SUMMARY Staff auditors frequently email clients to conduct evidence inquiry. A recent article by Bhattacharjee, Moreno, and Wright (2023) investigates whether two characteristics of email communication, client response time and message processing fluency, influence staff auditors’ judgments. The current article summarizes the study for practitioners, which finds that auditor skepticism is reduced when the client provides a more fluent email response compared with a less fluent response in a moderate response time. In addition, results show auditor skepticism is reduced when the client provides a more fluent email response in a moderate response time than an immediate response time. Implications for practice as well as practitioner and audit firm takeaways are discussed. Data Availability: Data are available upon request. JEL Classifications: M42.

SUMMARY Based on a survey of 67 internal audit professionals, we examine the interactions between internal and external auditors and the experience internal auditors have working with external auditors. Specifically, we investigate perceptions of collaboration, interaction, contribution, and confidence with respect to internal-external auditor relationships. In general, we find a positive relationship between internal and external auditors. However, our results suggest that internal auditors see a lot of room for growth in the internal-external audit relationship and are looking for more opportunities to collaborate with external auditors. We discuss implications for both internal and external auditors in practice. JEL Classifications: M42.

SUMMARY The purpose of this paper is to convey the authors’ perspective regarding the overall use of ChatGPT, a generative artificial intelligence tool, in financial audits. ChatGPT can provide audit efficiencies in data processing, continuous learning, predictive analytics, and cost-effectiveness. However, concerns arise when incorporating ChatGPT in these audits regarding data security and privacy, regulatory compliance, response reliability, industry-specific knowledge, and source data verification. This paper explores the literature and discusses benefits and drawbacks of incorporating ChatGPT in both external and internal financial audits. The paper also presents actionable takeaways for financial auditors to consider and/or implement in their respective audits. Despite the drawbacks highlighted in this paper, the efficiency gains from using ChatGPT in financial audits may outweigh the challenges, ultimately compelling auditors to increasingly rely on this technology in the completion of their financial audits. JEL Classifications: M42; M150.

SUMMARY KPMG issued its audit report for the parent company of Silicon Valley Bank (SVB), SVB Financial Group, on February 24, 2023, and the bank’s assets were taken over by Federal Deposit Insurance Corporation regulators on March 10. Although depositors began fleeing SVB in February, deposits declined by 13 percent during the preceding fiscal year. SVB invested substantially in long-term government bonds, whose value plummeted due to significant Federal Reserve interest rate increases, and the classification of the securities prevented their conversion to cash to meet depositor demands. Alongside explaining management and regulatory failings that led to SVB’s collapse, this paper formulates an argument of possible alternative actions the auditor could have pursued during the audit or upon release of its audit report. Due to inaction, KPMG may hinder its ability to defend against current litigation.

SUMMARY In the aftermath of the COVID-19 pandemic, remote and hybrid audits have become institutionalized in the external audit profession. However, the impact of remote/hybrid audits on audit success (i.e., audit quality, audit efficiency, and auditor job satisfaction) is not clearly understood. Recruiting external auditors (including audit associates, audit seniors, audit managers, and audit partners) with an average of three to five years of auditing experience, Li, Goel, and Williams (2023) found that working remotely is associated with high audit efficiency. They also found that in comparison to on-site audits, remote audits show increases in technology reliance, professional skepticism, workload, fatigue and frustration, risk-seeking attitudes, and team monitoring rigidity and decreases in auditor–client communication and cooperation efficiency. Furthermore, Li et al. (2023) identified situational and dispositional factors that become critical in remote/hybrid audits. We summarize the key findings of their paper and provide actionable suggestions for audit practitioners. Data Availability: Data are available upon request. JEL Classifications: M42.

