Brian Daugherty, Carol Callaway Dee, Denise Dickins, Julia Higgs
The CPA Journal,Vol. 86, Issue 1, Pages: 34.

Applicable to auditors as well, it proscribes,” The auditor has a responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time, not to exceed one year beyond he date of the financial statements being audited [hereinafter referred to as,? a reasonable period of time'”[emphasis added].[…] the going concern criteria in ASU 2014-15 are less aligned with IAS 1 than when first proposed.
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Zabihollah Rezaee, John Abernathy, Monika Causholli, Paul N Michas, Pamela B Roush, Stephen Rowe, Uma K Velury
Current Issues in Auditing,Vol. 10, Issue 1, Pages: C11-C27.

On July 1, 2015, the Public Accounting Oversight Board (PCAOB) issued its Concept Release seeking comments by September 29, 2015 on a portfolio of 28 potential Audit Quality Indicators (AQIs). The Auditing Standards Committee of the Auditing Section of the American Accounting Association is pleased to provide comments on the PCAOB Rulemaking Docket Matter No. 041. The committee wholeheartedly supports the development, implementation, and disclosure of AQIs, and commends the PCAOB for its …
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Carol Callaway Dee, Ayalew Lulseged, Tianming Zhang
The Accounting Review,Vol. 90, Issue 5, Pages: 1939-1967.

We empirically test whether audit quality is affected when part of an SEC issuer’s audit is outsourced to auditors other than the principal auditor (“participating auditors”). We find a significantly negative market reaction and a significant decline in earnings response coefficients (ERCs) for experimental issuers disclosed for the first time as having participating auditors involved in their audits. However, we find no market reaction and no decline in ERCs for a matching sample of issuers that are not disclosed as using …
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Carol Callaway Dee, Cindy Durtschi, and Mary P. Mindak
Issues in Accounting Education, Volume 29, Issue 3, pp. 443-458.

Grand Teton Candy Company (GTCC) is considering an initial public offering (IPO). To go public, GTCC will need an audit by a large accounting firm with a solid reputation and experience in audits of IPOs. As a precursor to the formal audit, Elsie Driggs, one of the owners of GTCC, has hired her brother’s CPA firm to ensure the books are in order. Her brother notices some red flags of fraud, so he forms a team of young accountants from his firm to carefully comb through his sister’s records to ensure she does not have problems when the formal audit takes place. You have been placed on the team and your task is to investigate your boss’ suspicions that there is fraud at Grand Teton Candy Company. You are to prepare a written report for your boss that includes the name of the fraudster(s), what he or she did, and how the perpetrator(s) benefited from the crime.

Carol Callaway Dee,Ayalew Lulseged,and Tianming Zhang
Current Issues in Auditing, Volume 6, Issue 2, pp. 18-24

In our paper “Client Stock Market Reaction to PCAOB Sanctions against a Big 4 Auditor” (Dee et al. 2011), we examine stock price effects for clients of a Big 4 audit firm when news of sanctions imposed by the PCAOB against the audit firm was made public. These PCAOB penalties were the first against a Big 4 auditor, and they revealed information about quality-control problems at the audit firm that were not publicly known until the sanctions were announced. Our analysis of stock prices suggests that investors in clients of the penalized Big 4 firm reevaluated their perceptions of the quality of the firm’s audit work after learning of the sanctions. The negative stock price effects for the firm’s clients were consistent with investors inferring that the financial statements were of lower quality. In the paper, we conclude that investors find information about PCAOB sanctions against audit firms to be relevant in assessing audit quality and use that information in setting stock prices for audit firms’ clients. This finding has relevance for the debate on the proposed legislation in Congress (H.R. 3503), which would allow the PCAOB to disclose proceedings against auditors before the investigations are concluded. Our results suggest that, although investors may find early disclosure of this information useful, public disclosure of Board disciplinary proceedings before they are completed could unfairly harm an audit firm’s reputation if the firm is ultimately vindicated of wrongdoing.

Carol Callaway Dee, Ayalew Lulseged, Tianming Zhang
Current Issues in Auditing,Vol. 6, Issue 2, Pages: P18-P24.

SUMMARY: In our paper “Client Stock Market Reaction to PCAOB Sanctions against a Big 4 Auditor”(Dee et al. 2011), we examine stock price effects for clients of a Big 4 audit firm when news of sanctions imposed by the PCAOB against the audit firm was made public. These PCAOB penalties were the first against a Big 4 auditor, and they revealed information about quality-control problems at the audit firm that were not publicly known until the sanctions were announced. Our analysis of stock prices suggests that investors in clients of the …
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Carol Calloway Dee, Ayalew Lulseged, and Tianming Zhang
Contemporary Accounting, Volume 28, Issue 1, Pp 263–291

We examine the stock market effects of news of the Public Company Accounting Oversight Board’s (PCAOB) sanctions imposed upon Deloitte and Touche, LLP (Deloitte) on December 10, 2007 for actions related to its 2003 audit of Ligand Pharmaceuticals Incorporated (Ligand). Deloitte was censured and fined one million dollars. In addition, the firm agreed to create an internal “Leadership Oversight Committee” responsible for increased supervision of its partners and directors. The engagement partner responsible for the Ligand audit was banned from association with a registered accounting firm, although after two years he may file a petition for relief. These sanctions mark the first time the PCAOB has used its enforcement powers against a Big 4 auditor (or any national or international firm), as well as the first time the PCAOB has issued a monetary penalty against any individual or registered accounting firm.

Carol Callaway Dee, William Hillison, and Carl Pacinic
Research in Accounting Regulation, Volume 22, Issue 2, Pp. 121–127

We examine the relation between reasons provided by management for late filing of Form 10-K and the market reaction to news of the late filing. We find negative abnormal returns for firms providing inadequate or boilerplate reasons for late filing (no attribution), and positive abnormal returns for firms that provide apparently legitimate reasons for late filing (attributions). Regression analyses show a positive relation between attributions and two-day CARs, after controlling for the type of earnings news in the notification of late filing found in Form 12b-25 (positive or negative news).

Dee, Carol Callaway and Durtschi, Cindy
Issues in Accounting Education; May 2010, Vol. 25  Issue 2, pp. 279-321

Your firm has been engaged to conduct a forensic investigation of the Tallahassee BeanCounters (TBC), a privately owned minor league baseball team in Tallahassee, Florida. Team owner Franklin Kennedy has told employees that the audit is related to the mortgage TBC obtained for the recently constructed training facility. However, Mr. Kennedy tells you privately that the investigation is not due to loan requirements; rather, it is due to his concerns arising from an anonymous tip he received in the mail. The assignment requires you and your investigative team to (1) analyze the financial and background data provided; (2) brainstorm the possible ways in which a fraud could be perpetrated and concealed within the organization; (3) determine the additional information you need to confirm or disprove your suspicions; and (4) request this information from the appropriate party at TBC. When your investigation is complete, you will present your written results to the owner, including (1) who committed the fraud, (2) how it was committed, (3) the economic impact of the fraud to TBC, and (4) the financial benefit your suspect(s) received from committing the crime.

Carol Callaway Dee, Cindy Durtschi
Issues in Accounting Education,Vol. 25, Issue 2, Pages: 279-321.

Your firm has been engaged to conduct a forensic investigation of the Tallahassee BeanCounters (TBC), a privately owned minor league baseball team in Tallahassee, Florida. Team owner Franklin Kennedy has told employees that the audit is related to the mortgage TBC obtained for the recently constructed training facility. However, Mr. Kennedy tells you privately that the investigation is not due to loan requirements; rather, it is due to his concerns arising from an anonymous tip he received in the mail. The …
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