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The effect of audit engagement partner professional experience on audit quality and audit fees: early evidence from Form AP disclosure
Asian Review of Accounting Pub Date : 2021-02-08 , DOI: 10.1108/ara-08-2020-0121
Chenyong Liu , Chunhao Xu

Purpose

The purpose of this study is to examine the effect of audit engagement partner's professional experience on audit quality. The authors also investigate the relationship between the audit partner's experience and audit fees in both Big 4 and non-Big 4 accounting firms.

Design/methodology/approach

Since the Public Company Accounting Oversight Board (PCAOB) officially enacted Rule 3211 in 2017, US accounting firms are required to disclose detailed information of engagement partners in Form AP (PCAOB, 2015b). The authors obtained a sample of 2,283 audit partners from Form AP and hand collected their individual professional experience data through Certified Public Accountant (CPA) database, corporate disclosure and social media sites (e.g. Linkedin). Econometric models with fixed effects are used in this study to test our hypotheses. Two-stage least square (2SLS) model is used in the robustness test.

Findings

The authors find that the relationship between audit engagement partner's professional experience and audit quality is concave. It indicates that audit quality is increasing during the early stage of engagement partners' career and then decreases as the partners approaching the late-career phase. Further, the authors find that partner's professional experience is positively associated with audit fees in non-Big 4 accounting firms but not significantly associated with audit fees in Big 4 accounting firms.

Practical implications

The finding of how auditor experience impacts audit quality can be useful for accounting firms to better plan their staffing in auditing engagements. This study’s results are also helpful for small accounting firms to optimize their pricing strategy.

Originality/value

This study provides new empirical evidence about the relation between auditor professional experience and audit quality. Furthermore, the authors extend the literature of audit fee determinants by testing the joint effects of audit firm-level factors and auditor individual-level professional experience on audit fees.



中文翻译:

审计业务合作伙伴专业经验对审计质量和审计费用的影响:来自表格AP披露的早期证据

目的

这项研究的目的是检验审计参与合伙人的专业经验对审计质量的影响。作者还调查了四大会计师事务所和非四大会计师事务所中审计合伙人的经验与审计费用之间的关系。

设计/方法/方法

自2017年上市公司会计监督委员会(PCAOB)正式颁布第3211条规则以来,美国会计公司必须在AP表格中披露参与合作伙伴的详细信息(PCAOB,2015b)。作者从Form AP获得了2,283个审计合作伙伴的样本,并通过注册会计师(CPA)数据库,公司披露和社交媒体网站(例如Linkedin)手工收集了他们的个人专业经验数据。在这项研究中使用具有固定影响的计量经济学模型来检验我们的假设。稳健性测试使用两阶段最小二乘(2SLS)模型。

发现

作者发现,审计参与合伙人的专业经验与审计质量之间的关系是凹的。它表明,在参与合作伙伴职业生涯的早期阶段,审计质量正在提高,而随着合作伙伴进入职业生涯后期阶段,审计质量将下降。此外,作者发现,合伙人的专业经验与非四大会计师事务所的审计费用呈正相关,而与四大会计师事务所的审计费用无显着相关。

实际影响

审计师经验如何影响审计质量的发现对于会计公司更好地计划其在审计业务中的人员配置很有用。这项研究的结果也有助于小型会计师事务所优化其定价策略。

创意/价值

这项研究为审计师专业经验与审计质量之间的关系提供了新的经验证据。此外,作者通过测试审计公司水平因素和审计师个人水平专业经验对审计费用的共同影响,扩展了审计费用决定因素的文献。

更新日期:2021-03-21
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