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

Kyle D. Allen, Drew B. Winters

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish
Pages (from-to)1057-1086
Number of pages30
JournalReview of Quantitative Finance and Accounting
Volume56
Issue number3
DOIs
StatePublished - Apr 2021

Keywords

  • Audit risk
  • Financial crisis
  • Money market funds

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