Misclassification of audit-related fees as a measure of internal control quality

Buslepp, William and Legoria, Joseph and Rosa, Regina and Shaw, Dan,(2019), Misclassification of audit-related fees as a measure of internal control quality. , Advances in Accounting, UNSPECIFIED

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There is an abundance of literature examining the effects of a poor internal control systemon financial reporting quality, decision-making and auditing. However, the most commonly used proxy for internal control quality (i.e., a material weakness in the internal controls over financial reporting) occurs relatively infrequently and has declined in occurrence over the past decade (Chasan, 2013). In this study,we attempt to develop an alternative measure for internal control quality using the information reported in the S\\K portion of a firm's 10-K.We suggest that a misclassification of audit-related fees in the unaudited disclosures of the annual report is a proxy for low internal control quality. Consistent with lower internal control quality, we find that firms misclassifying audit-related fees are more likely to report amaterial weakness, are less timely filers (longer report lag) and pay higher audit fees. Our findings suggest that misclassification of audit-related fees correlate with having poor internal control quality
Keywords : Mergers and acquisitions Audit-related fees Internal control quality Financial reporting quality, UNSPECIFIED
Journal or Publication Title: Advances in Accounting
Volume: 46
Item Type: Article
Subjects: Akuntansi
Depositing User: Users 8 not found.
Date Deposited: 26 Dec 2019 06:46
Last Modified: 26 Dec 2019 06:46
URI: https://repofeb.undip.ac.id/id/eprint/862

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