Are audit-related factors associated with financial reporting quality in nonprofit organizations?

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dc.contributor Houston, Richard W.
dc.contributor Mansfield, Edward R.
dc.contributor Reitenga, Austin L.
dc.contributor Robbins, Walter A.
dc.contributor.advisor Parsons, Linda M.
dc.contributor.author Garven, Sarah Ann
dc.date.accessioned 2017-04-26T14:22:23Z
dc.date.available 2017-04-26T14:22:23Z
dc.date.issued 2012
dc.identifier.other u0015_0000001_0000956
dc.identifier.other Garven_alatus_0004D_11140
dc.identifier.uri http://ir.ua.edu/handle/123456789/2925
dc.description Electronic Thesis or Dissertation
dc.description.abstract In this paper I examine the effects of various audit-related factors on financial reporting quality in nonprofit organizations (NPOs). Similar to for-profit organizations, NPOs have incentives to report favorable financial results. However, whereas for-profit organizations focus on earnings, of particular importance to NPOs is the program ratio - the proportion of total expenses dedicated to providing programs that fulfill an organization's mission relative to supporting the organization (i.e., fundraising efforts and administration). A nonprofit can inflate its program ratio by opportunistically shifting expenses away from administration and fundraising and toward programs. Although several for-profit papers have examined the impact of audit-related factors on financial reporting quality, especially with regard to earnings management, there is very little evidence on the effects of these factors on financial reporting quality in NPOs. Due to important audit environment and institutional differences between the nonprofit and for-profit sectors, results on audit-related factors in for-profit organizations may not necessarily hold for nonprofit organizations. Thus, the nonprofit sector provides a useful setting to test the generalizability of the effects of audit-related factors on financial reporting quality from the for-profit sector to other sectors. Using logistic regression analyses, my results suggest that audit fees, new auditors, and the Sarbanes-Oxley Act may have some effect on financial reporting quality in nonprofit organizations. In addition, auditor assessments related to auditee risk, going-concern issues, and reportable conditions over financial reporting also may be factors in nonprofit financial reporting quality. However, contrary to results found in for-profit studies, new auditors and reportable conditions over financial reporting appear to be associated with higher nonprofit financial reporting quality, and auditor size using the traditional Big 4/non-Big 4 designation, as well as audit lag, do not appear to be significant factors in determining nonprofit financial reporting quality. Results are mixed with respect to auditor specialization. Overall, my study provides some evidence that certain audit-related factors are associated with financial reporting quality in nonprofit organizations, and also confirms that, due to the uniqueness of the nonprofit audit environment, results from for-profit studies cannot necessarily be generalized to the nonprofit sector.
dc.format.extent 122 p.
dc.format.medium electronic
dc.format.mimetype application/pdf
dc.language English
dc.language.iso en_US
dc.publisher University of Alabama Libraries
dc.relation.ispartof The University of Alabama Electronic Theses and Dissertations
dc.relation.ispartof The University of Alabama Libraries Digital Collections
dc.relation.hasversion born digital
dc.rights All rights reserved by the author unless otherwise indicated.
dc.subject.other Accounting
dc.title Are audit-related factors associated with financial reporting quality in nonprofit organizations?
dc.type thesis
dc.type text
etdms.degree.department Culverhouse School of Accountancy
etdms.degree.discipline Accounting
etdms.degree.grantor The University of Alabama
etdms.degree.level doctoral
etdms.degree.name Ph.D.


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