This paper investigates whether client importance affects auditor independence within the local offices of audit firms. Client importance is measured as the proportion of audit fees, non-audit service fees, or total fees that a distressed, public client contributes to the total public-client revenue earned by the individual audit offices. Auditor independence is measured as the auditor's propensity to issue a going-concern opinion. The paper focuses on changes in the relation between fee ratios and auditor reporting decisions from the pre-SOX (2001) to post-SOX (2003) period. In the pre-SOX period, I do not find statistically significant association between any of the fee ratios and the auditor's propensity to issue a going concern opinion. However, in the post-SOX period, I find evidence that higher audit fee and total fee ratios are positively associated with the auditor's propensity to issue a going concern opinion. That is, post-SOX, relatively more important clients are more likely to receive a going concern opinion. These results allay concerns that auditor independence is compromised for significant clients.

External audits enhance the credibility of financial statements and are a cornerstone of capital market integrity. However, the growing and complex auditing literature poses challenges for researchers. This survey synthesizes and critically evaluates archival audit research published in top accounting journals from 1995 to 2025, organizing over 600 studies into three core areas: the audit market, audit quality, and audit personnel and processes. We offer new conceptual insights into the audit market, emphasizing that audit assurance is unobservable and that audit fee studies generally estimate reduced‐form models rather than separate demand and supply functions. On audit quality, we expand upon DeAngelo's definition to include the auditor's responsibility to assess ex ante risk. We suggest an alternative three‐dimensional definition of audit quality that is more closely aligned with professional standards. We also clarify common misconceptions arising from conflating audit quality with financial reporting quality. Finally, we review the growing literature on audit personnel and call for more research into underexplored roles of personnel in the early stages of the audit process. Our survey contributes by reframing key constructs, identifying limitations in common proxies, and suggesting future research directions to advance our understanding of how audits function and shape financial reporting outcomes.

This study examines whether PCAOB inspection reports are useful for signaling the risk of misstatements in future periods and the extent to which different types of audit deficiencies predict future misstatements. We find that, after the inspection report is issued, PCAOB‐identified audit deficiencies are positively associated with future misstatements for the audit firm's entire client portfolio. When we examine different types of deficiencies, we find that an auditor's failure to understand the client's accounting procedures or policies is the most detrimental type of deficiency for future reporting quality. We also examine the deficiency types for Big 4 versus non–Big 4 firms separately. The results show that an auditor's failure to understand the client's accounting procedures or policies is the only deficiency type that is positively associated with future misstatements for Big 4 firms. For non–Big 4 firms, however, future misstatements are predicted by an auditor's failure to understand the client's accounting procedures or policies, inadequate substantive testing, and inadequate going‐concern assessments. Our study has important implications given the concerns raised by auditors regarding the usefulness of PCAOB inspections.

The revelation of material negative events about a firm, including issues such as fraud, restatements, or internal control material weaknesses (ICMWs), may destabilize the firm’s corporate governance equilibrium as it works to remediate the event or effects thereof. Prior research investigates the association between the revelation of fraud and restatements and both board and management turnover. We extend that research, proposing and testing a conceptual model of the process that firms use to remediate negative events in general and ICMWs specifically, with a focus on the role of governance structure changes. Using a sample of 733 firms revealing an ICMW compared to 3,602 firms with unqualified internal control reports, results reveal a positive association between disclosure of ICMWs and subsequent turnover of members of boards of directors, audit committees, and top management. Focusing on the ICMW sample and comparing the 511 firms that remediate their ICMWs to the 222 firms that do not, results illustrate a positive association between remediation of ICMWs and improvements in the characteristics of boards of directors, audit committees, and top management. Data Availability: Data are publicly available from sources identified in the paper.