Consumers are increasingly conscientious of societal and environmental impacts of their purchases, prompting companies to make environmental, social, and governance (ESG) claims and engage in voluntary ESG assurance. However, prior literature lacks insight into whether consumers consider negative accounting news events (e.g., error/irregularity restatements) and their effects on purchasing intentions. Using real world consumers of sustainable goods, we investigate how varying levels of negative accounting news events (i.e., error or irregularity restatements), the presence of ESG product-quality assurance (e.g., cage free egg certification), and the type of assurance provider (e.g., an accounting firm that also audits the financial statements, an accounting firm that does not audit the financial statements, government agency) influence purchasing intentions and organizational legitimacy perceptions. We find that consumers surrogate negative accounting news events as indicators of ESG claim reliability, negatively impacting purchasing intentions, especially for more severe events (e.g., irregularity). However, ESG product-quality assurance partially mitigates these negative effects. Moreover, we find that when an error restatement occurs, the mitigating effect is less pronounced when the same firm provides both financial statement and ESG product-quality assurance compared to a governmental agency or non-financial statement auditor. Finally, when irregularities occur, though product-quality assurance partially mitigates the detrimental effects, there is no difference between assurance providers, likely because management's willingness to deceive auditors decreases the perceived reliability of assurance in general. Our results suggest boards should obtain ESG product-quality assurance and carefully select their assurance providers.

As audit technology becomes more widespread, practice and academia are raising concerns about the costs and benefits of these technologies. We examine how internal auditors use technology‐based audit techniques (TBATs) and how TBATs impact the efficiency and effectiveness of their audits. We use two surveys and interviews of individual auditors and chief audit executives (CAE) to examine their perceptions of TBATs. Auditors perceive TBATs as beneficial. Specifically, an increase in the use of TBATs is associated with completing more audits, finding more risk factors, providing more recommendations, and decreasing audit days. However, CAEs also perceive TBATs to be costly. An increase in the use of TBATs is associated with an increase in the size of the internal audit function. Finally, interviews with CAEs suggest that TBATs are not used more often because of difficulties in quantifying their benefits, observing their benefits in a timely manner, and hiring auditors with appropriate skills. Overall, TBATs stand to increase the efficiency and effectiveness of audit tasks, but auditors struggle to quantify their net cost‐benefit tradeoff. Our findings validate the issues raised by both proponents and opponents of audit technologies and help provide empirical data to inform their decision‐making process regarding the future of these tools. Additionally, our study prompts several avenues for future research that can help inform regulators, practitioners, and researchers on how these technologies are impacting the auditing profession.

We analyze the potential benefits that firms can realize from implementing technology specifically aimed at monitoring the effectiveness of their internal control systems. The Committee of Sponsoring Organizations of the Treadway Commission asserts that effective internal control monitoring should enhance the efficiency of internal control processes, and, in turn, the assurance over such processes (COSO 2009a). We develop hypotheses to test the realization of these potential benefits. Specifically, we identify a sample of firms that implemented internal control monitoring technology in response to the internal control requirements of the Sarbanes-Oxley Act. Consistent with our hypotheses, we document that the implementation of internal control monitoring technology is associated with lower likelihood of material weaknesses, smaller increases in audit fees, and smaller increases in audit delays during the post-SOX time period. We discuss the potential implications of our findings for research related to continuous monitoring, client-provided assurance assistance, and information technology governance.