Despite standards meant to produce consistency, all audits are not alike, and the differences depend more on the engagement partner assigned to the audit than the firm hired to perform it.

That's the finding of academic research being presented this week at a conference of the Canadian Academic Accounting Association. The study of seven years worth of audit work performed by Swedish affiliates of Big 4 firms found that aggressive and conservative audit reporting styles could be tracked to individual engagement partners, and the patterns were consistent across engagement partners' clients. The study also shows that the market penalizes companies that are susceptible to aggressive audit partner reporting decisions.

Titled Does the Identity of Engagement Partners Matter? An Analysis of Audit Partner Reporting Decisions, the study is authored by Robert Knechel at the University of Florida and two co-authors at universities in Finland and the Netherlands. The authors say the results of the aggressive or conservative reporting styles are systematic partner attributes that are not randomly distributed across audit engagements.

James Doty, chairman of the Public Company Accounting Oversight Board, has already latched on to the research as evidence that disclosure of the name of the engagement partner on U.S. public company audits would benefit investors. The PCAOB issued a proposal in 2011 calling for the name of audit engagement partners to be included in audit reports and is expected to issue a revised proposal by the end of the first quarter. “The market wants to know whether, in fact, the partner that's on their account is someone who has a long history of bungling audits, restatements that have trailed or followed him or her, or whether this auditor has a history of making tough calls and being an objective auditor,” he said in May at a session of the board's Standing Advisory Group.

Some auditors have protested having their names included in audit reports, asserting it would heighten their liability and diminish the investor's understanding that the audit is a group effort performed by many different people. Some audit firms have lobbied the PCAOB to consider instead requiring audit firms to link engagement partners with specific audit engagements in a filing with the PCAOB that would be readily available to investors who wanted to research it.

While acknowledging limitations to the research, the authors in the academic study said they believe the results provide important insights into the role of individual audit partners in influencing audit reporting decisions. “Specifically, our results imply that the identity of the engagement partner matters to the market,” the authors wrote.

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