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- Title
Why Do Audits Fail? Evidence from Lincoln Savings and Loan.
- Authors
Erickson, Merle; Mayhew, Brian W.; Felix Jr., William L.
- Abstract
The article describes and critiques the audit procedures applied to a set of material transactions from the Lincoln Savings and Loan (LSL) audit failure. The authors of this article propose alternative procedures, based on information available to the auditors at the time of the audit. The article presents a detailed analysis of LSL suggests potential reasons for audit failures, particularly in cases involving management fraud. The main conclusion of their analysis is that the most significant shortcoming in the LSL audit was the auditor's failure to obtain and use knowledge of LSL's business, the industry in which it operated, and the economic forces that influenced this industry/business.
- Subjects
SAVINGS &; loan association failures; LINCOLN Savings &; Loan Association; AUDITING procedures; AUDITING policies; TRANSACTION costs; BUSINESS failures; MANAGEMENT; ACCOUNTING
- Publication
Journal of Accounting Research (Wiley-Blackwell), 2000, Vol 38, Issue 1, p165
- ISSN
0021-8456
- Publication type
Article
- DOI
10.2307/2672927