This dissertation examines the litigation and legal liability exposure of auditors related to the Sarbanes-Oxley Act of 2002 (SOX). Three separate studies were conducted to examine how auditor's litigation exposure is evaluated by potential litigants (lawyers), and how auditor liability is evaluated by jurors, following the bankruptcy of a client. The first study examines whether the auditor's SOX Section 404 reporting decisions influence lawyers' assessments of their litigation exposure. The second study investigates whether voluntary disclosures of significant deficiencies in internal controls within the SOX Section 404 report, and the subjectivity of the internal control judgments made by the auditor, influence jurors' perceptions of auditor liability for negligence. The third study examines how the requirements of SOX Section 302 related to audit committee independence and audit committee expertise influence jurors' perceptions of auditor independence and auditor liability for negligence. Overall, these three studies provide insights on how different provisions of SOX, specifically the Section 404 report and audit committee requirements, influence the likelihood that auditors will be sued and the likelihood that they will be held liable by a jury.

Corporate managers often pursue voluntary non-GAAP reporting when mandatory reporting is limited, although regulators are concerned with how this reporting is utilized. While the level of flexibility external auditors exhibit during discussions over subjective GAAP reporting choices can influence management's GAAP reporting decisions, it is important to determine if this behavior affects subsequent non-GAAP reporting decisions. Additionally, recent calls for increased audit committee questioning of non-GAAP disclosures may also cause audit committees to influence non-GAAP reporting. In this dissertation, I conduct an experiment to examine how auditor flexibility and audit committee questioning influence non-GAAP preparation and earnings release disclosure choices of senior executives. I predict less flexible auditor behavior will enhance managers' psychological feeling of constraint, while audit committee questioning focused on non-GAAP measures can increase managers' self-assessment of reporting decisions, both of which will translate into more conservative non-GAAP reporting. However, given prior research indicating that corporate governance mechanisms can combine in complex ways, I predict a greater impact of audit committee questioning absent auditor constraint. Results indicate managers make less conservative non-GAAP preparation decisions and disclose more non-GAAP measures in the absence of constraint from inflexible auditors. However, absent this constraint, managers make more conservative non-GAAP preparation choices and present non-GAAP measures less prominently in earnings press releases when the audit committee questions non-GAAP disclosures. These results are driven by a thorough self-assessment of reporting decisions by managers expecting audit committee questioning. This study provides evidence on how external auditors and audit committees influence various voluntary reporting decisions. / Doctor of Philosophy / Corporate managers can report their company's financial information to investors and other stakeholders in various ways. Some financial information is required to be reported in accordance with a set of formal accounting standards called United States Generally Accepted Accounting Principles (GAAP). Beyond this mandatory reporting, other financial information is disclosed voluntarily when company management believes this extra information is beneficial to investors. These voluntary disclosures— called non-GAAP measures— do not follow a set of accounting standards and can be disclosed with more discretion by company management than GAAP measures. The variation in how non-GAAP measures are prepared and disclosed concerns regulators, such as the Securities and Exchange Commission (SEC). Mandatory GAAP financial reporting is overseen by external auditors from public accounting firms, but auditors typically have very little formal oversight over non-GAAP reporting. Although company management ultimately decides how to disclose GAAP information, external auditors influence these reporting decisions by recommending choices during discussions over subjective GAAP issues. Sometimes auditors exhibit inflexible behavior during these discussions by being unwilling to consider management's reporting choices. This inflexibility limits or constrains the GAAP reporting choices of managers. However, prior research has not studied how this constraint impacts how managers make non-GAAP reporting choices. Further, GAAP reporting choices can also be influenced by the audit committee, which is a subgroup of members of the board of directors that is in charge of overseeing financial reporting and disclosure. Recent calls from regulators have asked for increased audit committee questioning of non-GAAP disclosures, which may also cause audit committees to influence non-GAAP reporting. Non-GAAP measures are often presented in earnings press releases, which are public announcements by a company that disclose information regarding results of operations or financial condition for a given period. Managers can make strategic decisions regarding the preparation of non-GAAP measures and the presentation of this information in earnings releases, both of which can influence investors' decision-making. In this dissertation, I conduct an experiment utilizing senior executives to examine how auditor flexibility and audit committee questioning influence these two types of non-GAAP reporting decisions: how to prepare non-GAAP measures and how to disclose them in earnings press releases. I predict less flexible auditor behavior will enhance managers' psychological feeling of constraint, while audit committee questioning focused on non-GAAP measures will increase managers' self-assessment of reporting decisions, both of which will translate into more conservative non-GAAP reporting. However, prior research indicates that corporate governance mechanisms, which are factors intended to help direct and monitor company management (such as auditors and audit committees), can combine in complex ways. Therefore, I predict a greater impact of audit committee questioning absent auditor constraint. The results indicate managers make less conservative non-GAAP preparation decisions (i.e. are more likely to calculate non-GAAP earnings figures that deviate from their GAAP counterparts) and disclose more non-GAAP measures in the absence of constraint from inflexible auditors. However, absent this constraint, managers make more conservative non-GAAP preparation choices and present non-GAAP measures less prominently in earnings press releases when the audit committee questions non-GAAP disclosures. These results are driven by a thorough self-assessment of reporting decisions by managers expecting audit committee questioning. This study provides evidence on how external auditors and audit committees influence various voluntary reporting decisions. Given the ubiquity of non-GAAP reporting in recent years, this dissertation can provide valuable insights to regulators, investors, and other stakeholders on factors that influence managerial decision-making related to non-GAAP disclosures.

