Date of Graduation
8-2016
Document Type
Dissertation
Degree Name
Doctor of Philosophy in Business Administration (PhD)
Degree Level
Graduate
Department
Accounting
Advisor/Mentor
Peters, Gary F.
Committee Member
Bills, Kenneth
Second Committee Member
Shipman, Jonathan E.
Keywords
Social sciences; Audit quality; Audit-related services; Benefit plan audits
Abstract
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.
Citation
Prentice, J. (2016). Audit-Related Services and Audit Quality: Evidence from Benefit Plan Audits. Graduate Theses and Dissertations Retrieved from https://scholarworks.uark.edu/etd/1671
