A Study of CPA Firms’ Technical Competence

Raymond M. K. WONG, Michael FIRTH, Wai Yee LO

Research output: Other Conference ContributionsAbstractpeer-review


Technical competence and auditor independence are two key aspects for maintaining a high quality audit. Previous research generally uses the size of the CPA firm as a surrogate of audit quality. Many of these studies explicitly assume that large CPA firms (e.g., the Big 4) are more independent. There is also an implicit assumption that large CPA firms have greater technical competence. The upshot of this research is that small and mid-size CPA practices are viewed as performing relatively low quality audits and having low technical competence. We challenge this view and re-examine the technical competence issue. We develop a “span of control” measure as a main proxy of technical competence. We hypothesize and find that a narrower span of control within a CPA firm serves as a proxy for higher technical competence, results in higher quality audits, and in turn creates economic benefits for the CPA firm (in terms of the audit fee charged and market share gained).
Original languageEnglish
Publication statusPublished - Aug 2010
Event2010 American Accounting Association Annual Meeting - United States, San Francisco, United States
Duration: 31 Jul 20104 Aug 2010


Conference2010 American Accounting Association Annual Meeting
Country/TerritoryUnited States
CitySan Francisco
OtherAmerican Accounting Association
Internet address


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