Date of Graduation
8-2016
Document Type
Dissertation
Degree Name
Doctor of Philosophy in Business Administration (PhD)
Degree Level
Graduate
Department
Accounting
Advisor
Gary F. Peters
Committee Member
Ken Bills
Second Committee Member
Jonathan Shipman
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