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Auditor response to changing risk: money market funds during the financial crisis

Author

Listed:
  • Kyle D. Allen

    (Boise State University)

  • Drew B. Winters

    (Texas Tech University)

Abstract

Audits provide monitoring for investors. The collapse of markets across the financial crisis made assets more difficult to value, which increased risk for auditors. The money markets were at the center of the financial crisis increasing audit engagement risk on money market funds, which at the time of the crisis were highly opaque. Measuring the response to increased engagement risk with audit fees, this study finds that auditors increase their fees for the riskiest class of funds. However, no evidence was found that audit fees increased as funds increased their holdings in the riskiest class of securities.

Suggested Citation

  • Kyle D. Allen & Drew B. Winters, 2021. "Auditor response to changing risk: money market funds during the financial crisis," Review of Quantitative Finance and Accounting, Springer, vol. 56(3), pages 1057-1086, April.
    • Handle: RePEc:kap:rqfnac:v:56:y:2021:i:3:d:10.1007_s11156-020-00918-5
    DOI: 10.1007/s11156-020-00918-5
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Audit risk; Financial crisis; Money market funds;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • G01 - Financial Economics - - General - - - Financial Crises
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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