SUMMARY Prior accounting research in the healthcare field has paid little attention to how regulatory auditing innovations, such as artificial intelligence (AI) algorithms, can influence audit outcomes. Although these innovations may improve efficiency, they may have other consequences. This article summarizes the findings of a field study by Akinyele, Baudot, Koreff, and Sutton (2025), who examined the use of an AI-based auditing tool in the United States healthcare sector. The authors found that the use of this tool can generate debates about the legitimacy of health provider claims, especially when auditors rely heavily on algorithmic decisions. When paired with an incentive-based contract, these tools may be implicated in decision-making process, and even limit healthcare options. This research underscores the importance of balancing technological auditing innovations with professional judgment to ensure effective oversight and service delivery in the healthcare sector. JEL Classifications: M41; M42; M48.

SUMMARY To gain insights into external factors that impact auditors’ ability to meet regulatory requirements and thus audit quality, we review the existing audit literature on individual auditor mindset through three well-accepted mindset theories (Nolder and Kadous 2018; Gollwitzer 1990, 2012; Dweck 2006). Our paper reveals that the mindset of the individual auditor is a potential factor impacting their ability to meet regulatory requirements that are intended to promote audit quality. Implications of these findings for practitioners are discussed.

SUMMARY In this article, we provide a practitioner summary of the paper “Auditor perceptions, reactions, and responses to PCAOB inspection feedback” (Tegeler, Brown, and Downey 2025a) which finds that when auditors perceive the feedback source (inspectors), message, and their firm’s support more positively, they react with more satisfaction and motivation to use inspection feedback. These positive reactions in turn enhance auditors’ desirability to improve audit quality and inspection risk, result in more job satisfaction, and less turnover intent. In contrast, less positive reactions lead to more impression management (i.e., managing inspection risk in excess of audit quality). We summarize key findings and discuss practical implications to enhance audit practitioners’ inspection interactions and processes.

SUMMARY This article provides a practitioner summary of the research study titled “Auditor use of benchmarks to assess fraud risk: The case for industry data” (Brazel, Jones, and Lian 2024 (BJL)). Auditors perform preliminary analytical procedures to identify risks that financial statements are materially misstated due to fraud. Via a survey of practicing auditors, BJL find that auditors rely heavily on prior year balances and relations within the client’s financial data (e.g., ratios) as benchmarks when developing expectations during planning. Meanwhile, the empirical analyses of BJL reveal that, when identifying fraud risks, benchmarks derived from industry data, nonfinancial measures, and cash flows outperform both prior year balances and relations within the client’s financial data. The industry benchmark was the top performer. The article provides examples to demonstrate an approach that practitioners can use to identify fraud risks via industry data. Data Availability: Contact the authors. JEL Classifications: M40; M41; M42; M48.

SUMMARY This article summarizes “How do financial executives respond to the use of artificial intelligence in financial reporting and auditing?” (Estep, Griffith, and MacKenzie 2024; hereafter EGM). EGM survey financial executives about their perceptions of AI in financial reporting and experimentally examines how they would incorporate AI-generated information when resolving proposed audit adjustments. EGM find that financial executives do not have negative perceptions of AI. Further, in a hypothetical scenario, they find that when a financial executive’s company uses AI to help prepare an accounting estimate, financial executives book larger audit adjustments if auditors use AI to audit the estimate than if auditors do not use AI. If a financial executive’s company does not use AI, auditors’ use of AI has minimal influence on financial executives’ decisions. This paper provides insights for practice based on EGM’s findings. JEL Classifications: M41; M42; O33.

SUMMARY Over the past three decades, the practice of voluntarily obtaining independent assurance for sustainability disclosures has grown significantly. We are now on the verge of a monumental shift in sustainability assurance due to emerging mandatory assurance requirements introduced by the Securities and Exchange Commission (SEC) adopting rules to standardize climate-related disclosures, the state of California passing three climate disclosure bills (SB253, SB261, and AB1305), and the EU passing the Corporate Sustainability Reporting Directive. This paper provides an overview of the three regulations, including their current implementation status; identifies four key elements of the sustainability assurance requirements within them; and discusses the challenges and implications for practice. JEL Classifications: M420; M490.

SUMMARY In this paper, we examine the challenges in auditing information technology (IT)-enabled financial reporting by analyzing PCAOB inspection reports for the years 2019–2024. Despite increased regulatory efforts to enhance audit quality, recent PCAOB inspection findings still reveal recurring deficiencies in public company audits, suggesting diminished audit quality. Our review of PCAOB inspection reports indicates that audit deficiencies related to IT and accounting information systems, such as deficiencies in testing automated controls and using system-generated data as audit evidence, persist and remain challenging to address. These findings are critical as more companies adopt advanced technologies in their financial reporting processes. This paper provides valuable insights into how evolving IT may heighten the complexity of audit engagements and proposes recommendations to enhance audit quality in this rapidly evolving IT environment. Data Availability: All data used in this paper are publicly available. JEL Classifications: G38; M42; M48.

SUMMARY Regulators across different countries have debated requiring auditors to disclose their quantitative materiality thresholds within the audit report. Regulators in the United States have held off enacting mandates out of fear that these disclosures could mislead investors, whereas regulators in the United Kingdom and the Netherlands have enacted mandates out of a desire to better inform investors about the audit. This article summarizes a recent study by Festa, Jones, and Witz (2024) that finds that auditor quantitative materiality disclosures can mislead investors who have higher concerns about quantitatively small but qualitatively important misstatements. It informs practitioners about this potential unintended risk of quantitative materiality disclosures, and it also offers a helpful takeaway by demonstrating a practical solution. It demonstrates this risk can be addressed if auditors provide detailed disclosures of qualitative considerations applied in evaluating misstatements alongside quantitative materiality disclosures. JEL Classifications: M41; M42; M48.

SUMMARY Audit offices have finite resources available and, as a result, changes in workload can create resource strain. Overworked employees are susceptible to burnout, which leads to a reduction in job performance and lower audit quality. We summarize key findings from recent publications on resource strain, identify settings where resource strain is more likely, and make suggestions for audit practitioners. Our literature review and insights are intended to help practitioners maintain audit quality. JEL Classifications: M41; M42.

SUMMARY This article summarizes the published study “Related Party Transactions and Audit Fees: Indian Evidence” (Kushwaha, Anand, Jayadev, and Raghunandan 2024). Related party transactions (RPTs) in public companies are of concern to regulators in many countries, such as India, because RPTs can be used for wealth extraction by controlling shareholders. Many public companies in India have concentrated ownership and significant presence of RPTs. After the systemically important Satyam failure in 2009, Indian legislators enacted The Companies Act of 2013 to increase transparency for RPTs and improve corporate governance standards. Kushwaha et al. (2024) show that related party sales are associated with higher audit fees and auditor resignations after the enactment of the 2013 Act. The paper discusses implications for auditors and regulators when companies have material RPTs in non-Western markets. JEL Classifications: G34; M41; M42.