Audit Committee
Accounting Horizons Vol. 21, No. 2 June 2007 pp. 165–187
Auditor Communications with the Audit Committee and the Board of Directors: Policy Recommendations and Opportunities for Future Research
Jeffrey Cohen, Lisa Milici Gaynor, Ganesh Krishnamoorthy, and Arnold M. Wright
SYNOPSIS: To contribute to the Public Company Accounting Oversight Board (PCAOB) project on auditor communications with audit committees and boards of directors, we present in this paper a review of relevant academic literature. We also identify promising future research opportunities for the academic community. We specifically focus on how the communication process may affect overall financial reporting quality, internal controls, control environments, and external auditors’ performance, as well as matters that potentially impact financial reporting and should interest the PCAOB (e.g., in the area of management discussion and analysis). We specifically link the findings from academic research to the discussion questions posed by the PCAOB in its 2004 briefing paper. Several potential implications of the findings should also interest standard-setters and regulators addressing issues related to corporate governance and financial reporting quality. Keywords: communication between audit committees and external auditors; financial reporting quality; corporate governance; board of directors; internal control reports.
Jeffrey Cohen is an Associate Professor at Boston College, Lisa Milici Gaynor is an Assistant Professor at the University of South Florida, and Ganesh Krishnamoorthy is an Associate Professor and Arnold M. Wright is a Professor, both at Northeastern University.
We acknowledge the research assistance of Emily Cunningham, Chris Jones, and Elizabeth Parsons, and the helpful comments received from Jean Bedard, Joe Carcello, Dana Hermanson, Lori Holder-Webb, Gary Holstrum, Linda McDaniel, and Greg Scates. Professor Gaynor also thanks the McDonough School of Business, Georgetown University for
Auditor Communications with the Audit Committee and the Board of Directors: Policy Recommendations and Opportunities for Future Research
Jeffrey Cohen, Lisa Milici Gaynor, Ganesh Krishnamoorthy, and Arnold M. Wright
SYNOPSIS: To contribute to the Public Company Accounting Oversight Board (PCAOB) project on auditor communications with audit committees and boards of directors, we present in this paper a review of relevant academic literature. We also identify promising future research opportunities for the academic community. We specifically focus on how the communication process may affect overall financial reporting quality, internal controls, control environments, and external auditors’ performance, as well as matters that potentially impact financial reporting and should interest the PCAOB (e.g., in the area of management discussion and analysis). We specifically link the findings from academic research to the discussion questions posed by the PCAOB in its 2004 briefing paper. Several potential implications of the findings should also interest standard-setters and regulators addressing issues related to corporate governance and financial reporting quality. Keywords: communication between audit committees and external auditors; financial reporting quality; corporate governance; board of directors; internal control reports.
Jeffrey Cohen is an Associate Professor at Boston College, Lisa Milici Gaynor is an Assistant Professor at the University of South Florida, and Ganesh Krishnamoorthy is an Associate Professor and Arnold M. Wright is a Professor, both at Northeastern University.
We acknowledge the research assistance of Emily Cunningham, Chris Jones, and Elizabeth Parsons, and the helpful comments received from Jean Bedard, Joe Carcello, Dana Hermanson, Lori Holder-Webb, Gary Holstrum, Linda McDaniel, and Greg Scates. Professor Gaynor also thanks the McDonough School of Business, Georgetown University for