Do regulator inspections of audit firms discern audit quality? Evidence from Korean regulator inspections

Youngsoon S. Cheon, Dan Dhaliwal, Munho Hwang and Moonchul Kim

Asia-Pacific Journal of Accounting & Economics, 2017, vol. 24, issue 3-4, 272-301

Abstract: During the past decade, many countries have adopted a regulatory inspection program to oversee the auditing profession. In general, the inspection programs consist of two components: evaluation of accounting firms’ quality control systems and review of selected audit engagements. This study examines whether quality control system deficiencies and audit engagement deficiencies identified in the inspections reflect the audit quality of accounting firms using the data from Korean regulator inspections. We find that both quality control system deficiencies and audit engagement deficiencies reflect the audit quality of the accounting firms under inspection. Our findings also suggest that quality control system deficiencies discern the audit quality of accounting firms better than audit engagement deficiencies. Our results are robust across audit quality measures and auditor size. This study expands the literature by providing evidence about quality control system deficiencies and providing evidence for more comprehensive measures of audit quality.

Date: 2017
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/16081625.2016.1226143 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:raaexx:v:24:y:2017:i:3-4:p:272-301

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/raae20

DOI: 10.1080/16081625.2016.1226143

Access Statistics for this article

Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

More articles in Asia-Pacific Journal of Accounting & Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().