DISCUSSION THREAD ASSIGNMENT ACCOUNTING 2
The economics of auditing, enforcement, and audit oversight
The history of Accounting can be traced back to Abacus when the hand-held
mathematical instrument was used to calculate financial reports without any disclosure.
However, the Bible clearly defines auditing in 2 King 12:16 which talks about the lack of
honesty and integrity among managers who collected money for various projects and used the
money for their personal gain. The inappropriate financial behaviors continued throughout the
first part of the 21st centuries, when several Wall Street big corporation giants were found
negligence of misappropriation of funds. These fraudulent activities of money laundering and
inaccurate accounting statements got the attention of the Security Exchange Commission (SEC)
to investigate the complex system of Accounting. Conversely, the old traditional methodology
of financial reports was overhauled with a new set of policies and procedures created where all
publicly held, entities are mandated to practice.
In the standards of Sarbanes-Oxley Act of 2002, these are the laws that make up
conducting a financial examination by enforcing professional standards and other related laws to
prevent oversight based on future forecasts. However, due to complicated accounting systems,
there is a spite in the number of audits with deficiencies that can be controlled with the right
Enterprise Resource Planning (ERP)
There are stipulations, according to (Jia et al., 2023), in comparison with machine
intelligence that affects why these tools are better at specific task functions than human-being
participation. For one, humans’ cognitive behavior may cause a break down in their ability to
learn and missing representation of information presented.
To render the discrepancy, the five articles concluded by analyzing how audit compliance
affects financial reporting, investor trust, and market effectiveness? Based on new regulatory, the
DISCUSSION THREAD ASSIGNMENT ACCOUNTING 3
impact of audit oversight brings a continued investigation about the various legislation changes
and the role of SEC in improving the system effectiveness. In terms of direct influence over, the
authors analyzed the relationship between audit quality and its financial consequences. To
paraphrase Arianpoor et al.2023 theory, corporations are still trying to analyze the falsification of
financial statements, investor trust, and internal control to minimize risk aversion. From the
authors view point the factors that influence auditors’ such as non-audit services, audit firm
rotation, and other auditor independence need to be heavily implemented in PCAOB ongoing
policy changes. On another model, enforcement and litigation play a risk in shaping auditor
behavior and audit quality. Authors are more likely interested in how the threat of legal liability
and regulatory sanctions affect the auditors’ decisions and actions. Many other factors should be
interpreted; however, the federal bodies are using current trend and further research to address
the efficiency of audit firm stability competition, and decisions on audit outcomes. They are
more concentrated on how the threat of legal liability and regulatory sanction shape auditors’
behavior and audit quality.
For further research and findings, the five authors agreed that efficiency play a significant
role in determining the behavior of auditors as well as the internal control of the audit. Two
legislation issues according to Ginanarajah & Shorter (2020 p.2), is the limited ability to inspect
the work of foreign accounting by PCAOB firms that audit the foreign exchange listed NASAQ
exchange. The second is the newly emerging sustainability accounting standards for businesses,
which encompass environmental, social, and government (ESG)issue. Ginanarajah & Shorter
(2020 p.2), extended further observation that China was sighted with appropriately 200 issuers in
combination with market capitalization whose jurisdiction where it faces obstacles. By
restriction, China has the protection of national security to limit foreign access to their business
DISCUSSION THREAD ASSIGNMENT ACCOUNTING 4
books, records, and audit work papers. According to regulation of the PCAOB, the failure to
comply with audit standards and guidelines, when conducting an audit, will lead to disciplinary
actions by the professional bodies, loss of investors; legal lawsuit, and loss the market shares.
In Larmande & Lesage findings (2023), compared legal liability is an enforcement that is
contingent on client’s accounting failure whereas regulatory is not. A continuum in Artificial
intelligence will help both private and public businesses resolve many of the misstatements of
human thinking so it can act as collaborative synergy between them.
Based on the review of the literature, the authors agreed with the right digitalization of
accounting process and human being sincere focus, future forecasts of auditing will positively
point to the effectiveness in regulating both corporations and nonprofits entities auditing
standards and accounting practices.
DISCUSSION THREAD ASSIGNMENT ACCOUNTING 5
Reference
Arianpoor, A., Lamloom, T.I., Khayoon, M.H., & Zaldan, A.S. (2023) The impact of material
control, institutional ownership and managerial ownership on future-oriented disclosure evidence
from Islamic economy: Journal of Islamic Accounting and Business Research.
https://doi.org/10.1108/JIABR-02-2023-0052
Ginanarajah, R. & Shorter, G., (2020). Introduction to Financial Services: Accounting and
Auditing Regulatory Structure, U.S. and International. IN Focus. https://crsreport.gov
Jiar, N., Luo, X., Fang, Z., & Liao, C. (2023) When and how artificial intelligence augments
employee creativity. Academy of Management Journal:
https://doi.org/10.5464/amj.2022.0426
Larmande, F., & Lesage, C. (2023). Auditor’s professional judgement audit efficiency and
interplay between legal liability and regulatory oversight. (2023). Journal of Accounting
and Public Policy 45(6) https://doi.org/10.10161/j.jaccpub.pol
Munter, P., Sarbanes-Oxley Act of 2002 (2022). 15.U.S.C. 7211, Pub L. 107-204. 750 stat
116.2022. https://www.congress.gov/bill
