Unique Like Everyone Else: How the Audit Profession Selects Critical Audit Matters

• In Event: Qualitative Studies on Audit Firm Issues

Abstract

We report the results of a field study in which we provide important insights into how audit partners implement the CAM standard in the first year of the requirement (i.e., 2019 fiscal year- end audits for accelerated filers). Specifically, during the period in which auditors were implementing this transformational shift in the audit reporting model, we gathered interview and documentary evidence to identify the activities, factors, and parties involved in CAM selection and reporting. As virtually all of the partners who participated in our study reported that they sought to avoid “sticking out” when implementing the new standard on their engagements, we apply theories of herding behavior to audit partners’ CAM thought processes to understand how, in making these novel judgments and decisions, the audit profession perceives risks and threats, and defends itself against uncertainty. We find that, through this herding behavior, the concerns and benefits that stakeholders anticipated during the lengthy CAM rulemaking process ultimately dissipated into an uneventful implementation with little friction in the process. We discuss implications for CAMs reporting and future CAMs research and, more broadly, for the rulemaking and implementation process for new standards.

Authors

• Steve Dannemiller, University of Alabama

• Marcus M. Doxey, The University of Alabama

• Kris Hoang, University of Alabama-Tuscaloosa

• Rich Houston, University of Alabama