Private Auditing Standard Setting and the Economic Cycle

• In Event: Continental Breakfast - Research and Education Forum
  In Roundtable Session: Table 17: Standard Setting and Regulatory Reforms

Abstract

I explore the frequency and precision of private auditing standard issuance from 1939 through the 2002 creation of the Public Company Accounting Oversight Board. Consistent with the argument the risk of loss to investors increases during economic contractions, I find auditing standard setters issue a greater number of standards during economic contractions. Consistent with the argument that it is easier for auditors to document compliance when standards are precise, I also find a negative association between precision and regulatory enforcement actions against auditors. Together, these results suggest that private auditing standard setters are responsive to the concerns of investors and auditors.

Author

• Colleen M. Boland, University of Wisconsin–Milwaukee