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- Title
THE ASSOCIATIONS BETWEEN CRITICAL AUDIT MATTERS, INTERNAL CONTROL EFFECTIVENESS, AND GOING CONCERN OPINION.
- Authors
Katch, Jacey; Udeh, Ifeoma
- Abstract
This study examines the associations between internal control over financial reporting (ICFR), going concern opinion, and critical audit matters (CAMs). We use regression analyses and the initial reported CAMs of 2,050 large accelerated filers listed on the NYSE and NASDAQ. We examine two factors - ICFR and going concern opinion - that affect CAM reporting, because of their importance and pervasive impact on the financial statements. The study also uses the more objective auditor opinion on ICFR. We find that effective ICFR has a negative association with reported CAMs, while firms with a going concern opinion have a positive association with reported CAMs. Our results mean that firms with effective ICFR have fewer reported CAMs, while firms with a going concern opinion have more reported CAMs. No or fewer reported CAMs show no or reduced information asymmetry and may increase the perceived quality of the financial statements and management's credibility. Reporting more CAMs may minimize information asymmetry between financial statement users, auditors, and firms.
- Subjects
INTERNAL auditing; NASDAQ Stock Market; NEW York Stock Exchange; FINANCIAL statements; FINANCIAL management; INFORMATION asymmetry; PERCEIVED quality
- Publication
Journal of Theoretical Accounting Research, 2024, Vol 19, Issue 2, p23
- ISSN
1556-5106
- Publication type
Article