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Study asserts companies shop for internal control audit opinions

Tammy Whitehouse | May 4, 2016

Audit opinion shopping -- a not-uncommon practice believed to have been cut down in the post-Sarbanes-Oxley era -- remains alive and well in capital markets, and it’s most pervasive in the presence of competition among auditors. That’s the conclusion of academic research recently published by the American Accounting Association.

Four accounting professors representing universities in Missouri and Texas say they have identified evidence that some companies facing unfavorable findings by auditors regarding internal control over financial reporting have switched auditors to avoid an adverse audit opinion. The study also concludes opinion shopping is more likely, not less, in more competitive audit markets, and that switches associated with...

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