Dr. Jeroen van Raak

Assistant Professor

Jeroen van Raak is an Assistant Professor of Accounting at the Amsterdam Business School, University of Amsterdam, where he also serves as Programme Director of the Post-Master Accountancy program. He earned his MSc in Business Economics (cum laude) from Tilburg University and his PhD in Auditing from Maastricht University. Jeroen has previously held academic positions at Utrecht University and Kozminski University in Warsaw.His research focuses on audit quality, auditor independence, fraud, ESG reporting, internal controls, and the market for audit services. He has published in journals such as the Journal of Business Finance & Accounting and Maandblad voor Accountancy en Bedrijfseconomie. Recent work includes studies on audit market structure, internal control deficiencies, and performance measurement in impact investing.Jeroen teaches courses on auditing and data analytics (including Python) and actively collaborates with the Foundation for Auditing Research on projects related to audit quality and risk management.

Internal Control Quality and Audit Quality
This literature review highlights the role of internal controls in the audit process. We find that internal controls are of high economic importance for both the auditor and the client firm, as audit failure has severe consequences on both sides. In general, auditors can reduce the negative effects of weak internal controls on corporate financial reporting quality through increasing audit effort, which is associated with an increase in audit fees. However, increased effort does not fully preclude financial misstatements, i.e., a substantial risk of financial misstatement remains. While the reasons for this are not fully clear, the audit of internal controls is an extremely complex matter. In addition, auditors are subject to significant time and personnel constraints during the audit. This leads us to believe that the use of additional sources of private information on internal control quality could have strong positive consequences for both the auditor and, subsequently, the client firm. We suggest that financial analysts, their discussions during earnings conference calls and the information provided in their reports may be a valuable source of information for auditors. In particular, financial analysts’ assessment of fraud risk may help auditors to more efficiently and accurately assess internal control quality.  
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Internal control quality and audit quality: the role of financial analysts
This project studies the role of internal control quality during the audit process and proposes a new source which auditors can use to gain information on control risk. The study aims at understanding the relevance of internal control quality for audit quality and identifying an information channel which may help auditors to assess internal control quality more accurately and efficiently. Since financial analysts are typically macroeconomic experts and have profound industry knowledge, they are arguably able to form a relatively precise assessment of fraud risk. In this context, the team views fraud risk and internal control quality as two sides of the same coin. Financial analysts have an incentive to acquire information on fraud risk (including governance and controls) as undetected fraud negatively affects the quality of financial statements, which are an essential information source of financial analysts’ earnings forecasts. Moreover, analysts explicitly and implicitly include their assessment of fraud risk during earnings conference calls as well as in their analyst reports, which provide an overview of the information that analysts collected of their covered firms and include buy or sell recommendations. Consequently, they argue that the information provided by financial analysts may be a valuable information source for auditors to more accurately and efficiently assess inherent and control risk.  
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Internal Control Deficiencies and Audit Staffing
KEY TAKE-AWAYS We analyze how engagement lead partners staff audits with types of internal control deficiencies (ICD). Previous literature suggests that audit teams react to the discovery of ICDs by increasing effort in order to keep audit quality constant. However, audit effort is a multifaceted construct due to the heterogeneity of auditor characteristics within an audit team. We argue that the hours worked by expert personnel, such as high-ranking auditors and specialists, represent a scarce resource for the audit firm. In the internal control setting, engagement lead partners are likely to use this resource when audit teams encounter wide-scope ICDs, such as entity wide and ITrelated ICDs. Using proprietary data on the audit processes of Big 4 audit firms in the Netherlands, we find evidence in line with this argument. When wide-scope ICDs are encountered during the audit, more audit hours are worked by expert auditors. In contrast, only non-expert auditors work more audit hours in engagements with narrow-scope ICDs, such as account level ICDs. In additional analyses, we find that the combination of expert audit effort and ICD scope is associated with audit outcomes and audit quality. Overall, we provide novel evidence on audit staffing in the presence of internal control deficiencies.  
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What do we know about audit quality?
This special issue of MAB has been developed in collaboration with the Foundation for Auditing Research and is based on papers and discussions at the FAR conference at Nyenrode University (May 2016).  
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