The Center for Audit Quality is offering $200,000 in research funding for projects that would address some squishy audit and financial reporting issues, including the use of professional judgment, professional skepticism, audit quality, and the value of an audit.

The CAQ formed a research advisory board made up of academics and professional auditors in 2008 to fund independent research on topics related to auditing and accounting. The research group’s goal is to stir up academic interest in auditing and accounting research and to expand the teaching ranks in these areas as well.

“One of the things we’ve heard from a number of academics is that researchers have a difficult time getting funding,” said Cindy Fornelli, executive director at the CAQ. “Academics need vehicles in order to do robust research.” She noted the Treasury Advisory Committee on the Auditing Profession also asserted a need for more academic research when it issued its recommendations for bolstering the audit profession.

In its request for proposals, CAQ ticked off a number of prospective topics that represent some of the more contentious areas in financial reporting today—evaluation of estimates of fair values, impairments, development stage intangibles, contingent liabilities, materiality measures, interplay among different legal regimes, factors that encourage or discourage skepticism, auditor skills, and stakeholder expectations with respect to audits.

Fornelli said the advisory board identified research topics based on issues that have been identified by the audit profession and by users of financial statements as problematic to the auditing and financial reporting process. “These are four areas where research could really help the profession,” she said.

The funding comes directly from CAQ’s coffers, generated largely by membership dues, said Fornelli. While that springs largely from the audit firms themselves, they won’t have a hand in the research, she said. The advisory board “will decide which projects will receive grant money, but after that it is an independent process,” she said. “The CAQ and the advisory board will have no input into the outcome of the research.”

Research proposals are due May 15.

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