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Sharad Asthana - One of the best experts on this subject based on the ideXlab platform.

  • Does Client Cyber-Breach Have Reputational Consequences for the Local Audit Office?
    Accounting Horizons, 2021
    Co-Authors: Sharad Asthana, Rachana Kalelkar, K. K. Raman
    Abstract:

    We examine whether the public disclosure of a client cyber-breach hurts the reputation of the local engagement Office of the incumbent Auditor. Prior research suggests that alleged client misconduct (even if unrelated to accounting) can hurt the Auditor’s reputation and bargaining position vis-à-vis other clients. By contrast, in a client cyber-breach the client is the victim of misconduct rather than perpetrator of the misconduct (SEC 2018). Consistent with a loss in the perceived value of the Audit and a decline in the bargaining position of the incumbent Auditor’s local Audit Office, during 2005-2018 following a client cyber-breach we find a decline in the stock price as well as Audit fees for non -breach clients of the local Audit Office. We contribute to the literature by documenting that the negative effects of a cyber-breach are not limited to the breached client but spillover to the local Audit Office.

  • Diversification by the Audit Offices in the US and its impact on Audit quality
    Review of Quantitative Finance and Accounting, 2017
    Co-Authors: Sharad Asthana
    Abstract:

    Audit Offices in the US exhibit a wide variation in the number of industries they service. Strategic management theory suggests that diversification can affect the quality of output, depending on the nature and circumstances of diversification. This paper examines the effect of diversification at the Audit Office level on Audit quality. Five proxies of Audit quality are examined, mainly, absolute discretionary accruals, propensity to meet-or-beat earnings expectations by a cent, propensity to restate financial statements, propensity to receive a comment letter after an SEC review and propensity to issue a going concern opinion. Results suggest that diversification has detrimental effects on Audit quality. On the other hand, when the diversification is part of the Audit firm level strategy, the detrimental effects on Audit quality are dampened. Moreover, when the diversification at the Office level is part of a revenue expansion strategy, the Audit quality is adversely affected. However, there is no detrimental effect on the Audit quality when revenue expansion is not the objective. Also, diversification across dissimilar industries leads to more adverse effect on Audit quality than diversification to similar industries. Results also suggest that when the Audit Office is located in a market with more (less) diversified client base, the adverse effects of diversification on Audit quality are weaker (stronger). Finally, the Offices of big-4 Audit firms handle diversification better with less adverse effect on Audit quality. The findings are important since they identify additional factors that explain Audit quality at the Audit Office level.

  • Client-based measure of the Audit Office reputation
    International Journal of Accounting Auditing and Performance Evaluation, 2017
    Co-Authors: Sharad Asthana, Rachana Kalelkar
    Abstract:

    Following the findings from marketing and management literature on corporate reputation, we develop a new proxy to measure the Audit Office reputation. We argue that the presence of reputable clients and their tenure with the Audit Office is an unbiased and strong testimony for Audit Office reputation. For a sample of 3,233 Audit firm clients we find that our measure of Audit Office reputation is positively associated with Audit fees and Audit quality. We also show that the earnings of clients from Audit Offices with higher CBAR are valued higher, suggesting that the market perceives the reputation of such Offices to be higher and the earnings of their clients to be more credible. This research is important since CBAR is a new and readily available measure of Audit Office quality that provides incremental explanatory power for Audit fees and Audit quality beyond previously available measures.

  • Client-Based Measure of the Audit Office Reputation and Its Association with Audit Fees, Earnings Quality, and Client’s Market Value
    2014
    Co-Authors: Sharad Asthana, Rachana Kalelkar
    Abstract:

    Following the findings from marketing and management literature on corporate reputation, we develop a new proxy to measure the Audit Office reputation and examine the impact of this measure on Audit fees and Audit quality. We argue that the presence of reputable clients and their tenure with the Audit Office is an unbiased and strong testimony for Audit Office reputation. Following this argument, we use the proximity of clients to the S&P 500 Index and Fortune’s List of Most Admired Companies, weighted by the tenure of the Audit Office-client relationship, to estimate our client-based Audit Office reputation measure (CBAR). For a sample of 3,233 Audit firm clients we find that our measure of Audit Office reputation is positively associated with Audit fees and Audit quality (proxied by absolute discretionary accruals, meet-or-beat-earnings expectations, and restatements). We also show that the earnings of clients from Audit Offices with higher CBAR are valued higher, suggesting that the market perceives the reputation of such Offices to be higher and the earnings of their clients to be more credible. This research is important since CBAR is a new and readily available measure of Audit Office quality that provides incremental explanatory power for Audit fees and Audit quality beyond previously available measures.

