Purpose: The value of an audit lies in its ability to detect and correct misstatements in financial statements. The purpose of this paper is to investigate the resolution of detected misstatements. Design/methodology/approach: Using data on a large sample of audit adjustments by a German Big 4...

This paper analyses the expected benefits and costs associated with changes to the institutional framework of statutory audits. We focus on five changes: Mandatory external audit firm rotation, auditor appointment by an independent regulator, a general ban on providing non-audit services, a ban...

This paper analyzes whether audit adjustments vary systematically with inherent and control risk factors. The analysis is based on proprietary data from a large recent sample of audit adjustments detected in the financial statement audits conducted by a Big 4 audit firm in Germany. We extend the...