Three Decades of Major Audit Overseer Reports: Implications for the Audit Profession and Audit Research

• In Event: Breakfast and Research Forum
  In Roundtable Session: Table 13: Literature Review/Synthesis

Abstract

Objective 1.2 of the recent Pathway Commission report (2012), states simply, “Focus more academic research on relevant practice issues.” The implied mismatch between research and practice that leads to this objective is not a newly recognized problem. For instance, Hopwood (2007, p. 1365) stressed that “accounting research has [been] increasingly detached from the practice of the craft.” This paper explores issues and recommendations put forth by financial audit regulators, standard setters, and professional organizations over three decades to provide a baseline for audit researchers to consider to better align their research to “the practice of the craft” to use Hopwood’s phrase. Specifically, this paper summarizes and compares the concerns captured in reports published by the Cohen Commission (1978), the Treadway Commission (1987), the O’Malley Panel (2000), and the Advisory Committee on the Auditing Profession (2008). This paper also examines the legacy of these reports. These reports were selected because of depth of coverage, broad stakeholder representation, and extensive vetting processes. Some common themes include changing in the audit standards and the standard setting processes, auditor communications to the audit committee, reducing the expectations gaps for financial statement users, and making changes in accounting education. Both common themes and the newest themes represent research opportunities that could have the most immediate impact on the audit profession. Not all the topics in each report have received the same level of coverage after their publication, which may also provide new research opportunities.

Authors

• Glen L Gray, California State University, Northridge

• Nicole V.S. Ratzinger-Sakel, Universitat Ulm

• Sung Wook Yoon, California State University, Northridge