  • DIVERSIFICATION BY THE Audit Office AND ITS IMPACT ON Audit QUALITY
    2013
    Co-Authors: Sharad Asthana
    Abstract:

    Prior research documents a positive association between Audit Office size and Audit quality (Francis and Yu 2009; Choi et al. 2010; Francis et al. 2012). Since firms diversify with the intention of revenue expansion (Palepu 1985), large Audit Offices are likely to be more diversified. Moreover, strategic management theory suggests that diversification may have positive / negative effect on the quality of output, depending on the nature of diversification. Thus, the interrelationship of diversification, Audit Office size, and Audit quality is an interesting yet unexplored research issue. This paper examines the impact of four different diversification strategies: industry diversification, client diversification, geographic diversification, and service diversification on two proxies of Audit quality, mainly, discretionary accruals and propensity to meet-or-beat earnings expectations by a cent. Results suggest that, holding Audit Office and Auditee attributes constant, industry diversification, client diversification, and geographic diversification have detrimental effects on Audit quality, possibly because such diverse Audit engagements strain the resources of the Audit Office. On the other hand, service diversification, results in improvement of Audit quality, possibly due to knowledge spill-over effect from providing multiple services to the same client, such as, tax compliance and planning, Auditing employee benefit plans, acquisition related consultancy services, internal control reviews, and attest services. The pecking order of various strategies available for revenue expansion is also studied. The results suggest that the more effective a diversification strategy, the greater the detrimental effect on Audit quality. Audit Offices with more reputation in the local Audit market manage diversification better, probably due to higher visibility costs and greater potential for loss of quasi-rents. Finally, consistent with theory, increase (decrease) in diversification levels over time has negative (positive) impact on Audit quality. These results are robust to various controls from extant research. The findings of this paper are important since they identify additional factors that explain Audit quality at the Audit Office level.

Simon Dominic Norton - One of the best experts on this subject based on the ideXlab platform.

  • Contrast and Foundation of the Public Oversight Roles of the Public U.S. Government Accountability Office and the U.K. united States National Audit Office versus United
    2016
    Co-Authors: Simon Dominic Norton, L. Murphy Smith, Soviet Union, L Murphy
    Abstract:

    This paper examines and compares, according to the New Public Management approach, the U.S. watchdog, the Government Accountability Office, in its ability to oversee and call to account the executive branch of gov ernment, and its U.K. counterpart, the National Audit Office. Results of this examination indicate that the Gov ernment Accountability Office is more effective than its U.K. counterpart. Its greater effectiveness is attributable to the fact that it derives its powers and legitimacy from a written constitution; in contrast, in the United Kingdom there is no equivalent document defining the relationship between the state and the citizenry. As a consequence, the powers, duties, and self perception of the National Audit Office are significantly weaker and more mutable than those of the Government Accountability Office.

  • contrast and foundation of the public oversight roles of the u s government accountability Office and the u k national Audit Office
    Public Administration Review, 2008
    Co-Authors: Simon Dominic Norton, Murphy L Smith
    Abstract:

    This paper examines and compares, according to the New Public Management approach, the U.S. watchdog, the Government Accountability Office, in its ability to oversee and call to account the executive branch of government, and its U.K. counterpart, the National Audit Office. Results of this examination indicate that the Government Accountability Office is more effective than its U.K. counterpart. Its greater effectiveness is attributable to the fact that it derives its powers and legitimacy from a written constitution; in contrast, in the United Kingdom there is no equivalent document defining the relationship between the state and the citizenry. As a consequence, the powers, duties, and self-perception of the National Audit Office are significantly weaker and more mutable than those of the Government Accountability Office.

  • Contrast and Foundation of the Public Oversight Roles of the Us General Accountability Office and the UK National Audit Office
    2008
    Co-Authors: Simon Dominic Norton, L. Murphy Smith
    Abstract:

    This paper examines and compares, according to the new public management (NPM) approach, the United States watchdog, the General Accountability Office (GAO), in its ability to oversee and call to account the executive branch of government and its United Kingdom counterpart, the National Audit Office (NAO). Results of this examination indicate that the GAO is more effective than its UK counterpart. The greater effectiveness of the GAO may be that it derives its powers and legitimacy from the existence of a written constitution; in contrast, in the UK there is no equivalent 'sacrosanct' document defining the relationship between the state and the citizenry. As a consequence the powers, duties, and self-perception of the NAO are significantly weaker and more mutable than those of the GAO.

