| Summary: | 碩士 === 國立臺灣大學 === 會計學研究所 === 106 === This research examines whether the release of PCAOB inspection part II reports affects auditors’ issuance of going-concern opinions. Prior literature of PCAOB inspection focuses on part I reports. However, the release of part II reports shows significant deficiencies in auditors’ quality control system, which is relevant to the whole audit firm. Accordingly, its impacts on audit firms should be more pervasive and harmful than the release of part I reports. In addition, prior literature finds mixed results on the relationship between part I disclosure and audit quality. Therefore, the sample in this study includes the audit firms with publicly released part II of PCAOB inspection reports. Because auditors’ behavior has the fundamental effect on audit quality, this study uses auditors’ issuance of going-concern opinions as a more direct measure of audit quality.
We find that audit firms with publicly released PCAOB part II reports are less likely to issue going-concern opinions relative to audit firms without PCAOB part II reports. This study also examines the relation between audit firms with part II reports and their clients’ bankruptcy or liquidation filings. The results show that going-concern opinions issued by audit firms with publicly released part II reports have lower predictive ability of clients’ bankruptcy or liquidation.
This study extends prior research on PCAOB inspection reports by focusing on the effect of part II reports. The results suggest that financial statements users should pay more attention to audit firms whose part II reports have been released. The findings in this study also provide policy implications for the PCAOB to re-examine its inspection process so that the release of inspection reports would not adversely affect audit quality.
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