Date of Graduation
Doctor of Philosophy in Business Administration (PhD)
Gary F. Peters
Second Committee Member
The following study examines a material but less understood component of the public audit marketplace, namely the provision of “audit-related” services to financial statement audit clients. I use the benefit plan audit service setting to examine the company and benefit plan characteristics associated with auditor selection and the impact of audit-related services on financial statement audit quality. I provide market evidence of distinct shifts in the use of the same audit firm for the financial statement audit and other audit-related services over time as well as characteristics of the choice of auditors. I then test whether having the same audit firm for both types of audit services is associated with financial statement audit quality as measured by missed misstatements (revealed through future restatements). I find that companies that engage the same audit firm for their financial statement audit and benefit plan audit are less likely to have subsequent restatements. I also test whether having the same audit firm for both types of audit services is associated with switching the financial statement audit firm. I find that companies that engage the same audit firm for their financial statement audit and benefit plan audit are associated with a lower likelihood of switching their financial statement audit firm.
Overall, my results suggest that choosing the same auditor for both the financial statement audit and audit-related services is associated with a higher level of financial statement audit quality consistent with knowledge spillover between the financial statement and benefit plan audits. My findings also suggests that who provides audit-related services, and whether or not that provider has changed, affects the perception of switching costs for the financial statement audit.
Prentice, Jaclyn, "Audit-Related Services and Audit Quality: Evidence from Benefit Plan Audits" (2016). Theses and Dissertations. 1671.