Report of the President

Audit Scholars:
An Endangered Species?
In past decades, audit researchers and educators did much to inform and improve audit theory and practice. While all of us would immensely enjoy sustaining and enlarging our Section's past success, it is healthy to recognize that we arguably are a threatened species that is uncomfortably likely to become an endangered species—unless current trends change.

Indeed, we appear to have reached what Malcolm Gladwell would call a tipping point. Whether our Section's future research and educational productivity becomes significantly more or less meaningful to the profession and society depends on which way we tip. Our tip trajectory depends largely on how three factors will interact over the next several years.

Factor 1 – The stock and flows of interesting audit research questions. I have only good news here. Ongoing societal and regulatory changes, coupled with technological innovations and global developments, raise a rich set of questions for talented, well-trained audit scholars to pursue. Researchers and practitioners alike recognize that pressing and fundamental questions exist, but practitioners generally lack the expertise, time, and social distance to examine such questions. In fact, one leading practitioner, Grant Thornton LLP's Ed Nusbaum, recently provided our Section with his "top ten" wish list of research questions for us to pursue. He first did so at our luncheon at the Annual Meeting in Chicago, and he has since elaborated on his list for our inaugural issue of Current Issues in Auditing. I encourage you to study and plan how you can help answer his questions.

Factor 2 – The stock and flows of archival, experimental, and field data. In the past, a number of audit firms and their networks tended to provide access to very helpful data (recall, e.g., The KPMG Foundation's Research Opportunities in Auditing Program from the mid-1970s). In recent years, however, the supply of data has contracted. As a consequence, today's stock of data is not sufficiently rich and plentiful to satisfactorily examine questions in Ed Nusbaum's or other thought leaders' wish lists. Will constraints that are choking the supply of data abate? Some positive news is that most all of the traditional constraints to data access are fundamentally navigable with appropriate changes and precautions. And, there are signs that meaningful collaborative efforts are underway that ultimately will facilitate the allocation of data to talented, well-trained audit scholars. The future of audit research significantly hinges on these collaborative efforts.

Factor 3 – The stock and flows of sufficiently talented, well-trained audit scholars. For the moment, our Section still enjoys its legacy of having a critical mass of audit scholars who regularly contribute to audit theory and/or practice and publish in elite accountancy journals. But, troubling questions exist about the adequacy of current and future net inflows. You have heard about the impending shortage of audit (and managerial and tax) professors. To make the point more concrete, though, try a thought experiment. Identify your own list of the top ten auditing researchers who also are helping to train accounting Ph.D.s interested in audit research. Now, for each scholar listed, estimate how many more years she or he has before retirement. If you're like me, you will find this exercise to be disconcerting. It underscores that we have a strikingly limited window within which we can equip new crops of audit doctoral students with the tools to become tenurable assistant professors. A sin qua non in this regard is immediate, meaningful, and sustained progress on Factor 2, i.e., data. A delay in improved data access would be most costly; data largely dictates which way we tip.

Audit Education
Over the longer term, our future as educators is intertwined with our future as researchers. Intuition as well as both anecdotal and empirical findings suggest that research-active audit scholars enhance both their own and others' audit educational capabilities.

Over the shorter-term, though, a number of exciting developments are taking place. Let me mention two. One, before our Midyear Meeting in Austin, the Section will hold its first Excellence in Audit Education Workshop. I am delighted that Mark Beasley has agreed to work with our Practice Advisory Council to bring together audit educators and leaders from the accounting profession to discuss emerging instructional and training issues. I have learned that Bob Ashton and/or Tim Bell will be on hand to cover a most interesting capstone audit judgment case. The rest of the workshop program promises to be equally stimulating. Please see the announcement in this Newsletter for an overview and watch for forthcoming details. Another example of the Section's educational developments is the aforementioned cutting-edge new journal, Current Issues in Auditing. This journal can become a wonderful resource for audit instructors (and researchers, practitioners, and students) for years to come. We owe Dana Hermanson and Scott Showalter and the rest of their editorial team a debt of gratitude for their past and ongoing efforts on this journal. See their article in this newsletter for more information.

Annual Meeting Update
The annual meeting was quite successful, thanks to the expert efforts of Chris Earley and Chris Hogan. They deserve the Section's deepest thanks for teaming up with 136 reviewers to evaluate the merits of 127 submissions. After the review process, 74 papers were accepted for presentation and 30 for poster sessions. In addition, we had four panel sessions covering topics such as the PCAOB's AS 5 and Fraud, Assurance Services, Internal Auditing, and Audit Education. A highlight of the annual meeting, of course, was the previously mentioned luncheon address by Ed Nusbaum. Overall, the Section had an impressive presence at the annual meeting. Thank you authors, reviewers, and discussants! Click here for meeting photos.

Before looking ahead, I would like to note that, consistent with our custom, the Section's Executive Committee's composition changed during the annual meeting in Chicago. We were sorry to let go of our outgoing Past-President Mark Beasley, Treasurer Kathryn Kadous, and Historian Arnie Wright. The Section thanks them very much for their dedication, stewardship, and insight-fulness. At the same time, it is indeed a pleasure to welcome our new Academic Vice-President Audrey Gramling, Treasurer Mark Taylor, and Historian Urton Anderson to the Executive Committee.

Annual Midyear Conference
I am pleased to report that Co-Chairs Roger Martin and Gary Peters have been working very hard to plan our Fourteenth Annual Auditing Section Midyear Conference. They are in the midst of overseeing the evaluation of submissions, with the invaluable assistance of Vice-Chairs Brian Ballou and Chris Hogan. Plus, if you are a Ph.D. student, please know that Vicky Hoffman is developing a wonderful doctoral consortium. Program details about the Austin Midyear Meeting (January 17–19, 2008) and the doctoral consortium are included in this newsletter. You must not miss this meeting, as it will feature wonderful plenary speakers and panel sessions in addition to an impressive line-up of research paper presentations and discussions. And, as has been the case for a number of years now, we extend our enthusiastic thanks to The KPMG Foundation and to Bernie Milano for their generous, unwavering sponsorship and support of our conference and related activities.

Honored to Serve
In writing my first President's letter for the Section, I realized once again what a tremendous honor it is to serve as your President. Serving is especially gratifying to me in that I had the advantage of having two of the Section's Past Presidents on my dissertation committee at Illinois: Fred Neumann (our first Section president) and Ira Solomon (my dissertation chair). They made sure I had a chance to attend Audit Section Midyear Conferences when I was a doctoral student, and they always have advised me to participate in the Section's activities. What great advice!

See you in Austin come January!