Yes / This study investigates the associations between audit committee characteristics and the likelihood of auditors' going-concern decisions among UK failed firms. Specifically, we examine whether the threat posed by auditor-provided non-audit services (NAS) to auditors' reporting decisions is mediated by audit committee characteristics. We find that failed firms with higher proportions of independent non-executive directors (NEDs) and financial experts on the audit committee are more likely to receive auditor going-concern modifications prior to failure, but that there is no significant relationship between NAS fees and the likelihood of receiving a going-concern modification. The evidence further suggests that the association between NAS and auditors' reporting decisions is subject to audit committee characteristics. Where the audit committee is more independent and includes a greater proportion of financial experts, auditors providing the client with NAS are less likely to issue a standard unmodified going-concern report prior to failure. Overall, the findings provide support for corporate governance regulators' concerns about the monitoring benefits of audit committee independence and the presence of financial expertise on the audit committee for auditors' reporting decisions.

Business Management / D. B. L.

Syfte: Vårt första delsyfte med den här studien är att undersöka om press är ett hot mot revisorns oberoende genom att undersöka om det är skillnad på den press revisorer upplever och den press de bedömer att de klarar av. Vårt andra delsyfte är att redogöra för hur och i vilken omfattning ett revisionsutskotts existens kan sänka revisorns upplevda press och därmed stärka revisorns oberoende. Metod: Denna studie är utförd med kvantitativ metod. Data har samlats in med hjälp av dataenkäter som har skickats via e-post till 316 revisorer i Sverige som arbetar med noterade bolag. Revisorerna har skattat sin upplevda press från klienterna med hjälp av Borg CR100 (centiMax) Scale®. Analys av data har utförts med korrelationsanalys, regressionsanalys och t-test med hjälp av statistikprogrammet SPSS. Resultat & slutsats: Vi fann signifikant skillnad mellan den press revisorerna upplever och den press revisorerna bedömer att de skulle klara av innan de godkänner en felaktig finansiell rapport. Studien indikerar en liten skillnad i upplevd press vid revision av företag med revisionsutskott jämfört med revision av företag utan revisionsutskott. Dock var denna skillnad inte signifikant. Förslag till fortsatt forskning: I kapitel 5.5 tar vi upp förslag till fortsatt forskning varvid huvudfrågorna vi diskuterar är följande: hur sammansättningen av revisionsutskotten påverkar revisionsutskottens effektivitet, vad som orsakar de stora skillnaderna i huruvida revisorerna upplever press eller inte från VD och styrelse och hur hälsan påverkas av den press revisorerna bedömer att de upplever. Uppsatsens bidrag: Uppsatsen bidrar med empiriskt underlag för fortsatt forskning då denna studie är den första i sitt slag som har utförts i Sverige. Vidare bidrar studien praktiskt till en ökad kunskap om hur mycket press en revisor upplever i förhållande till vad en revisor bedömer att de klarar av samt hur revisionsutskott påverkar revisorns upplevda press. / Aim: Our first subsidiary aim of this study is to investigate whether the pressure is a threat to auditor's independence by investigating whether there is a difference between the pressure experienced by auditors and the pressures they estimate that they can handle. Our second subsidiary aim is to explain how and to what extent an audit committees' existence can lower the auditor's perceived pressure and thereby strengthen the auditor's independence. Method: This study is conducted by a quantitative method. Data were collected using data questionnaires sent by e - mail to 316 auditors in Sweden working with listed companies. The auditor has estimated his or hers perceived pressure from clients using the Borg CR100 (centiMax) Scale®. Data analysis has been performed by correlation analysis, regression analysis, and t-test with the statistical program SPSS. Result & Conclusions: We found a significant difference between the experienced pressure by auditors and the pressure auditors estimated that they could handle before approving a false financial report. The study indicates a small difference in the perceived pressure for audits in co-operation with companies with audit committees, compared with companies without audit committees. However, the difference was not significant. Suggestions for further research: In Chapter 5.5 we bring up suggestions for further research and the main issues we discuss are: how the composition of audit committees influences audit committees' effectiveness, what the large differences in whether the auditors are experiencing pressure or not from the President and Board of the company are caused by and how the health is affected by the estimated pressure auditors experiencing. Contribution of the thesis: The study contributes with the empirical foundation for continued research because this study is the first of its kind in Sweden. Furthermore, the study contributes practically to a greater knowledge of how much pressure an accountant experience in relation to what the auditor believes that they are capable of and how audit committees affect the auditor's perceived pressure.