SUMMARY Research suggests that the amount of inherent uncertainty in contemporary accounting estimates has increased in recent years, potentially increasing audit litigation risk. We review a recent study that finds that high estimate uncertainty impacts auditor litigation risk in opposite directions, depending on whether the litigation is decided in a jury trial or settled by attorneys out of court. Mock jurors and attorneys specialized in corporate and securities law read the same case about an alleged undetected material misstatement, with jurors judging auditor negligence and attorneys planning proposed out-of-court settlement negotiations on behalf of auditors. Results show that, under common conditions, mock jurors found auditors less negligent when estimate uncertainty was high. However, attorneys predicted the mock jurors to find auditors more negligent when estimate uncertainty was high, leading them to concede more on behalf of auditors in their proposed settlements.

SUMMARY This article summarizes the study of Rozario, Vasarhelyi, and Wang (2022), which examines the use of consumer tweets in improving the prediction and error detection performance of preliminary analytical procedures for the revenue account for firms that belong to consumer-oriented industries. They find that consumer tweets about product or brand interest increase the prediction and error detection ability of analytical procedures compared to analytical procedures that do not include it. These results suggest that this new source of external nonfinancial information is incrementally informative to auditors in developing assessments for the risk of misstated revenue in the planning stage of the audit. The findings of this study have important implications that may be relevant to the audits of other financial statement accounts.

Auditing is published by the Auditing Section of the American Accounting Association. To promote timely, widespread dissemination of ideas to the academic and practice communities, the journal is published online and is free to all interested parties. Current Issues in Auditing is devoted to advancing the dialogue between academics and practitioners on current issues facing the auditing practice community (e.g., new opportunities and challenges, emerging areas, global developments, effects of new regulations or pronouncements, and effects of technological or market developments on audit processes). We define ''auditing practice'' broadly to include practice-related issues in external auditing, internal auditing, government auditing, IT auditing, assurance services, and related fields. The journal seeks short, well-written papers from academics, practitioners, and regulators addressing timely issues facing the auditing practice community. Papers should be a maximum of 2,500 words of text and should not include complex statistics or models. Authors should strive to produce papers that are broadly understandable by the practice community and contain a substantive, relevant message for those interested in auditing practice. Submissions may include short, practice-oriented cases for classroom use. Practitioners are strongly encouraged to submit papers, as are author teams that include both academics and practitioners. Submitted papers will be double-blind reviewed by two qualified reviewers under the direction of a co-editor. The journal's editorial board includes members from the academic, practice, and regulatory communities. The primary criteria for acceptance of a submitted paper by Current Issues in Auditing are (1) addressing an auditing practice issue that would be of interest to practitioners and academics, (2) a new and substantive message, and (3) effective, concise writing. In addition to unsolicited papers that will be double-blind reviewed, the co-editors also may invite commissioned papers from thought leaders in the academic, practice, and regulatory communities. The coeditors or editorial board members will editorially review commissioned papers.

SUMMARY The Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) have justified audit-related disclosure rules by asserting that such information would be relevant for shareholders in auditor ratification voting decisions. The underlying assumption, stated more explicitly by activists and others, is that such voting can influence auditors’ subsequent actions. A recent study by Tanyi, Rama, Raghunandan, and Martin (2020) tests this assumption. Using data from 10,326 auditor ratification votes, Tanyi et al. (2020) find that higher than expected shareholder dissatisfaction of their external auditors is associated with higher audit quality and higher audit fees in the subsequent period. The results suggest that auditors should pro actively engage with audit committees if there is higher than expected shareholder dissatisfaction. Auditors can also expect regulators to use such evidence in future rule proposals by the SEC and PCAOB, given past actions by regulators.

SUMMARY Accountants potentially have a major role to play as the field of sustainability reporting grows. Surveying 173 accountants, we find that the majority are unfamiliar with many of the existing sustainability frameworks and that 31 percent have current experience working in sustainability reporting. Comments from respondents also indicate that there is some hesitation by older generations as to whether sustainability falls within accountants’ roles and responsibilities, whereas respondents under 30 indicated greater enthusiasm for the future of sustainability reporting. With the prospect of mandatory Securities and Exchange Commission (SEC) sustainability reporting and assurance looming, these results are critical as firms and professionals prepare for these potential changes. Shifting market demands and new generations entering the workforce may impact the professional accounting landscape as companies seek to recruit and retain top talent who are excited about the prospects of working with sustainability information.