The ability to detect misreporting is an important aspect of financial reporting regulation. I derive a measure of SEC error detection rates using information from comment letter reviews. Conditional on the SEC issuing a comment letter, I find that the review team detects an error resulting in a restatement in 4.6 percent of cases, while firms eventually restate financial reports for 13.6 percent of periods under review. My measure of SEC error detection rates is the ratio of reviews that detect an error to total reviews that could have detected an error. I document a positive association between detection rates and review team size. Using a novel approach to identify examiner characteristics, I show that this association is driven by the number of accountants on the review team. I find an economically insignificant association between individual examiner performance and economic or career incentives. JEL Classifications: G18; M41; M48. Data Availability: The examiner characteristics data used in this study are available upon request. All other data are available from the sources cited in the text.

Staff at the U.S. Securities and Exchange Commission (SEC) conduct recurring reviews of firms’ filings to deter misconduct and facilitate investor access to high-quality information. We identify the names of SEC staff who work on a comment letter and examine whether their prior involvement (i.e., continuity) is associated with comment letter quality. Our results are consistent with continuity leading to lower-quality comment letters. Continuity is associated with fewer substantive comments, agreed-upon disclosure changes, and greater similarity between consecutive comment letter reviews. These results are consistent with continuity increasing staffs’ tendency to focus on familiar issues and overlook other areas of potential deficiencies. Time, changes in firms’ operations, and increasing staffs’ feelings of accountability can mitigate the negative effect of continuity on comment letter quality. Our study suggests benefits to a fresh perspective in regulatory monitoring.

We examine whether performance reporting leads to inconsistent enforcement at the Securities and Exchange Commission (SEC). In a sample of over 13,000 SEC enforcement actions, we show that SEC staff respond to performance-reporting pressures and file more enforcement actions in September, the final month of the SEC's fiscal year, than in any other month. The increase in case volume in September is not fully explained by staff filing more procedural cases or accelerating case filings. Instead, SEC staff pursue less complex cases and agree to more lenient financial and non-financial sanctions to increase case volume in September. We attempt to rule out alternative explanations for our results, including natural SEC workflow and resource constraints. Overall, our findings suggest that performance reporting creates agency conflicts that lead to regulatory inconsistency within the fiscal year.

We examine whether SEC effort to review state sponsors of terrorism (SST) disclosure negatively influences financial reporting oversight. Using comment letter inquiries about SST to measure effort, we find the likelihood that the SEC fails to identify a financial reporting error increases when comment letters reference SST. Consistent with SST disclosure review crowding out financial reporting oversight, comment letters referencing SST are less likely to mention accounting, non-GAAP, and MD&A issues. These effects are unique to SST as we find comment letter references to non-SST issues complement financial reporting oversight. Data obtained through a Freedom of Information Act request reveals a temporal shift in the occupational mix of SEC reviewers towards (away from) lawyers (accountants) that coincides with an increased focus on SST. Path analysis reveals that accountants (lawyers) are more (less) likely to detect errors and comment on financial reporting topics, with an indirect path through SST exacerbating these effects.

We examine whether the Financial Accounting Standards Board (FASB) Codification made it easier for preparers and auditors to locate relevant accounting guidance. We find that areas of U.S. GAAP with more dispersed and voluminous guidance before the Codification experience a larger post‐Codification reduction in restatements. We find a similar decline in SEC comment letter questions referencing areas of U.S. GAAP with more dispersed and voluminous pre‐Codification guidance. Our results suggest that before the Codification, preparers and auditors had difficulty in locating the appropriate accounting guidance and that the Codification mitigated this difficulty.

We investigate whether prior employment connections influence the strictness of the Securities and Exchange Commission (SEC) filing review process. Using novel data on over 250 accountants at the SEC, we define connected examiners as accountants reviewing financial statements audited by their former employer. We find that SEC review teams with a higher percentage of connected examiners are less likely to detect financial statement errors, raise fewer substantive issues, and are less likely to push back on registrants’ responses to comment letters. Our estimates also indicate that the effect of examiners’ prior employment connections is strongest earlier in their SEC tenure and attenuates with time. Our findings provide important practical insights on the boundaries of the revolving door between regulators and the regulated, suggesting that even indirect connections can impact oversight.

We examine the impact of the SEC’s Office of Minority and Women Inclusion (OMWI) on the role of employee gender in the Division of Corporation Finance’s filing review process. Gender bias theory suggests that women may work harder to compensate for perceived bias and discrimination. Consistent with this theory, we find that women reviewers issue longer comment letters, raise more issues, ask more accounting-specific questions, reference more authoritative guidance, request more filing amendments, follow up on more issues from prior rounds, and take longer to close the comment letter process. We also find that women are less prevalent in higher paygrades and leadership positions. These gender differences attenuate after the establishment of OMWI in 2011, but significant differences remain. Analyses of SEC employee survey data corroborate our comment letter results. Data Availability: All data are publicly available.