Involvement of Component Auditors in Multinational Group Audits: Determinants, Audit Quality, and Audit Fees

• 成果类型: Article
• 署名作者: Carson, Elizabeth; Simnett, Roger; Thurheimer, Ulrike; Vanstraelen, Ann
• 署名单位: University of New South Wales Sydney; Deakin University; Maastricht University; University of Antwerp
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12418
• 发表日期: 2022
• 页码: 1419-1462
• 关键词: earnings management; industry expertise; pcaob; FIRMS; wide; size

摘要

We study what determines the involvement of component auditors in multinational enterprise (MNE) group audits and the association with audit quality and audit fees. Using unique Australian disclosures of group audit fees paid to the principal and component auditors, we first document that MNE complexity, MNE internationalization, and auditor characteristics are associated with component auditor involvement, and extent and type of component auditor involvement. Next, we find that involvement of component auditors benefits audit quality as long as the principal auditor conducts a substantial amount of work. Once the involvement of component auditors exceeds a certain level, audit quality decreases. We also document that audit fees are higher in the presence of a component auditor and increase with the extent of involvement, irrespective of component auditor type. Our results contribute to the emerging literature on group audits and provide empirical evidence on regulatory concerns about group audit quality.