Recent increases in the occurrence and magnitude of goodwill impairment charges highlight the increasing importance of the role of the auditor in goodwill accounting. This study examines the association between disclosures about the fair value measurement of goodwill and audit fees. We find that...

Auditors frequently use valuation specialists to help them evaluate fair values, but problems related to specialists' involvement suggest the potential benefits of specialists' involvement are under-realized. I interviewed 28 auditors and 14 valuation specialists to investigate how auditors use...

This study empirically examines whether difference in audit quality is reflected in the pricing of other comprehensive income (OCI). Specifically, we first investigate whether OCI measures of Big 4 clients are more-value relevant than those of non-Big 4 clients. Considering different degrees of...

In this paper, I study whether and how auditors develop domain-specific expertise in auditing difficult-to-audit fair value (FV) measurements. Specifically, by analyzing the dispersion in the FV estimates of the same security held by different insurance clients of the same auditor, I provide...

Managers have alternative discretionary choices. I exploit security-level disclosures in the insurance industry to examine auditors’ role in insurers’ choice between using two specific types of discretion to avoid other-than-temporary-impairment (OTTI) losses. Managers can avoid recognizing...

In this study, we examine whether banks' use of the loan loss provision (LLP) to manage earnings is associated with 1) the extent to which banks hold assets subject to fair value reporting and 2) the use of an industry specialist auditor. We find that banks with a greater proportion of assets...

We examine whether auditors effectively incorporate cues indicating increased risk into their evaluation of fair value estimates. Consistent with concerns from PCAOB inspections, more than one-third of fair value estimates in our security-level dataset differ from the true fair value by an...

PCAOB inspections repeatedly indicate deficiencies in audits of FV estimates, resulting in efforts by regulators to improve the related guidance and auditing standards (PCAOB 2017a). Nevertheless, regulators cannot fully resolve the complexity and inherent subjectivity in auditing fair value...