Public Accounting Profession Research Articles

Examining the Current Legal Environment Facing the Public Accounting Profession: Recommendations for a Consistent U.S. Policy

We examine the recent history and trends of U.S. auditor liability to third parties to help regulators and legislators develop policies to protect and maintain audit quality while limiting auditor liability exposure. Although the United States has yet developed a formal policy to address auditor liability, some European Union member countries and Australia, in varying degrees, support such limitation. Thus, we also explore current EU and Australian policies as examples of potential recommendations to U.S. policy makers. In light of a litigious environment, U.S. Certified Public Accounting firms generally accept potential clients only after analyzing potential risks, dismiss many risky clients, raise their total or hourly fees, spend more time examining attestation evidence, and perform other procedures to reduce their litigation risk. This risk arises largely from the federal and state legal systems, assuming that auditors can better absorb and control losses from misleading financial statements than can financial statement users. While culpable, this litigious environment led to the demise of two large international Certified Public Accounting firms—Arthur Andersen and Laventhol & Horwath. Is the global economy better off having fewer accounting firms with the capacity to perform international audits? A Public Company Accounting Oversight Board’s recent Exposure Draft would require auditors of issuers to expand significantly their audit reports beyond current Pass/Fail standards, which could increase audit firms’ disclosures and resultant liabilities. After examining U.S. federal and state statutes plus court decisions regarding auditor liability, we suggest methods to protect the public while allowing audit firms to thrive in these environments.

Accounting Students' Perceptions of AEC 2015 on Public Accounting Profession

Objective - The economic growth of a country isvery importantbecause it reflects the country's economic development and success. This study's objective is to examine how accounting students' perceptions of the public accounting profession are taken into account in facingthe AEC 2015. In that regard, this study gauges how Indonesian companies can fulfil their needs to be more competitive in meeting the goals of the AEC 2015. Methodology/Technique - This study is qualitative in nature thus analysis will be descriptive. Questionnaires were distributed to currently activestudents of accounting in Indonesia. The samples were extracted from a nonprobability sampling technique. The 339 respondents were selected based on a set of basic considerations. In this context, the participants must have knowledgeof the AEC 2015 and are currently studying in public accountancy as a profession All were from Indonesia. Findings - Results drawn from the respondents indicate that they do not deeply understand the description of the AEC 2015.Majority of the respondents (27.4%) understood that the implementation of the AEC 2015 will make goods and services flow freely and majority (39.8%) also feel that they have a good ability in speaking with almost half of them assuming that they also write well in English. With regards to their competence in accountingafter graduation, more than half (52.2%) of the respondents agreethat the competence of public accountants from the host country will not be able to compete with those from ASEAN countries. Novelty - This paper enables accounting students to understand the challenges they face ahead,especially for those who are prospective successors to the Indonesian nation. Type of Paper: Empirical Keywords: AEC 2015, Public Accounting Profession, Accounting, Accounting Students Perceptions

PEMAHAMAN MENGENAI UNDANG-UNDANG DAN ETIKA PROFESI AKUNTAN PUBLIK TERHADAP PEMILIHAN KARIER SEBAGAI AKUNTAN PUBLIK

This research aim to know partially and simultaneously influence the understanding of the laws and ethics of the public accounting profession for a career as a public accountant election. This type of research is qualitative descriptive. The data source is the primary data. Population, sample and respondents were accounting students UNIBA Surakarta, sampling with random sampling. The research instrument used questionnaires in the validity and reliability. Data analysis method used descriptive test, classic assumption test including normality test, multicolinearity test, heteroscedasticity test, autocorrelation test for hypothesis testing using multiple linear regression with t test, F test and test determiasi (R2). H1 result t count > t table (3.591 > 1.991), and the significance 0.001 < 0.05 so Ha is received, so the understanding of the laws public accountant influence on the selection of a career as a public accountant. H2 result t count > t table (2.054 > 1.991), and the significance 0.043 < 0.05 so Ha is received, so the understanding of the public accounting profession ethics influence the election of a career as a public accountant. Test F, F count > F table (13.543 > 3.115) and significance < 0.05 (0.000 < 0.05), the Ha received so H3 result is that an understanding of the laws and ethics of the public accounting profession simultaneously affect the election as a career public accountant.Key words: Law, Public Accountant, Professional Ethics, Career Selection

FAKTOR-FAKTOR YANG MEMPENGARUHI PEMILIHAN KARIR SEBAGAI PROFESI AKUNTAN PUBLIK BAGI MAHASISWA AKUNTANSI

The purpose of this study is to analyze the factors that influence the selection of career as a profession of public accountant. Factors measured in this study with variable intrinsic value of work, financial rewards, labor market considerations, social values, work environment and personality. Data collected through questionnaires to accounting students at Trisakti Universities in West Jakarta. Samples used in this study are 90 respondents. This study has two variables: independept variable and dependent variable, where the independent variables are intrinsic value of work, financial rewards, labor market considerations,social values, work environment, and personality. And the dependent variable is career selection as public accountant profession. Analysis of the data in this study using multiple regression analysis with the SPSS2016. The results of this analysis showed that the variables intrinsic value of work, financial rewards, work environment,, social values, consideration of the labor market, and personality significant effect on career choice became public accountant by accounting students

