The Effect of Form AP on Auditor Liability when Engagement Partner Disclosure Shows a History of Restatements
研究了表格AP披露审计合伙人与重述的关联后，事务所为恢复审计质量采取的干预措施反而增加了其在诉讼中的法律责任，对审计实务和监管有启示。
SYNOPSIS Engagement partner disclosures required by Form AP allow litigants to associate audit partners with both current and past restatements. We investigate how this information and audit firm interventions to restore audit quality impact audit firm liability in litigation stemming from a partner's second client restatement. Interestingly, we do not find that a partner's association with a current and past restatement alone increases audit firm liability. However, we do find that jurors interpret firm interventions to restore audit quality as indicators that the partner contributed to the second audit failure and that firm oversight was inadequate. Specifically, we find that both requiring a probationary engagement co-partner after an initial restatement and partner dismissal after a second restatement increase juror assessments of firm liability. Collectively, our findings suggest Form AP presents a catch-22, whereby firm interventions to restore audit quality are expected by regulators but increase liability in subsequent litigation settings. Data Availability: Available upon request from the authors.