Determinants of the severity of legal and employment consequences for CPAs named in SEC accounting and auditing enforcement releases

Juric, Daniella, O'Connell, Brendan, Rankin, Michaela and Birt, Jacqueline (2015) Determinants of the severity of legal and employment consequences for CPAs named in SEC accounting and auditing enforcement releases. Journal of Business Ethics, 1-19. doi:10.1007/s10551-015-2956-y

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Author Juric, Daniella
O'Connell, Brendan
Rankin, Michaela
Birt, Jacqueline
Title Determinants of the severity of legal and employment consequences for CPAs named in SEC accounting and auditing enforcement releases
Journal name Journal of Business Ethics   Check publisher's open access policy
ISSN 0167-4544
1573-0697
Publication date 2015-11-25
Sub-type Article (original research)
DOI 10.1007/s10551-015-2956-y
Open Access Status Not Open Access
Start page 1
End page 19
Total pages 19
Place of publication Dordrecht, Netherlands
Publisher Springer
Collection year 2016
Language eng
Formatted abstract
This study investigates the impact of Securities and Exchange Commission (SEC) enforcement actions on individuals holding Certified Public Accountant (CPA) accreditation. While prior research has investigated both the characteristics of companies that have been investigated by the SEC and litigation against audit firms, it has not addressed the ways in which SEC investigations impact CPAs. Using a sample of 262 CPAs, we find that the most common CPA breach was associated with overstating revenues/income or earnings. The study finds serious consequences for CPAs in terms of employment restrictions and SEC actions, incorporating suspension, which is often permanent. We find that the primary factors relating to the severity of actions by the SEC is whether the CPA intentionally breached the professional code of conduct, the age of the CPA, whether the CPA is still a member of the AICPA with CPA status and whether the CPA was operating as an external auditor or in a corporate accounting role. Our findings have implications for accounting practitioners, the AICPA and boards of directors.
Keyword Accounting and auditing enforcement releases (AAERs)
CPAs
Institutional theory
SEC litigation
Corporate fraud
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ
Additional Notes First online: 25 November 2015

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2016 Collection
UQ Business School Publications
 
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Created: Mon, 30 Nov 2015, 14:44:33 EST by Karen Morgan on behalf of UQ Business School