PENGARUH KOMPETENSI, INDEPENDENSI, PROFESIONALISME, DAN INTEGRITAS AUDITOR TERHADAP KUALITAS AUDIT

Public accounting profession is a profession that is expected to put confidence as
 parties can conduct an audit of the financial statements and may be responsible for the
 opinion given. Of the public accounting profession, the public expects that assessment
 independent and impartial to the information presented by management companies in the
 financial statements. This research was conducted with the aim to obtain empirical evidence
 whether the factors ofcompetence, independence, professionalism, integrity auditor effect on
 audit quality. T-test results showed that the factors of competence, independence,
 professionalism auditors effect on audit quality. While factors do not affect the integrity of the
 auditors on audit quality. The coefficient of determination indicates that the factors of
 competence, independence, professionalism, integrity of the auditor is able to explain the
 quality of audits by 85 %, while the remaining 15%is explained by other variables that are
 not used in this study.

An Examination of the U.S. Public Accounting Profession’s Public Interest Discourse and Actions in Federal Policy Making

Participation in the political process by the United States public accounting profession often blurs the role of the profession as advocates for the public interest with its role as advocates for its own private interests. In this study, we draw from prior theoretical and empirical work to investigate recent federal political activities of the public accounting profession to shed light on these sometimes contradictory roles. In particular, we investigate ten contemporary regulatory issues of interest to the AICPA. We analyze 36 AICPA legislative advocacy letters related to these issues that were provided to federal policy makers. In addition, we analyze the public accounting profession’s federal lobbying reports that were submitted during this same time period. The analysis allows us to assess the public interest discourse present in the AICPA legislative letters as well as the extent of political action taken by the profession related to these issues based on the profession’s lobbying efforts. Our analyses (1) demonstrate that the profession’s discourse and actions often reflect both public and private interest motivations, (2) allow us to categorize the profession’s advocacy efforts as arising from specific motivations, and (3) show that the profession’s public interest arguments used to advocate for their policy positions change depending upon the specific legislative issue being considered.

Discussion of “An Examination of the U.S. Public Accounting Profession’s Public Interest Discourse and Actions in Federal Policy Making”

The history of the public accounting profession is filled with perceived crises in professionalism. Baudot et al. (An examination of the U.S. public accounting profession’s public interest discourse and actions in federal policy making, 2015) focus on the post Sarbanes–Oxley period, highlighting how the advocacy efforts of the public accounting profession directed toward financial regulation represent the most recent of crises. This study makes an important contribution to the literature because it illustrates the inherent challenges faced by a regulatory structure that requires private interests to act in the public good. The purpose of this commentary is to provide a historical and institutional context for the study’s findings, to assess the current state of research, and to offer suggestions for future research.

KOMPETENSI DAN INDEPENDENSI DALAM KUALITAS AUDIT AUDITOR : SUATU PENDEKATAN TEORITIS

Public accounting profession (auditors) are like sword in both eyes,. Auditors should consider thecredibility and ethics of the profession, on the other hand they also cope pressure from clients in avariety of auditing decision. If the auditors are unable to resist the pressure from customers such aspersonal stress, emotional and financial independence of auditors, it will reduce and may affect thequality of the audit. Accordance with its responsibility to increase the reliability of the financialstatements of an accounting firm, public accounting profession not only need to have the skill orexpertise, but also must be independent. To be able to meet quality audit of the auditor in theapplying of his/her profession, he/she should be guided by the code of ethics for accountants,professional standards and applicable accounting standards in Indonesia. Each audit is to maintainthe integrity and objectivity in the performance of their duties to act honestly, firmly, unpretentious,so that it can act fairly, without being influenced of personal interests. The auditors identify andreport violations of the client's accounting system. Violation of measuring the quality of auditfindings related to the knowledge and expertise of the auditor. While encouraging the offensedepends on the auditor to disclose the violation. The reader will depend on the auditor'sindependence instead.Keywords: Competence, Independence and Quality Audit

COMMENTARY––A Public Interest View of Auditor Independence: Moving Toward Auditor Reliability When Considering and Promoting Audit Quality

ABSTRACT A longstanding view inside and outside the auditing profession is that the public accounting profession rests on the foundation of independence (Previts and Merino 1998), with regulatory bodies requiring auditors to be independent both in appearance and in fact. For many decades, regulators and stakeholders alike have held the view that auditor independence is the auditor's endgame. We review recent research on the Reliability Framework, which recasts auditor independence with other professional constructs, including integrity, competence, and objectivity, as co-antecedents of auditor reliability and audit quality. On that basis, this commentary advocates that a public interest view of auditor independence must account for the auditor's real reason for existence based on what stakeholders want and need: reliable audit services that facilitate financial reporting quality and protect the public interest. Recent initiatives by the Center for Audit Quality and its member firms, as well as the profession's regulators, reveal movement consistent with this holistic view. These developments indicate that the public interest view of auditor reliability is shifting toward a revised view of independence, along with other professional constructs that co-create audit quality and reliable financial reporting.

