IDEAS home Printed from https://ideas.repec.org/a/eee/advacc/v30y2014i1p55-66.html
   My bibliography  Save this article

The role of the paid preparer in nonprofit reporting quality

Author

Listed:
  • Gross, Andrew
  • Neely, Daniel Gordon

Abstract

The purpose of this paper is to examine whether the preparer of the Form 990 influences the Form 990 reporting quality. Currently, the Form 990 is the only widely available source of governance and financial information for nonprofit organizations. The leading rater of nonprofit organizations, Charity Navigator, relies primarily on information from the Form 990 in developing their ratings. We identify misreporting by utilizing five measures of reporting quality. We find organizations that hire an outside accounting firm to prepare the Form 990 report higher quality financial information than organizations that choose to prepare the Form 990 in house. Interestingly, the size of the accounting firm is not associated with the quality of Form 990 reporting with the exception that paid preparers who are sole proprietors are more likely to misreport. Further exploration reveals that paid preparers who file more returns are less likely to misreport indicating that specialization is associated with more accurate reporting on Form 990. Our study contributes to the literature by using multiple reporting measures to examine the impact of paid preparers on the reporting quality of 990s. Furthermore, our study is the first to consider how specialization affects the accuracy of 990 returns.

Suggested Citation

  • Gross, Andrew & Neely, Daniel Gordon, 2014. "The role of the paid preparer in nonprofit reporting quality," Advances in accounting, Elsevier, vol. 30(1), pages 55-66.
    • Handle: RePEc:eee:advacc:v:30:y:2014:i:1:p:55-66
    DOI: 10.1016/j.adiac.2013.12.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0882611013000643
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.adiac.2013.12.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gordon, Teresa P. & Knock, Cathryn L. & Neely, Daniel G., 2009. "The role of rating agencies in the market for charitable contributions: An empirical test," Journal of Accounting and Public Policy, Elsevier, vol. 28(6), pages 469-484, November.
    2. Chee‐Yeow Lim & Hun‐Tong Tan, 2008. "Non‐audit Service Fees and Audit Quality: The Impact of Auditor Specialization," Journal of Accounting Research, Wiley Blackwell, vol. 46(1), pages 199-246, March.
    3. Clive S. Lennox, 1999. "Audit Quality and Auditor Size: An Evaluation of Reputation and Deep Pockets Hypotheses," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(7&8), pages 779-805.
    4. DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
    5. Calabrese, Thad D., 2011. "Public mandates, market monitoring, and nonprofit financial disclosures," Journal of Accounting and Public Policy, Elsevier, vol. 30(1), pages 71-88, January.
    6. Michelle H. Yetman & Robert J. Yetman, 2012. "The Effects of Governance on the Accuracy of Charitable Expenses Reported by Nonprofit Organizations," Contemporary Accounting Research, John Wiley & Sons, vol. 29(3), pages 738-767, September.
    7. Clive S. Lennox, 1999. "Audit Quality and Auditor Size: An Evaluation of Reputation and Deep Pockets Hypotheses," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(7‐8), pages 779-805, September.
    8. Burgstahler, David & Dichev, Ilia, 1997. "Earnings management to avoid earnings decreases and losses," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 99-126, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Casey, Ryan J. & Kaplan, Steven E. & Pinello, Arianna Spina, 2015. "Do auditors constrain benchmark beating behavior to a greater extent in the fourth versus interim quarters?," Advances in accounting, Elsevier, vol. 31(1), pages 1-10.
    2. Augustine O. Okolie Ph.D, FCA, 2014. "Audit Firm Size and Market Price Per Share of Quoted Companies in Nigeria," International Journal of Business and Social Research, LAR Center Press, vol. 4(5), pages 100-117, May.