我國從2002年引進獨立董事制度，並於2007年引進審計委員會制度;且要求公開發行股票之證券投資信託事業、綜合證券商、上市（櫃）期貨商及實收資本額達新臺幣100億元以上未滿500億元之非屬金融業之上市（櫃）公司應於104至106年間完成審計委員會之設置。實收資本額達新臺幣20億元以上未滿100億元之非屬金融業上市（櫃）公司應於106至108年間完成審計委員會之設置。本研究將針對已施行近10年的審計委員會制度做一檢視。 本研究採用朱德芳（2013，2014）關於審計委員會制度之研究理念與作法。邀請五位獨立董事做訪談並將訪談內容作整理分析，初步了解臺灣審計委員會實施概況。本研究發現：宜強化審計委員會的功能，以及調整雙軌制漸漸趨向單軌制。 / The Independent Director System was imported into Taiwan in 2002 and subsequently the audit committee system started in 2007. Public companies, brokerages, listed futures firms and securities firms were then required to establish an audit committee. This new regulation also applied to non-securities firms who has capital between NTD $10Bn and NTD $50Bn. It was stipulated that the changes must be implemented between 2015 and 2017. Furthermore, listed firms whose capital exceeds NTD $2Bn but less than NTD $10Bn must establish audit committees in the period 2017-2019. This thesis intends to review and analyze the implementation of these audit committees. This study adopts concepts put forward by distinguished professor Te-Fang Chu (2013-2014) as well as uses the process she developed to verify the effectiveness of the legislation in the business world. We invited five independent directors to interview and helped us gain a surface-level understanding of the audit committee process.This analysis resulted in two specific recommendations. First, some functions within the audit committee must be strengthened. Second, the two-tier corporate governance system should be flattened to a single tier.

