As the venue has a maximum capacity of 50 people, we kindly request that you register by October 16 using the form below. Please note: Registration is required to attend in person. Entry will be permitted until 11:15 AM.
Form: https://qualtricsareasociale.unibo.it/jfe/form/SV_aW9v2UtzwfFhv5I
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Because material weakness opinions (MWOs) can have negative consequences, managers have incentives to strategically influence how the auditor reports an existing MWO in the audit report. The lack of guidance regarding whether auditors should issue combined versus separate reports for integrated audits of internal control over financial reporting (ICFR) and financial statements suggests that these decisions are perceived as trivial.
We find that auditors are significantly more likely to change from issuing combined to separate reports when clients receive new material weakness opinions (MWOs). Cross-sectional tests suggest that client incentives and opportunities to influence the report format could play a role in this decision.
We also find that Big 4 auditor decisions to combine audit reports in MWO years signal elevated misstatement risk, and when clients with separate reports receive new MWOs, managers place the reports farther apart in the 10-K than in the preceding (non-MWO) year.
Collectively, these results suggest that the auditor’s decision about reporting format in light of a MWO can have potentially important consequences for how the MWO is communicated to financial statement users.
Linda A. Myers is a Distinguished Professor of Accounting and holder of the Haslam Chair of Business in the Haslam College of Business at The University of Tennessee, Knoxville (UTK).
She graduated from the University of Michigan in 2001 and has published more than 50 peer-reviewed articles in The Accounting Review; Journal of Accounting and Economics; Journal of Accounting Research; Contemporary Accounting Research; Review of Accounting Studies; Accounting, Organizations and Society; Auditing: A Journal of Practice & Theory; and Accounting Horizons, among others.
Linda received the AAA’s Notable Contribution to the Auditing Literature Award in 2014, the AAA’s Financial Accounting and Reporting Section Best Paper Award in 2009, and the Financial Executives Research Foundation’s Award for the Outstanding Accounting Review Article in 2004.
Her research has been cited in The Economist and the New York Times, as well as by the PCAOB and the SEC, and she has been quoted on Marketplace Business.
Linda serves as Deputy-Editor-in-Chief at Contemporary Accounting Research, and an Editor at Auditing: A Journal of Practice & Theory, Accounting Horizon, and Journal of International Accounting Research. She also serves as an Associate / Conference Editor at Journal of Accounting, Auditing & Finance and an Ad-hoc Editor at The Accounting Review.
Her research interests include audit markets, capital markets, corporate disclosure, and financial reporting quality. She currently teaches a Ph.D. seminar in Accounting and has served as Director of the Ph.D. Program in Accounting at UTK and at the University of Arkansas.
The seminar will be held in English.
Major information: Eleonora Monaco (e.monaco@unibo.it).