Audit Partner Identification: Unintended Consequences on Audit Judgment

• In Event: Continental Breakfast and Research & Education Forum
  In Paper Session: Table 16: Audit Reporting

Abstract

Employing accountability theory (e.g., Kennedy 1993; Lerner and Tetlock 1999; Schlenker, Britt, Pennington, Murphy, and Doherty 1994), we examine how and why audit partners respond to the partner identification requirement proposed by the Public Company Accounting Oversight Board (PCAOB). In an experiment in which we manipulate partner identification at three levels (i.e., no identification; disclosure identification; signature identification), 83 audit partners make an inventory writedown assessment and other judgments aimed at identifying the processes underlying their decision making. We find that partner identification yields unintended consequences on audit partners’ judgment. Specifically, contrary to the PCAOB’s stated purpose of enhancing audit quality, partner identification—either disclosure or signature—increases the aggressiveness of partners’ writedown judgments by decreasing their commitment to the profession and to the public. Implications of these results and suggestions for future research are presented.

Authors

• Anna M Cianci, Wake Forest University

• Richard W Houston, University of Alabama-Tuscaloosa

• Norma Ramirez Montague, Wake Forest University

• Ryan Vogel, Pennsylvania State University, Erie