内控对财务报表的影响

HowDoesInternalControlRegulationAffectFinancialReporting?[e-mail],614-688-8679FisherCollegeofBusinessTheOhioStateUniversity448FisherHall2100NeilAvenueColumbus,OH43210AnneBeatty*[e-mail],614-292-5418FisherCollegeofBusinessTheOhioStateUniversity442FisherHall2100NeilAvenueColumbus,OH43210June4,2008*Correspondingauthor.BeattythanksDeloitte&Touche,forfinancialsupport.Wewouldliketothankananonymousreviewer,BobHolthausen,RickJohnston,LuanneLynch,DougSchroeder,MaryStanford,RickYoung,PeteWilson,ArnieWright,HelenZhangandseminarparticipantsatBostonCollege,UniversityofHouston,LondonBusinessSchool,MichiganState,TheMidwestSummerResearchConference,TheOhioStateUniversity,TheUniversityofOklahomaEthicsConference,andtheUniversityofSouthernCaliforniafortheirhelpfulcommentsandsuggestions.HowDoesInternalControlRegulationAffectFinancialReporting?AbstractTheeffectivenessofinternalcontrolregulationisstillbeingquestioneddespitedecadesofexperience.Themostrecentwrite-downsinthefinancialservicesindustryhaveledsometoargueforincreasedregulation,whileothersarguethatthefailureofexistingregulationtopreventtheseeventsindicatesthatadditionalregulationisfutile.WestudyhowinternalcontrolregulationaffectsfinancialreportingbyexaminingtheeffectsoftheFederalDepositoryInsuranceCorporationImprovementAct(FDICIA)internalcontrolprovisionsontheloanlossprovision,earningspersistence,predictabilityoffuturecashflows,changesinbenchmark-beatingactivity,andchangesinconservatism.TheexemptionofU.S.bankswithassetslessthan$500million,andofnon-U.S.banks,fromtheFDICAinternalcontrolsprovisionsallowsustoidentifytwocontrolsamplesofunaffectedfirms.Usingadifference-in-differencesresearchdesign,ourresultssuggestthatFDICIA-mandatedinternalcontrolrequirementsledtoincreasesinthevalidityoftheloanlossprovision,earningspersistenceandpredictabilityoffuturecashflows,andtoreductionsinbenchmark-beatingandaccountingconservatismforaffectedrelativetounaffectedbanks.Wefindthatthesechangesaremorepronouncedinthefirstthroughthirdquartersrelativetothefourthquarter,suggestingthatanincreasedauditorpresencemightsubstitutefortheeffectsofinternalcontrolregulation.Theseresultsshouldbeofinteresttoregulators,practitionersandacademicscurrentlydebatingtheeffectivenessofinternalcontrolregulationonthepropertiesoffinancialreports,giventheongoingsubprimemortgage-inducedfinancialreportingproblems.11.IntroductionEffectiveinternalcontrolsystemshavelongbeenadvocatedasamechanismforestablishinghighqualityfinancialreporting,andhavebeenusedvoluntarilybyfirmsforthispurpose.Inresponsetoseveralhigh-profilefinancialfrauds,TheCommitteeofSponsoringOrganizations–TreadwayCommission(COSO)issueditsInternalControlIntegratedFrameworkReportinSeptember1992,providingafoundationfortheassessmentoftheeffectivenessofinternalcontrols.Sincethattime,severalwavesofaccountingscandalshaveledtoregulatoryrequirementsformanagementandauditorstoreportontheeffectivenessofinternalcontrols.Theusefulnessofinternalcontrolsregulationanditsimpactonfinancialreportingcontinuestobeatopicofdebateamongregulatorsandpractitioners.Inhisessay“CowboysVersusCattleThieves,”Smith(2003)arguesthatwhilethereisnoquestionthatwemustmanagerisks,“thedisputeisaboutthebestwayofdoingso.Thequestion,inotherwords,isnotwhetherrisksshouldberegulated,butratherhowshouldtheyberegulatedandbywhom?”Morerecently,thesubprimemortgagecrisishasledtoreneweddiscussionsabouttheeffectivenessofinternalcontrolsregulationinmitigatingandmanagingrisk.InaspeechdeliveredattheU.S.ChamberofCommerceGlobalCapitalMarketsSummit,JamesTurley(2008),ChairmanandCEOofErnst&Young,callsfor“aglobaldebateaboutwhatmanagementshouldbesayingaboutitscontrols,(and)whatauditorsshouldbesayingaboutthem,ifanything.”Supportersofinternalcontrolsregulationarguethatlimitingmanagerialdiscretionimprovesthequalityoffinancialreporting.Whilethismaybetrueforfirmswithmaterialinternalcontrolweaknesses,limitingmanagerialdiscretionmaynotimprovefinancial2reporting,onaverage,forallregulatedfirmsandcouldpotentiallyreducetheinformationinfinancialreports.Forexample,BagnoliandWatts(2005)showthatmanagers,givendiscretiontoreportconservatively,canusetheirdiscretiontosignaltheirprivateinformationabouttheprobabilitythattheirfirm’sfutureprospectsaregood.Opponentsofthistypeofregulationalsocomplainofincreasesinpaperworkandcompliancecosts,andvoiceconcernsaboutefficiencylosses.Essentialtotheresolutionoftheseargumentsistheabilitytoisolatechangesinfinancialreportingthatarespecificallyassociatedwithinternalcontrolsregulation.Intheirstudyevaluatingtheeffectivenessofthistypeofregulation,Hochbergetal.(2008)pointoutthat“thecentralchallengetodistinguishingbetweenthetwomainviews…isthelackofacontrolgroupof…firmsunaffectedbythelegislation.”TheinternalcontrolprovisionsoftheFederalDepositInsuranceCorporationImprovementActof1992(FDICIA)allowustomeetthischallengebyprovidingasettingwhereinternalcontrolsregulationcanbeisolatedforagroupofaffectedversusunaffectedfirms.Intheabsenceofanexplicitexclusion,theFDICIAprovisionsapplytoallinsuredde