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- Title
A REVIEW OF THE SECOND DECADE OF THE PCAOB AT WORK.
- Authors
Ahlawat, Sunita; Fitzgerald, Liam
- Abstract
The Public Company Accounting Oversight Board (PCAOB), created in 2002, oversees the audits of public companies and other issuers to protect the interests of investors and further the public interest in the quality of audit reports. In this study, we review PCAOB inspections and enforcement actions for eight firms (Big-4 and four second-tier firms) from 2009-2020 to assess the level of regulatory oversight and whether the scrutiny seen in the early years is maintained. Since the Big-4 firms manage over 78% of all U.S. public audits, the two-tier sample is adequate. Our analysis revealed a gradual decrease in the percentage of audits showing deficiencies, the severity of deficiencies, the number of firms that fail to address quality control criticisms satisfactorily, and the extent of enforcement actions. In addition, we identified common weaknesses related to the same recurring auditing standards and noticed a downward trend in the frequency of occurrence. The downward trend may suggest an improvement in audit quality over time. However, whether the results point to improved quality or a diminished appetite for regulatory oversight on the part of the PCAOB is debatable.
- Subjects
PUBLIC Company Accounting Oversight Board; AUDITING; AUDITING standards; INSPECTION &; review; PUBLIC companies; QUALITY control; INVESTOR protection
- Publication
Journal of Business & Accounting, 2023, Vol 16, Issue 1, p50
- ISSN
1944-2874
- Publication type
Article