Topic: The Impact of IFRS versus U.S. GAAP on Audit Fees and Going Concern Opinions:Evidence from U.S.-Listed Foreign Firms
Presenter: Huajing(Lucy) Chen Associate Professor
School of Business, Villanova University
Time: April 12, 2017（Wednesday）10：00 – 11：30
Venue： Room 205, Jiageng Bld 2
Abstract：In this paper, we empirically evaluate the effect of International Financial ReportingStandards (IFRS) versus U.S. Generally Accepted Accounting Standards (GAAP) on audit feesand auditor’s decision to issue a going concern opinion. We posit that IFRS, by specifying broaderrequirements and requiring more judgment in application than U.S. GAAP, increase auditors’effort and engagement risk, which leads to higher audit fees and higher likelihood of issuing agoing concern opinion. We test our predictions using a sample of foreign firms listed in the U.S.with fiscal year ended from November 16, 2007 to December 31, 2014 that prepare their financialstatements under either IFRS or U.S. GAAP. We find that, on average, foreign IFRS firms paymore audit fees than foreign U.S. GAAP firms and are more likely to receive going concernopinions than foreign U.S. GAAP firms. Further analyses of U.S. listed foreign firms reveal thataudit fees and the likelihood of receiving a going concern opinion are higher for foreign
IFRS firms with more transactional complexity and higher misstatement risk than foreign U.S.GAAP firms, and for foreign IFRS firms from developed markets. Overall, our evidence highlightsthe impact of accounting standards on auditing outcomes and should be useful to the U.S.Securities and Exchange Commission as it deliberates whether and how to incorporate IFRSinformation for U.S. domestic firms.