Auditor Displacement Does the Division for CPA Firms Make a Difference?

The peer review program of the AICPA's division for certified public accountant (CPA) firms has improved audit quality, reduced liability exposure from audit failures, and improved employee recruitment opportunities. Membership in the division's Securities & Exchange Commission practice section has...

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Journal Title: Journal of Accountancy Vol. 162; no. 1
Author: Wayne Bremser
Format: Article
Language: English
Published: July 1986
Subjects:
Summary: The peer review program of the AICPA's division for certified public accountant (CPA) firms has improved audit quality, reduced liability exposure from audit failures, and improved employee recruitment opportunities. Membership in the division's Securities & Exchange Commission practice section has been stable, while membership in the division's private companies practice section has increased in recent months. To determine whether peer reviews reduce the risk of smaller CPA firms being displaced by national firms, a study was conducted that analyzed auditor changes by public companies listed in Who Audits America. The results indicated that division member firms had a net loss of 47 clients to national firms, and nonmember firms had a net loss of 105 clients. This implies that being a division member reduces the risk of displacement. Moreover, division members should use their membership to boost credibility by explaining its significance to their clients.
ISSN: 0021-8448