with a benchmark for accounting-ethics research. While Bernardi and Bean (2010) considered publications in business-ethics and accounting’s top-40 journals this study considers research in eight accounting-ethics and public-interest journals, as well as, 34 business-ethics journals. We analyzed the contents of our 42 journals for the 25-year period between 1991 through 2015. This research documents the continued growth (Bernardi & Bean, 2007) of accounting-ethics research in both accounting-ethics and business-ethics journals. We provide data on the top-10 ethics authors in each doctoral year group, the top-50 ethics authors over the most recent 10, 20, and 25 years, and a distribution among ethics scholars for these periods. For the 25-year timeframe, our data indicate that only 665 (274) of the 5,125 accounting PhDs/DBAs (13.0% and 5.4% respectively) in Canada and the United States had authored or co-authored one (more than one) ethics article.