We examine 316 Public Company Accounting Oversight Board (PCAOB) inspection reports issued to smaller CPA firms (100 or fewer issuer clients) through July 2006. We find that 60 percent of the inspected firms have audit deficiencies. Firms with audit deficiencies are smaller, have a larger number...

This study reports the results of an experiment that investigates the effects of financial-report timing, EPS proximity to analyst forecast, and external auditor argument consistency on audit committee members' support for a proposed audit adjustment. We use source credibility theory to predict...

This study examines differences in audit committee member judgments before the Sarbanes-Oxley Act ("pre-SOX") versus after the act was passed ("post- SOX") as well as audit committee member perceptions of the effects of SOX. Based on experimental materials administered to 372 public company...

Differentiating real earnings management (REM) from normal business decisions poses a unique challenge for auditors, researchers, and investors. The ambiguity associated with REM, and the fact that REM does not violate GAAP, may explain why its use is on the rise. While some assert that auditors...

Real earnings management (REM) is an increasingly common method of manipulating financial results, yet little research examines auditors' perceptions of and responses to REM. Using the auditor comfort framework (Pentland 1993; Carrington and Catasús 2007), we examine the extent to which REM impacts...