Em virtude de sucessivas crises e fraudes envolvendo grandes empresas ocorridas nos últimos anos, a sociedade e os governos passaram a buscar novas formas de controle, além de revitalizar antigas formas que haviam sido deixadas de lado. Sendo o Comitê de Auditoria (CA) uma das fontes mais importantes de controle dentro das atuais necessidades das organizações, o presente trabalho tem como objetivo identificar e analisar os aspectos mais relevantes que o caracterizam. Diversos regulamentos e orientações para regular este órgão (CA), tal como a lei Sarbanes-Oxley, foram criados tanto no Brasil como no exterior e uma comparação entre os normativos e orientações das autoridades e organismos brasileiros com os normativos internacionais foi efetuada. Como contribuição ao conhecimento sobre o tema, uma pesquisa documental foi desenvolvida em 112 empresas de grande porte no Brasil, identificando as principais informações sobre o comitê de auditoria, evidenciadas por essas organizações, utilizando o canal de comunicação da internet. Um índice para efetuar comparações entre as empresas foi criado: o Índice de Disclosure do Comitê de Auditoria (IDCA). Os resultados mostraram que a maioria das empresas componentes da amostra não apresentou um grau de evidenciação sobre o Comitê de Auditoria que permita uma visualização efetiva sobre esse organismo nas organizações pesquisadas. / Successive crises and frauds involving large companies in recent years have driven the society and the governments to seek new forms of control and to revive old forms previously set aside. Since the Audit Committee (AC) is one of the most important sources of control within present needs of the organizations, this research aims to identify and analyze the most relevant aspects that characterize audit committees. Various regulations and guidelines, such as Sarbanes-Oxley Act, were created to regulate AC in Brazil and other countries as well, so a comparison was performed between the Brazilian regulations and guidelines produced by Brazilian and international authorities and regulatory bodies. As a contribution to the knowledge on the subject, a documental research was performed in 112 large companies in Brazil to identify the main information on audit committees disclosed by these organizations using the Internet communication channel. An index to compare companies disclosure on audit committees was created (IDCA). The findings show that most companies of the sample did not present a level of disclosure on the IDCA index to allow an effective view of the audit committee in these organizations.

Under den senare delen av 1900-talet inträffade ett antal företagsskandaler, såsom Enron och Worldcom, vilket föranledde ett bristande förtroendet för såväl styrelsers som revisorers arbete. För att återfå förtroende på den svenska marknaden introducerades Koden och en uppdatering av Aktiebolagslagen gjordes. En av de förtroendehöjande åtgärderna innebar att revisionsutskotten introducerades. Revisionsutskottens införande innebar ett tydliggörande av styrelseledamöternas arbetsuppgifter, men medförde samtidigt att huvudmannaskapsproblematiken i styrelsen aktualiserades. Vilket leder till vår problemformulering: Hur har revisionsutskottens införande påverkat ansvarsfördelning i styrelsen?För att kunna besvara vår frågeställning har vi genomfört kvalitativa intervjuer utifrån ett expertperspektiv. Expertperspektivet har företrätts av institutionella ägare, revisorer och en advokat. Respondenternas olika relationer till fenomenet har bidragit till ett brett perspektiv.Empiriinsamlingen påvisar tydligt att införandet av revisionsutskott har aktualiserat huvudmannaskapsproblematiken. Empirin påvisar att en dualism, i styrelsen, kan ha uppstått utifrån vem som agerar i vems uppdrag. Dock åberopar respondenterna likt lagrum och rekommendationer att styrelsens huvudansvar i helhet kvarstår.Vår slutsats är att styrelsen inte har skapat sig ett alibi genom införandet av revisionsutskott, och att styrelsens ansvar i helhet kvarstår. Därmed kan vi konstatera att införandet av revisionsutskott har belyst ansvarsfrågan, men att ansvaret kvarstår hos styrelsen i sin helhet. Vi har även konstaterat att forskning om huvudmannaskapsproblematiken inom styrelsen är bristfällig och att mer forskning skulle berika området. / Program: Civilekonomprogrammet

This study investigates whether a relationship exists between fraudulent financial reporting and a variety of corporate governance attributes. Numerous high profile accounting scandals perpetuated over recent years have brought prominence to the corporate governance structure employed by US public companies. Many of these scandals involved manipulation of the financial reporting process by high level managers. It is therefore thought that a lack of effective oversight provided by the governing bodies engaged to monitor the actions of management may be at the heart of the problem. A review of prior research is used to identify the attributes of corporate governance relevant for inclusion in this study and to provide support for the posing of twenty directional hypotheses. The selected corporate governance attributes are classified into four broad categories depicting Audit Committee Functionality, Board of Director Composition, Ownership Structure, and External Auditor Factors. A matched pair research design is utilised to determine whether significant differences exist between the corporate governance attributes employed by fraud and non-fraud companies. A sample of 76 fraud companies, identified through an examination of Accounting and Auditing Enforcement Releases issued by the Securities Exchange Commission and drawn from a total of 223 companies examined, are tested along with an industry-size matched sample of non-fraud companies. The results of univariate paired t-tests and a conditional logistic regression equation find that statistically significant relationships do exist between a number of corporate governance attributes and fraudulent financial reporting. Specifically, the study finds that the percentage of independent directors on a company's board, the existence of a nominating committee, and the engaging of a Big6 auditor are negatively related to the incidence of fraud. Whereas, the average number of directorships held by audit committee members, the duality of the CEO and Chairman of the Board positions, and the percentage of company ownership held by outside blockholders are positively related to the incidence of fraudulent financial reporting.