    3. Augustine O. Okolie Ph.D, FCA, 2014. "Audit Firm Size and Market Price Per Share of Quoted Companies in Nigeria," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 4(5), pages 100-117, May.
    4. Incardona, John & Kannan, Yezen & Premuroso, Ronald & Higgs, Julia L. & Huang, Ivy, 2014. "Taxing audit markets and reputation: An examination of the U.S. tax shelter controversy," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 23(1), pages 18-31.
    5. Tharindra Ranasinghe & Lin Yi & Ling Zhou, 2023. "Do auditors charge a client business risk premium? Evidence from audit fees and derivative hedging in the U.S. oil and gas industry," Review of Accounting Studies, Springer, vol. 28(2), pages 1107-1139, June.
    6. Dennis M. Lopez & Pamela C. Smith, 2010. "Auditor Type and Audit Quality Differences in Nonprofit Healthcare Organizations – U.S. Evidence," Working Papers 0107, College of Business, University of Texas at San Antonio.
    7. Nathan R. Berglund, 2020. "Do Client Bankruptcies Preceded by Clean Audit Opinions Damage Auditor Reputation?," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1914-1951, September.
    8. Lin, Z. Jun & Liu, Ming, 2009. "The impact of corporate governance on auditor choice: Evidence from China," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 18(1), pages 44-59.
    9. Jennifer K. Howard & Myungsoo Son & Hakjoon Song, 2023. "Shareholders’ Perception of Auditor Type and Timing of Auditor Engagement: Evidence from Auditor Ratification," Australian Accounting Review, CPA Australia, vol. 33(3), pages 284-301, September.
    10. Serge Evraert & Stéphane Trebucq, 2003. "Crise De Confiance Et Information Comptable : Une Etude Empirique Des Reactions Du Marche Français A L'Annonce Des Affaires Enron Et Worldcom," Post-Print halshs-00582775, HAL.
    11. Friedrich, Christian & Quick, Reiner, 2024. "Do non-audit service failures impair auditor reputation? An analysis of KPMG advisory service scandals in Germany," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 98(C).
    12. Seyed Mahmoud Hosseinniakani & Helena Inacio & Rui Mota, 2014. "A Review on Audit Quality Factors," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 243-254, April.
    13. Ju Ryum Chung & Eun Jung Cho & Ho-Young Lee & Myungsoo Son, 2017. "The impact of labour unions on external auditor selection and audit scope: evidence from the Korean market," Applied Economics, Taylor & Francis Journals, vol. 49(48), pages 4833-4850, October.
    14. Numata, Shingo & Takeda, Fumiko, 2010. "Stock market reactions to audit failure in Japan: The case of Kanebo and ChuoAoyama," The International Journal of Accounting, Elsevier, vol. 45(2), pages 175-199, June.
    15. Ines Maraghni & Mehdi Nekhili, 2017. "Audit committee characteristics and audit fees: Evidence from France [Caractéristiques du comité d’audit et honoraires d’audit : cas des entreprises françaises]," Post-Print hal-01907594, HAL.
    16. Hou, Fei & Liu, Jie & Pang, Tingyun & Xiong, Hao, 2020. "Signing auditors’ foreign experience and audit pricing," Economic Modelling, Elsevier, vol. 91(C), pages 300-312.
    17. Katsuhiko Muramiya & Tomomi Takada, 2010. "Auditor Conservatism, Abnormal Accruals, and Going Concern Opinions," Discussion Papers 2010-64, Kobe University, Graduate School of Business Administration.
    18. Fung, Simon Yu Kit & Raman, K.K. & Zhu, Xindong (Kevin), 2017. "Does the PCAOB international inspection program improve audit quality for non-US-listed foreign clients?," Journal of Accounting and Economics, Elsevier, vol. 64(1), pages 15-36.
    19. Le, Ha Thi Thu & Tran, Ha Giang & Vo, Xuan Vinh, 2021. "Audit quality, accruals quality and the cost of equity in an emerging market: Evidence from Vietnam," International Review of Financial Analysis, Elsevier, vol. 77(C).
    20. Cook, Jonathan & Kowaleski, Zachary T. & Minnis, Michael & Sutherland, Andrew & Zehms, Karla M., 2020. "Auditors are known by the companies they keep," Journal of Accounting and Economics, Elsevier, vol. 70(1).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:advacc:v:30:y:2014:i:1:p:55-66. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/advances-in-accounting/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.