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dc.contributor.authorRahman, Md. J.en_US
dc.contributor.authorYing, Yuhanen_US
dc.contributor.authorZhu, Linjieen_US
dc.contributor.authorJi, Pengjuen_US
dc.identifier.citationRahman, J. M., Ying, Y., Zhu, L., & Ji, P. (2020). What do we know about audit failure so far?. Accountancy Business and the Public Interest, 19, 163-192.en_US
dc.description.abstractThis article presents a comprehensive review of academic research pertaining to audit failure. This literature review is based on auditing-related articles published in leading journals during the 1976-2019 period. We organize our review around three main groups, namely (a) proxy measures of audit failure, (b) causes of audit failure, and (c) effects of audit failure. We observe that the literature uses a variety of proxies to capture audit failure, such as auditors’ going concern opinions (GCOs), material misstatements, auditor communication, financial reporting quality, and perceptions. We find that there are three signals of audit failure: non-issuance of a GCO prior to a business failure, material misstatements in the last audited financial statements, and violation of the code issued by regulators. We find that audit failures reduce clients’ market value and the auditor’s ability to retain clients. There is also evidence that larger penalties for audit failure result in higher audit fees and overinvestment in audit effort and that increased liability decreases audit failure and reduces auditor shirking. A related objective of this paper is to shed light on audit failure by Big N and non-Big N auditors separately. We observe that the audit failure rate is lower for Big N auditors than for non-Big N auditors. Our findings have implications for government policies, regulators, auditors, investors, and academics.en_US
dc.format.extent30 pagesen_US
dc.publisherAssociation for Accountancy & Business Affairs (AABA)en_US
dc.relation.ispartofAccountancy Business and the Public Interesten_US
dc.subject.lcshEconomic Cyclesen_US
dc.titleWhat do you know about audit failure so far?en_US
dc.rights.licenseAttribution-NonCommercial 4.0 International (CC BY-NC 4.0)en_US
dc.subject.keywordsAudit Failureen_US
dc.subject.keywordsRule-checking Mentalityen_US
dc.subject.keywordsGoing Concern Opinionen_US
dc.subject.keywordsFinancial Misstatementen_US
dc.subject.keywordsPeer Review Reporten_US
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