Fin 2001, début 2002, les États-Unis ont été frappés par un nombre élevé de scandales financiers. Plusieurs affaires ont été révélées par les médias, singulièrement le cas Enron. La reformulation de la profession d'audit en matière d'indépendance des auditeurs et des comités d'audit après le scandale Enron a cherché à garantir la crédibilité des états financiers. L'objectif de ce travail est de tester l'effet de la nouvelle formulation de la profession d'audit, notamment en matière d'indépendance des auditeurs et des comités d'audit, précisément sur la question de la crédibilité des états financiers. Trois objectifs opérationnels ont été traités dans le cadre de cette étude. Premièrement, nous avons analysé les effets de l’affaire Enron sur la réaction des marchés financiers, le choix des commissaires aux comptes et l’affermissement du conservatisme des auditeurs, dans le contexte français. Deuxièmement, nous avons étudié l’impact de l’institution du Haut Conseil du Commissariat aux Comptes sur l’indépendance des auditeurs. Finalement, nous avons étudié l’influence du Comité d’audit sur la crédibilité des états financiers après le rapport Bouton de 2002. Les résultats empiriques s’attachent à montrer que la présence d’un co-commissaire aux comptes Non-Big a minimisé l’effet négatif de la réaction du marché financier français lors de l’annonce du scandale Enron. Par contre, le scandale Enron n’a pas influencé significativement la perception des investisseurs institutionnels étrangers envers les services des grands cabinets d’audit. Ces derniers n’ont pas justifié la production d’une bonne qualité d’audit par rapport aux Non-Big. Pour rétablir la confiance sur les marchés financiers, le législateur français est intervenu via la création d’un organisme de supervision publique de la profession comptable intitulé le H3C. Les résultats empiriques montrent que la création du H3C a renforcé l’indépendance des auditeurs. Par contre, l’annonce du lancement des activités disciplinaires de ce nouvel organisme après 2005 n’a pas d’effet significatif sur l’indépendance des auditeurs. Par contre l’apparition du rapport Bouton en 2002, et la nouvelle dimension accordée au contrôle interne, montre que ce dernier dépendant des caractéristiques des comités d’audit notamment l’expertise et l’indépendance de leurs membres. / At the end of 2001, the scandal series was announced in the US context. Several scandals, especially the Eron failure, were revealed in the first stage by the media. The main purpose of this research is to study the impact of the new reform, in audit after Enron scandal, on auditor independence, audit comity and financial statement credibility. Three operational objectives have been treated in this study. First, we have analyzed the effects of Enron scandal on financial market reaction, auditor choice and auditor conservatism in the French context. Second, we have investigated the impact of the new reform on the auditor independence. Finally, we have examined the effect of audit committee on financial statement credibility after the adoption of the Bouton Report in 2002.The empirical results have shown that the presence of the Non-Big4 members in the legal audit process have minimized the negative effect of the reaction of the SBF 250. However, the perception of the foreign institutional investors has not changed significantly for the Big4 audit services. This auditor group (Big4) does not justify the production of the audit quality compared to other auditors in France. To restore confidence in the financial market, the French legislative authority has created the H3C. The empirical results have revealed that the establishment of the H3C has ameliorated the auditor independence. Hence, the announcement of the launch of H3C disciplinary activity after 2005 has not had a significant effect on auditor independence. In contrast, the appearance of the Bouton Report in 2002 and the reform related to the internal control depend on the audit committee characteristics (expertise and independence audit committee members).