SOCIALIZATION OF US NOVICE ACCOUNTING PROFESSIONALS THROUGH ETHICAL DISCOURSE IN 1931

This study applies a qualitative analysis of Fogarty's [1992] application of institutional theory to an individual's socialization in the American public accountancy profession in an historical context. The Ethics of the Profession, a book published by the American Institute of Accountants (AIA) in 1931, is examined to identify the normative, mimetic, and coercive socialization mechanisms embedded within. Both informal and formal code-based ethical discourse is contained in the book. This reflects the AIA's status as one of two competing national professional organizations and the only organization with a promulgated code of conduct. The results indicate use of embedded historical linguistic terms to delineate professional self-image and use of normative and mimetic socialization mechanisms in this effort to instill professional ideals into new entrants to the profession.

A review of financial reporting liability lawsuits in Singapore

Accountants and auditors around the world have been subject to professional liability lawsuits, as a result of corporate collapses in the wake of the global financial crisis. Some of the reasons for these corporate collapses and bankruptcies have been related to breaches of contract, professional negligence, and the contravention of statutory duties by financial advisors and the failure of auditors to give a true and fair view of a company’s financial position. Auditors are subject to numerous rules and regulations in Singapore. The purpose of this paper is to examine the factors that have caused certified practising accountants and independent auditors in Singapore to be sued by their clients and third party users of financial reports. The answer to this question is of obvious interest to members of the public accounting profession in Singapore and around the world. The major purpose of this paper is to make that question more specific and to gather and analyse evidence that might provide answers. This paper has taken into account lawsuits brought against accountants and auditors in Singaporean courts over the past two decades (1990–2010). It focuses on two types of cases. The first type refers to those where the accountants and auditors were directly sued by their clients, and litigated in a court of law. The second type focuses on matters where the accountants and auditors were not directly sued but were summoned as witnesses or third parties in the litigation.

Responsible Accounting for Stakeholders

ABSTRACTThrough a critique of existing financial theory underlying current accounting practices, and reapplication of this theory to a broad group of stakeholders, this paper lays a normative foundation for a revised perspective on the responsibility of the public accounting profession. Specifically, we argue that the profession should embrace the development of standards for reporting information important to a broader group of stakeholders than just investors and creditors. The FASB has recently moved in the opposite direction. Nonetheless, an institution around accounting for stakeholders continues to grow, backed by a groundswell of support from many sources. Based on institutional theory, we predict that this institution and the forces supporting it will cause changes in the public accounting profession, even if through coercion. We also provide examples of stakeholder accounting, building from the premise that a primary responsibility of accounting is to provide information to address the risk management needs of stakeholders.

Data analytics in auditing: Opportunities and challenges

In this article, I provide background regarding a hot topic in the public accounting profession: the rise of big data and the related field of data analytics (DA). The tax and advisory practices of public accounting firms have embraced the use of DA, and firms have made significant investments in growing these practice areas. Although DA holds great promise for the auditing practice as well, the use of widespread DA on audit engagements has lagged behind other practice areas. This is due to the fact that auditing presents unique challenges in the adoption of DA that are not relevant for other practice areas. Despite the impression that DA is not being embraced as readily in auditing, public accounting firms are continuing to make significant investments in developing audit-related DA, and it is only a matter of time before we start to see the transformational impact of these efforts. The purpose of this article is (1) to explain how DA applies to financial statement audits and why it could represent a game changer in how audits are conducted, and (2) to provide a context for researchers in terms of problems to be addressed related to DA.

The Joint Effect of Unfavorable Supervisory Feedback Environments and External Mentoring on Job Attitudes and Job Outcomes in the Public Accounting Profession

ABSTRACTUnfavorable supervisory feedback environments (SFEs) occur when supervisors provide unhelpful, inconsistent, and inconsiderate feedback. This study investigates whether external mentoring (i.e., mentoring support that is provided by a superior who is external to the supervisor-subordinate relationship) can moderate (i.e., attenuate) the adverse effects of unfavorable SFEs that occur in the accounting profession. Based on a survey of 421 public accounting professionals, the results indicate that unfavorable SFEs are associated with lower job satisfaction and role clarity, which, in turn, lead to lower organizational commitment and higher turnover intentions. More importantly, the results also show that external mentoring moderates (i.e., attenuates) the negative effects of unfavorable SFEs on both role clarity and job satisfaction. Implications for research and practice are discussed.

