Date: Sep 28, 2015

Time: 15:30pm-17:00pm

Venue: Room 702, Administration Building, Zijingang Campus

Speaker: Prof. Hong Xie, University of Kentucky 

Topic: Do Auditors Perceive Non-articulation between Financial Statements as a Source of Audit Risk?

Host: Dr. Dong Wang

About the Speaker:

Doctor Hong Xie is an associate professor of Von Allmen School of Accountancy at University of Kentucky. He won his doctor degree from University of Iowa in 1998.

He has been conducting research in Accounting for a long time. His work has been publicized on many top-level magazines such as: The Accounting Review、Contemporary Accounting Research、Review of Accounting Studies.

Abstract:

Prior studies find that changes in noncash current assets and in current liabilities from comparative balance sheets often do not articulate with (i.e., are not equal to) their corresponding changes on the statement of cash flows. Labeling the difference between these two changes asnon-articulation amounts, we examine the association of absolute non-articulation amounts with misreporting, accruals quality, audit fees, and auditor opinions, respectively. We find that absolute non-articulation amounts are positively associated with misreporting and negatively associated with accruals quality. In addition, auditors are more likely to charge higher audit fees and to issue a modified or going-concern audit opinion to firms with larger absolute nonarticulation amounts. Our findings are consistent with the view that larger absolute nonarticulation amounts indicate lower financial reporting quality and that auditors charge higher audit fees and/or issue modified audit opinions to compensate for higher audit risk associated with larger absolute non-articulation amounts.