The Impact of Competition on Audit Planning, Review, and Performance  

Oleh:

Bierstaker, James ; Houston, Rich ; Wright, Arnold

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Journal of Accounting Literature vol. 2006 no. 25 (2006), page 001-058.
Topik: Public Sector Accounting; PSA; Sarbanes-Oxley Act; SOX; Audit Market; Client Acceptance; Client Retentionl; Risk Assessment; Program Planning; Auditor Selection; Audit Pricing; Audit Firm Behavior; Investor Perceptions
Fulltext: JAL 06 25 001.pdf (5.19MB)

Isi artikel

Is there empirical evidence of an impairment in audit quality as a result of competition? How have auditing firms coped with competitive pressures? How will auditors balance new quality-related demands [e.g., inspections by the Public Company Accounting Oversight Board] with possible increases in competitive pressures caused by the Sarbanes-Oxley Act (herein referred to as SOX) such as the prohibition of certain non-audit services? The objectives of this paper are to review prior studies bearing on these and other questions related to the effects of competition in the audit market and to consider the implications for practice and future research. The focus is on the planning (new client acceptance, client retention, risk assessment, and program planning), review, and execution phases of the audit. Given the significant changes in the audit environment caused by SOX, it is critically important that future research examine how the findings of previous research on competition, summarized in this paper, affect auditing in a post-SOX audit environment. That is, future research must examine whether the sources and effects of competitive pressures have changed in the SOX environment. The remainder of the paper is divided into four sections. The following three sections contain reviews of prior research on the impact of competition on auditor selection and audit pricing, on audit firm behavior and related investor perceptions, and on individual audit behavior. Throughout the paper, based on our review of extant research, we identify issues that represent promising directions for future investigation.

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