Highlight: Dr. Nader Wans


Dr. Nader Wans’ paper, Audit office experience with SOX 404(b) filers and SOX 404 audit quality, co-authored with Dr. Divya Anantharaman, examines the association between audit office experience and the value of internal control (IC) audits by external auditors.

The authors develop a novel approach in measuring the quality of IC audit using (a) the timeliness of reporting control deficiencies and (b) the expansiveness of substantive tests to identify misstatements in a timely manner.

Section 404(b) of the Sarbanes-Oxley Act (SOX 404b) requires external auditors’ IC attestation for large public companies. Dr. Wans and Dr. Ananthraraman find that audit offices with more SOX 404b clients, as well as a more extensive history of conducting IC evaluations for the client, are more likely to identify and report material weaknesses as well as discover misstatements in a timely manner.

Dr. Wans’ and Dr. Ananthraraman’s paper provides insights into factors driving the quality of IC audits (a continuing area of focus by accounting regulators) as well as the importance of auditors’ evaluation of IC, especially in the wake of the Dodd-Frank Act that permanently exempts smaller companies from this requirement. Their findings also help advance discussions on the factors driving variation in audit quality.

Dr. Wans’ paper was published in The Accounting Review in July 2019.


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