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2017C02 - The (future) auditing (partner) business model


Research synthesis, within six months


The first JWG Research Summit (4 October 2017) resulted in the following research agenda:

2017C02-1: Research synthesis
What do we already know from research about the impact of a combination of audit and non-audit services (1) within one firm and (2) for one client on audit quality in general and on the specific audit engagement? Additional focal points are knowledge spillovers, audit firm quality culture and multidisciplinary talent pool (e.g., attracting within firm expertise for audit purposes), the trade-off between independence and the auditor’s knowledge base, and different auditee market segments (e.g., public interest entities versus owner-managed-businesses).

2017C02-2: An archival study with the nine FAR affiliated audit firms
How have the Dutch audit firms’ partner profit sharing, compensation, and performance incentives systems developed over the past 10 years in relation to audit quality incentives? Additional focal points are (equal) firm based profit sharing versus partner performance systems, profit sharing systems across service lines, audit firm sustainability over the economic cycles of each of the service lines – and how these incentive systems relate to the firms’ overall audit quality assurance systems.

2017C02-3: An archival study with the nine FAR affiliated audit firms via a call for projects
How have the Dutch audit firms’ organizational structures and corporate governance systems developed over the past 10 years as part of the firms’ audit quality assurance systems? Focal points include the profession’s (historical) establishment, the development from partnerships to corporate models, and the role of the international firm networks in the quality assurance systems of the Dutch audit firms and audit quality for multinational group audits.

2017C02-4: Empirical research project
How do audited companies (and their supervisory boards / audit committees / shareholders) select and appoint their auditors? What are primary selection criteria in design and practice (i.e., what are actual selection and appointment decisions made)? How are the (total) costs of auditing (thus including potential switching costs) considered in selection and appointment? FAR will need to get access to audited companies’ selection process, potentially in cooperation with VEUO (the representative organization of listed companies at Euronext Amsterdam).

2017C02-5: Empirical research project
What is the impact of (increased) audit committee involvement with the audit on audit quality? Additional focal points are a (post-implementation) comparison of AC involvement and audit quality and AC involvement in key audit matter reporting and issue-clearance (including related fee-issues).

2017C02-6: A field experiment, for example within the municipalities’ market segment
What is the effect on audit quality and auditor independence of auditor selection and appointment through a government organized agency (“government organized auditing”) compared to the current appointment system in the Netherlands? Additional focal point may be the statutory required audit versus voluntary auditing.

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  • Project Number
  • Timeline
    01/2017 - 06/2019