James A. Tackett

Sarbanes‐Oxley and audit failure

The highly publicized accounting scandals of the recent past seriously damaged the credibility of the accounting profession. In an effort to restore public confidence in the capital markets, the US Congress passed the Sarbanes‐Oxley Act of 2002. A central theme of this new law is the attempted reduction of major audit failure by stricter governmental regulation of the accounting profession and the creation of the Public Company Accounting Oversight Board. This paper discusses the likely effectiveness of the Sarbanes‐Oxley Act in the reduction of major audit failures. Four root causes of audit failure are identified, and issues not addressed by the Sarbanes‐Oxley Act that may have audit failure implications are discussed. Recommendations for improvements that potentially further reduce the likelihood of audit failure are presented.

Audit disaster futures: antidotes for the expectation gap?

The gap between what the public expects from the auditor and what the auditor perceives his or her role to be has exacerbated crises within the accounting profession. Perceived audit failures, followed by historically large law suits, have resulted in the alteration of accounting firms’ behavior. Ironically, the response has done little to alleviate the crisis in public confidence and has led to other concerns related to the auditor‐client relationship. Discusses issues associated with the expectation gap and posits that the profession’s efforts to educate users as to the nature of the audit process is a necessary, but insufficient, response. A two‐part strategy is proposed to effect structural change of the auditor‐client environment. Part one of the strategy calls for greater involvement of regulators in selecting the external auditor and requiring auditor rotation. Part two of the strategy proposes market‐based instruments, audit failure permits and audit disaster futures, to deal with remaining audit ...

The Effectiveness of Instruction in Accounting Ethics Education: Another Look

Abstract This study examines the effectiveness of instruction in accounting ethics as measured by the impact of that instruction on the incidence of student plagiarism in a college writing assignment. This study avoids the potential problems inherent in measuring Machiavellianism via a psychological questionnaire by using a “reverse methodology,” whereby Machiavellianism is assessed directly from behavior. The results support past research suggesting that traditional collegiate ethical education may not affect students’ ethical choices. The findings also suggest that increasing penalties for ethical failures may be an effective means of deterring students and business professionals from engaging in inappropriate activities. This study supports the use of a behavioral measure of Machivellianism as a means of evaluating the effectiveness of alternative instructional methods in ethics. This behavioral approach is superior to the traditional questionnaire methodology because Machivellianism is judged based on actual behavior rather than having students respond to hypothetical and often stereotyped ethical cases, whereby the student can provide an artificial response that will be viewed favorably by the evaluator. The findings suggest that higher education needs to recognize the relevance of factors beyond mere ethical education when preparing students for the ethical challenges they will face in the business world. This paper employs a unique “reverse methodology” to measure Machiavellianism. This reverse methodology has greater external validity in quasi-experimental ethical studies because the results can be extrapolated to real-world scenarios where there is a cost to behaving ethically.