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Audit partner identification and audit quality

Author

Listed:
  • Kyungha Kari Lee

    (Rutgers Business School)

  • Carolyn B. Levine

    (University of Delaware)

Abstract

This paper studies the effects of disclosing the audit engagement partner’s identity on individual and partnership incentives and overall audit quality. We model a collective decision problem, incorporating individual engagement partners’ preferences with the partnership’s choice of internal quality control. In our model, disclosure of the individual engagement partner (on Form AP) influences the probability that clients observe individual partners’ past performance. While Form AP disclosure increases individual partners’ incentives to provide high-quality audits for a given level of internal quality control within the partnership, it may simultaneously decrease the partnership’s incentives to maintain good internal quality control systems, leading to a net degradation in audit quality. Our paper also demonstrates that the level of external audit oversight is critical in determining whether Form AP disclosure enhances audit quality.

Suggested Citation

  • Kyungha Kari Lee & Carolyn B. Levine, 2020. "Audit partner identification and audit quality," Review of Accounting Studies, Springer, vol. 25(2), pages 778-809, June.
    • Handle: RePEc:spr:reaccs:v:25:y:2020:i:2:d:10.1007_s11142-020-09533-0
    DOI: 10.1007/s11142-020-09533-0
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    More about this item

    Keywords

    Audit; Engagement partner; Audit transparency; Partner naming; Audit quality;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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