The Association between PCAOB Revenue-Deficient Audit Engagements and Revenue Quality

• 成果类型: Article
• 署名作者: Abbott, Lawrence J.; Boland, Colleen M.; Mccarthy, Sean M.; Swenson, Laura A.
• 署名单位: University of Wisconsin System; University of Wisconsin Milwaukee
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2021-0060
• 发表日期: 2025
• 页码: 1-27
• 关键词: internal control; inspection reports; FIRMS; Mediation

摘要

The Big 4 auditors are inspected annually by the Public Company Accounting Oversight Board (PCAOB), with the summarized findings (labeled audit deficiencies) being publicly available on its website. Although the PCAOB claims that its inspection findings and process are designed to increase audit quality, there is limited empirical evidence to support this claim. We examine whether changes in revenue-deficient audit engagements are associated with subsequent year changes in client revenue quality. A revenue-deficient audit engagement is an inspected engagement that has at least one revenue-related audit deficiency. To infer audit quality, we link year-over- year changes in revenue-deficient audit engagements to the subsequent year's change in engagement-level revenue quality-a common financial reporting quality proxy. We predict that audit firms will react asymmetrically to changes in revenue-deficient audit engagements: increases will prompt audit quality improving actions, but decreases will not. Our results support our prediction.