Small, Association-Connected Firms Conduct Higher-Quality Audits

Small audit firms with membership in an accounting association or network perform higher-quality audits than small firms that do not belong to such organizations, according to a new study by accounting researchers at Walton College.

The study also revealed that the quality of audits by small firms participating in an association or network was comparable to the quality of audits done by the largest public accounting firms, the so-called “Big 4.”

“Our findings should be of particular interest to audit committees tasked with auditor selection, because they suggest that, on average, membership in an accounting association, network or alliance provides small audit firms with additional resources that enable them to overcome barriers to performing high-quality, public company audits,” said Kenneth Bills, coauthor of the study and assistant professor of accounting.

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