Corporate accounting failures and regulatory proceedings that led to the enactment of the Sarbanes–Oxley Act of 2002 increased the scrutiny of auditors. We investigate whether these events resulted in a change in auditor behavior with respect to going concern reporting. Generally speaking, we find that non-Big N auditors became more conservative while Big N auditors became more accurate. Specif...

Why are auditors unable to detect fraudulent financial reporting in some audits? Should auditors be able to anticipate when fraud is likely to occur? Various studies have discussed not only the need for experience and supervision of auditors, but also the effect of decision models, and even expert systems, on fraud detection and the study of internal controls. This paper presents a discussion o...

Previous studies concerning experience effects in audit judgments have produced mixed results, possibly because they did not consider the knowledge necessary to complete the task and when it would normally be acquired. Further, many studies did not view the global judgment process as consisting of several components, e.g., cue selection. Task-specific knowledge may aid the performance of experi...

In the model there are two types of financial auditors with identical technology, one of which is endowed with a prior reputation for honesty. We characterize conditions under which there exists a “two-tier equilibrium” in which “reputable” auditors refuse bribes offered by clients for fear of losing reputation, while “disreputable” auditors accept bribes because even persistent refusal does no...

This paper analyzes political agency with endogenous information collection and revelation by third-party auditors. While increasing incentives for auditors to provide information straightforwardly improves political control, a small amount of pro-incumbent bias can also be useful for maintaining high levels of control. When the equilibrium level of control is high, most investigations uncover ...