- مبلغ: ۸۶,۰۰۰ تومان
- مبلغ: ۹۱,۰۰۰ تومان
Accounting comparability among peer firms in the same industry reflects the similarity and the relatedness of firms’ operating environments and financial reporting. From the perspectives of “inherent audit risk” and “external information efficiency,” comparability is helpful for auditors in assessing client audit risk and lowers the costs of information acquisition, processing, and testing. I posit that the availability of information about comparable clients helps improve audit efficiency and accuracy. Empirical results show that comparability is negatively related to audit effort (surrogated by audit fees and audit delay). Moreover, comparability is negatively associated with the likelihood of audit opinion errors. These findings are robust to different specifications of regression models, particularly for the “endogeneity” issues due to the possible reverse causality that auditor style might influence client firms’ comparability. In sum, the study shows that accounting comparability enhances the utility of accounting information for external audits.
This study investigates how accounting comparability affects the overall quality and perceived risk of an external audit. Comparability enables auditors to identify similarities and differences in how client firms’ economic events are translated into accounting results over time and across clients. I argue that comparability reflects low audit risk from inherent client business risk per se, and provides a positive externality gain from and for multiple audit engagements. I predict that accounting comparability is negatively associated with audit risk and audit delay, and positively associated with audit quality and opinion accuracy. Empirical tests indicate that comparability is systemically associated with audit efficiency and accuracy. Specifically, it shows that comparability is negatively related to audit service fees and audit delay, and positively related to audit opinion accuracy (both Type I and Type II errors).
This study is important in expanding our understanding of the accounting quality of comparability. An audit client with a higher degree of information comparability is associated with a lower level of information risk and audit risk. At the same time, comparability contributes to externality gains that result in audit efficiency. Comparability has a dual effect: (i) lower audit fees, which benefit auditees, and (ii) more timely and accurate audit reporting, which benefits auditors. Given the role of externalities in expanding auditors’ available information set, the study of intraindustry information transfers in audit engagements provides additional insights into the economic benefits of audit accuracy and audit efficiency.