Session Title: Data Quality, Restatements, and Software Bots
Presentation Date: Wednesday August 10, 2011
Presentation Time: 2:00 pm-3:30 pm
Commercial Bank Regulatory Restatements: The Need for New Technology for Improving Audit and Financial Reporting Quality
David Y. Chan, Rutgers University
ABSTRACT: In this study, we examine the quality of independent audits at small private commercial banks using restatements as a proxy for deficient audits. Furthermore, we examine types of bank characteristics that may exacerbate a restatement. We find that independently audited banks in general were more likely to have restatements. This finding of low quality audits being performed at small private commercial banks is consistent with (Chan and Kogan 2011). As a result, we propose the use of advance auditing technology such as continuous auditing to improve the rigor, effectiveness, and efficiency of audits at commercial banks. We also find that bank size, operational complexity, ownership structure, and profitability may contribute to the likelihood of a restatement at these small banks.
Alexander Kogan, Rutgers University
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