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Consequences of Role Ambiguity on PCAOB Inspection Report Language | Research Colloquium

Contributed by: Tamara Estep
Published: Monday, 03 March 2014 9:00 AM
MILLER COLLEGE RESEARCH COLLOQUIUM

12:00 - 1:30 p.m., Monday, March 17, 2014
Whitinger Business Building, WB 145

RSVP before Friday, March 7th to jmkeever@bsu.edu.

Consequences of Role Ambiguity on PCAOB Inspection Report Language

Presented by Renee Flasher
Assistant Professor of Accounting

Consequences of Role Ambiguity on PCAOB Inspection Report Language
I examine the public version of the Public Company Accounting Oversight Board (PCAOB) inspection reports for language aligning with prior career experiences of PCAOB inspectors. I test hypotheses linking the language describing the audit firm deficiencies for alignment with PCAOB inspectors' past career experiences based on role theory. I document that there is a decrease in the probability of the existence of financial statement assertion words and an increase in the probability of the existence of qualifying words (i.e. document or test), as the client base of a triennially inspected firm includes more small accelerated clients, most similar to the typical inspector's past career experience. In addition, as the PCAOB inspection process matures, the likelihood of the financial statement assertion words decreases and the likelihood of the qualifying words increases. As each PCAOB inspection report does not contain a summary rating, an individual reader interprets the free-form wording of the inspection deficiencies as a reflection of the public accounting firm's audit practice. Therefore, these results provide evidence that the deficiency wording can be associated with prior experiences of the inspectors, highlighting the subjective nature of the deficiency descriptions.

About Renee Flasher
Renee Flasher, Assistant Professor of Accounting, received her Ph.D. in business administration with an emphasis in accounting from Pennsylvania State University in 2013. Prior to that, she also received a Master’s degree in accounting from Case Western Reserve University in 1997. Her current research interests include auditor oversight, internal controls, and corporate governance for public, private and not for profit entities.
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Miller College Research Colloquia Series 2014

Date | Presenter
All colloquia are scheduled for 12:00 p.m.
and meet in Whitinger Building, room 145.


April 21, Monday | Eric Nesson
April 24, Thursday | Marcus Wolfe
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