COMMENTARY––A Call to Action: The Securities and Exchange Commission and the Auditing Profession's Public Interest Responsibilities

As President Franklin Roosevelt recognized more than 70 years ago, the public accounting profession plays an integral role in protecting investors. The SEC was created during FDR’s presidency and, as defined by one of its early chairmen, William O. Douglas, has historically been viewed as the sole government agency that serves as ‘‘the investor’s advocate’’ (Hohenstein 2005). As an individual who has observed virtually every important auditing-related policy debate over the past dozen years from a quasi-inside perspective, but unrestrained by the strictures of a government appointment so, therefore, able to speak freely, I believe that the SEC can do more to empower the PCAOB to advance policy-related initiatives that will serve the auditing profession’s public interest responsibilities. In this commentary, I discuss three auditing policy-related initiatives where I believe that the SEC can provide more support to the PCAOB, and one initiative that the SEC can pursue on its own. Each of these initiatives should lead to better auditing and/or to better communication between the auditor and financial statement users. These initiatives involve: (1) the standard audit report; (2)

An examination of the ethical discourse of the US public accounting profession from a Foucaultian perspective

Purpose – The purpose of this paper is to examine the evolution of the ethical discourse of the US public accounting profession over the last century in relation to Foucault's concept of “codified discourse”. The ethical discourse of the US public accounting profession has evolved from its first code of ethics promulgated in 1917, which focused primarily on protecting the economic interests of the profession, to a position in the most recent promulgation of the code of professional conduct, which contains aspirational elements regarding ethical behavior, but which incorporates few enforceable provisions. It is therefore necessary to look elsewhere for the ethical discourse of the profession, which appears to be located more in the behaviors of accountants practicing in large international public accounting firms, in which the professional accountant becomes molded into an “ethical being” in the Foucaultian sense, as one who is self-regulated and self-formed into an ideal member of the profession. Design/m...

Called to account: financial frauds that shaped the accounting profession

Called to Account traces evolution of global public accounting profession through a series of scandals leading to voluntary or mandated reforms. Ever entertaining and educational, book describes 16 of most audacious accounting frauds of last 80 years, and identifies accounting standards and legislation adopted as a direct consequence of each scandal. This third edition offers expanded coverage of Global Financial Crisis and international auditing. While retaining favorite chapters exposing schemes of Crazy Eddie Antar, Chainsaw Al Dunlap, and Barry the Boy Wonder Minkow, new chapters describe accounting problems at Lehman Brothers, Colonial Bank, and Olympus. Students will learn that financial fraud is a global problem, and that accounting reform is heavily influenced by politics. With discussion questions and a chart mapping each chapter to topics covered in popular auditing textbooks, Called to Account is ideal companion for classes in auditing, fraud examination, advanced accounting, or professional responsibilities.

Elements of theory on state control applied to accounting: the French case

It took 100 years for the French State to control the accounting structures, turning year after year some awkward government into powerful governance. The first factor of control was the generalisation of the income tax by the companies and the citizens. For that, it was necessary to take some settlements about a public accountant profession which existed already but which did not have a specialised diploma. During the Second World War, the Government founded the Institute of Public Accountants, a new diploma for the accounting profession and the first French standard setting body. This system was not really called into question for the release. Then the State used every advisability to reinforce its power. The blind government, brutal and relatively ineffective of the 19th century, succeeded a bit in more realistic and more effective governance.

PENGARUH PERSEPSI TERHADAP MINAT MENJADI SEORANG AKUNTAN PUBLIK: STUDI KASUS DI UNIVERSITAS SURABAYA

This study examines the effect of students' perceptions in public accounting profession on the interest to be a public accountant. Perception variables are measured in three components: the degree of completion of work structure, the level of precision of an accountant, and the level of solitary in completing works. OLS multiple regression and ANOVA test were used as techniques of analysis. The results showed that both the degree of completion of work structure and the solitar y in completing works have negative significant effects on the interest to be a public accountant. In contrast, the level of precision in completing works has a positive but not significant effect on the interests of undergraduate accounting students to be a public accountant.

Organizational Leadership And Subordinate Effect In Utahs Certified Public Accounting Profession

Using the Multifactor Leadership Questionnaire (Bass and Avolio 2004), we test the correlation of transformational, transactional, and passive-avoidant leadership styles to subordinate perceptions of workplace efficiency, effectiveness, and satisfaction. Results, from a convenience sample of 103 accounting professionals in 11 CPA firms in Utah, show that transformational leadership has the largest positive correlation. Transactional leadership is less positively correlated. The passive-avoidant style is negatively correlated. Recommendations for implementing transformational leadership are provided.