Who Audit What? An Empirical Investigation of the Partners' Client-Portfolios

• In Event: Audit Partners

Abstract

This study investigates the engagement partners and clients (or categories of clients such as industries) pairing across audit firms. This paper's approach acknowledges the fact that the patterns of partner-client pairing may differ across the firms and offices, and it goes beyond the simple investigation of linking partners' characteristics to the clients' attributes. Using a large data set from Sweden, I find evidence that partners show similarity rather than dissimilarity in their distributions across industries, and that partners have clients in many different and unrelated industries. Besides, I observe that nontrivial number of offices group clients based on the clients' sizes rather than other clients' characteristics - and that the extent of grouping varies considerably across offices but not firms; however, I did not find evidence that any type of client grouping is predictive of audit quality. I also find that bigger offices are more likely to engage in a systematic assignment of partners based on clients' sizes. In addition, the results suggest that partners with the higher level of experience, skepticism and certification are more likely to have larger client portfolio. Overall, the results indicate that partners are striving to audit a larger client portfolio, and to do so, there are open to any type of clients.

Author

• Amin S. Sofla, Umea University