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Do partners suffer bad inspection results? Not really, study says

Tammy Whitehouse | July 18, 2017

Emerging academic research suggests audit firms may be shielding low-performing partners from client scrutiny by remaining coy about regulatory inspection results.

Using information provided by audit regulators that’s not available to the general public, the new research out of Northwestern and Georgetown universities makes a case for identifying companies and engagement partners in audit firm inspection reports as a way to hold partners more accountable for their work. The study says the visibility of audit incidents is a critical factor in whether audit clients demand new leadership on their engagements.

The study is focused on determining what consequences engagement partners suffer when a particular audit engagement is determined to be faulty, including whether engagement partners “bear direct costs” resulting from audit incidents. Highly visible incidents of defective audit work are easy to...

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