Yoonseok Zang - One of the best experts on this subject based on the ideXlab platform.

  • Audit Office size Audit quality and Audit pricing
    Ear and Hearing, 2010
    Co-Authors: Jonghag Choi, Chansog Kim, Jeongbon Kim, Yoonseok Zang
    Abstract:

    SUMMARY: Using a large sample of U.S. Audit client firms over the period 2000–2005, this paper investigates whether and how the size of a local practice Office within an Audit firm (hereafter, Office size) is a significant, engagement-specific factor determining Audit quality and Audit fees over and beyond Audit firm size at the national level and Auditor industry leadership at the city or Office level. For our empirical tests, Audit quality is measured by unsigned abnormal accruals, and the Office size is measured in two different ways: one based on the number of Audit clients in each Office and the other based on a total of Audit fees earned by each Office. Our results show that the Office size has significantly positive relations with both Audit quality and Audit fees, even after controlling for national-level Audit firm size and Office-level industry expertise. These positive relations support the view that large local Offices provide higher-quality Audits compared with small local Offices, and that s...

  • Audit Office size Audit quality and Audit pricing
    2009
    Co-Authors: Jonghag Choi, Chansog Kim, Jeongbon Kim, Yoonseok Zang
    Abstract:

    Using a large sample of U.S. Audit client firms over the period 2000-2005, this paper investigates whether and how the size of a local practice Office within an Audit firm (henceforth, Office size) is a significant, engagement-specific factor determining Audit quality and Audit fees over and beyond Audit firm size at the national level and Auditor industry leadership at the city or Office level. For our empirical tests, Audit quality is measured by unsigned abnormal accruals, and the Office size is measured in two different ways: one based on the number of Audit clients in each Office and the other based on a total of Audit fees earned by each Office. Our results show that the Office size has significantly positive relations with both Audit quality and Audit fees even after controlling for national-level Audit firm size and Office-level industry expertise. These positive relations support the view that large local Offices provide higher-quality Audits, compared with small local Offices and that such quality differences are priced in the market for Audit services.

Murphy L Smith - One of the best experts on this subject based on the ideXlab platform.

  • contrast and foundation of the public oversight roles of the u s government accountability Office and the u k national Audit Office
    Public Administration Review, 2008
    Co-Authors: Simon Dominic Norton, Murphy L Smith
    Abstract:

    This paper examines and compares, according to the New Public Management approach, the U.S. watchdog, the Government Accountability Office, in its ability to oversee and call to account the executive branch of government, and its U.K. counterpart, the National Audit Office. Results of this examination indicate that the Government Accountability Office is more effective than its U.K. counterpart. Its greater effectiveness is attributable to the fact that it derives its powers and legitimacy from a written constitution; in contrast, in the United Kingdom there is no equivalent document defining the relationship between the state and the citizenry. As a consequence, the powers, duties, and self-perception of the National Audit Office are significantly weaker and more mutable than those of the Government Accountability Office.

J.f. Mceldowney - One of the best experts on this subject based on the ideXlab platform.

  • The National Audit Office and Privatisation
    The Modern Law Review, 1991
    Co-Authors: J.f. Mceldowney
    Abstract:

    Accounting' in the public sector has become increasingly important as attention has focused on the control of public expenditure as an essential weapon in the battle against inflation. Since the mid-1970s, the introduction of cash limiits2 and the dispensing with volume planned public expenditure in favour of cash planning has attempted to avoid incremental budgeting and( introduce restraints on the costs of goods and services in the public sector. Central government has adopted a wide range of techniques such as the Raynel Efficiency Studies (1979),' the Financial Management Initiative (FMI) (1983)4 and the Next Steps (1988),5 designed to reduce cost, imnprove the economy and efficiency of government, avoid waste and provide greater value for money. Accountancy techniques and business practices have been adopted as principles of government policy replacing the traditional Whitehall model in the organisation and management of government departments. Since 1979, the Government's privatisation programme has also directed attention to inefficiencies and lack of scrutiny in public ownership. Privatisation sales have gliadually become an important source of revenue for the Exchequer. The early sales of shares in companies such as BP, Amersham International, and Cable and Wireless yielded small amounts in revenue. Later privatisations such as British Telecom, British Gas and the Water Companies have increased the net receipts to the Exchequer to sums in excess of ?20 bn.6 Privatisation sales have complex economic and