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Client Responses To Non-Compliant Audits: An Analysis Of Clients Targeted By Pcaob Inspection, Quinn Thomas Swanquist

Doctoral Dissertations

PCAOB inspectors are afforded privileged insight into the quality of audits selected for inspection. Using inspection reports from 2005-2012, I create a unique sample of audits that were inspected by the PCAOB (i.e., all of an auditor’s clients were selected for inspection). By tracing inspection findings to specific engagements, I directly identify compliant and non-compliant audits. I examine the contributing factors of ‘audit quality’ and provide evidence that higher audit fees and greater human capital are positively related to compliant PCAOB inspections. When PCAOB findings can be linked to a specific engagement, I also find that, on average, the client …