Audit Efficiency and Effectiveness Consequences of Accounting System Homogeneity across Audit Clients: A New Form of Knowledge Spillover?

• 成果类型: Article
• 署名作者: Murthy, Uday S.; Park, Jong Chool; Smith, Thomas; Whitworth, James
• 署名单位: State University System of Florida; University of South Florida
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0609
• 发表日期: 2023
• 页码: 389-418
• 关键词: industry specialization; earnings management; nonaudit services; INTERNAL CONTROL; expertise; erp; QUALITY; FIRMS; fees; determinants

摘要

We examine the effects of a large number of clients in an audit office using the same enterprise -resource planning (ERP) system such as SAP or Oracle resulting in what we term client accounting system homogeneity on audit efficiency and effectiveness. Using a unique dataset of ERP system implementations, we find that accounting system homogeneity is positively associated with audit efficiency. Specifically, we find lower (higher) audit fees for clients using an ERP system from a vendor used by a higher (lower) proportion of clients in that office. We further document that accounting system homogeneity is associated with improved audit effectiveness as proxied by two accruals-based measures, incorrect internal control weakness reporting, and restatements. Our findings are reflective of a new form of knowledge spillover from repeated experiences auditing clients using similar accounting systems, resulting in audits that are not only less expensive but also of higher quality.