hero image
Joe Schroeder - Indiana University, Kelley School of Business. Bloomington, IN, US

Joe Schroeder Joe Schroeder

Associate Professor of Accounting | Indiana University, Kelley School of Business

Bloomington, IN, UNITED STATES

Joe Schroeder researches the implications of auditing and financial accounting standards

Industry Expertise (1)

Education/Learning

Areas of Expertise (6)

Tax

Financial Disclosures

Implications of Auditing

Auditing

Financial Accounting Standards

Corporate Governance

Accomplishments (8)

Harry Sauvain Teaching Award

2018

Innovation in Teaching Award

2018

AAA Audit Midyear Meeting Best Paper Award

2018

Kelley Trustee Teaching Award

2015

AAA Auditing Section Outstanding Dissertation Award

2015

Michigan State University Student Excellence in Research Award

2012

Michigan State University Department of Residence Life Teaching Recognition

2009

Indiana CPA Society Top Ten CPA Exam Score Award

2004

Education (3)

Michigan State University: Ph.D., Accounting 2013

Ball State University: M.S., Accounting 2004

Ball State University: B.S., Accounting 2003

Articles (5)

The Impact of Audit Completeness and Quality on Earnings Announcement GAAP Disclosures The Accounting ReviewF

Joseph H Schroeder

2016 This study examines the role of the external audit in management's decision about the amount of GAAP financial statement information to disclose in the annual earnings announcement. The earnings announcement is a key disclosure provided by public companies. Yet, there is no requirement that earnings announcements contain audited GAAP numbers; in fact, recent trends indicate that a majority of companies release earnings before the completion of year-end audit fieldwork. I predict and find that companies that wait until the audit is more complete at the earnings announcement date and receive higher quality audits provide more detailed balance sheet, cash flow statement, and overall GAAP disclosures. I also provide evidence that complete audits and higher quality audits impact the information content of the earnings announcement. The combined results indicate that audit completeness and quality help facilitate more detailed earnings announcement disclosures and have implications for the equity market.

view more

Do SOX 404 Control Audits and Management Assessments Improve Overall Internal Control System Quality? The Accounting ReviewF

Joseph H. Schroeder, and Marcy L. Shepardson

2016 We address whether SOX 404(b) internal control audits under two auditing standards regimes and SOX 404(a) management assessments are associated with improved internal control system quality, an important and largely unstudied potential benefit. In 2013, the PCAOB disclosed that 15 percent of inspected control audits were ineffective, suggesting that the current control auditing standard may not be sufficient to induce implementation of high-quality control systems. We use an indirect measure of internal control system quality—future unaudited accruals quality—to proxy for internal control quality because sustained internal control improvements should be exhibited in future quarterly financial reports unaltered by contemporaneous financial statement audits. We find that internal control audits initially provided internal control quality benefits. After the 2007 auditing standards change, internal control quality deteriorated for ICFR audited versus unaudited firms. Finally, we find limited evidence that management assessments affect internal control quality. Results indicate that recent PCAOB concerns may have merit.

view more

Integration of Internal Control and Financial Statement Audits: Are Two Audits Better than One? Kelley School of Business Research Paper No. 16-58F

Lori Shefchik Bhaskar, Joseph H Schroeder, Marcy L Shepardson

2016 The quality of financial statement (FS) audits integrated with audits of internal controls over financial reporting (ICFR) depends upon the quality of ICFR information used in, and its integration into, FS audits. Recent research and PCAOB inspections find auditors underreport existing ICFR weaknesses and perform insufficient testing to address identified risks, suggesting integrated audits – in which substantial ICFR testing is required – may result in lower FS-audit quality than similar FS-only audits. We compare a 2007 – 2013 sample of small, U.S. public company firm-years receiving integrated audits (accelerated filers) to firm-years receiving FS-only audits (non-accelerated filers) and find integrated audits are associated with higher likelihood of material misstatements and discretionary accruals, consistent with lower FS audit quality. We also find evidence of (1) auditor judgment-based integration issues and (2) low-quality ICFR audits harming FS audit quality. Overall, results suggest an important potential consequence of integrated audits is lower FS audit quality.

view more

Do Property Taxes Affect Real Operating Decisions and Market Prices for Crude Oil?† Contemporary Accounting ResearchF

Kristian D. Allee, Daniel P. Lynch, Kathy R. Petroni, Joseph H. Schroeder

2014 This study examines the effect of a personal property tax (PPT) on firms’ operating decisions by examining crude oil inventories. Using a unique data set of monthly US crude oil inventories and monthly refinery-level data obtained through a confidentiality agreement with the United States Energy Information Administration (EIA), we test the hypotheses that changes in crude oil inventory are decreasing (increasing) in the presence of PPTs prior to (following) the calendar year-end assessment. We then examine the relationship between changes in crude oil prices and changes in inventory levels during the assessment period to investigate the effect of these inventory adjustments on crude oil prices. The popular press has observed declines in US crude oil inventories prior to calendar year-end PPT assessments every year since 1984 (Ciaccio 2010). There is speculation that this is caused by PPTs on raw materials …

view more

The Impact of PCAOB AS5 and the Economic Recession on Client Portfolio Characteristics of the Big 4 Audit Firms AUDITING: A Journal of Practice & TheoryF

Joseph H. Schroeder and Chris E. Hogan

2013 We examine the impact of PCAOB Auditing Standard No. 5 (AS5) and the economic recession on risk characteristics and degree of auditor/client misalignment in the publicly traded client portfolios of Big 4 firms. AS5 and the economic recession both likely resulted in an increase in audit firm personnel capacity as well as a decline in current and future revenue prospects, leading to concerns that the Big 4 firms may pursue clients that present greater risk to the portfolio. We find that the overall portfolio in 2009 presents greater financial risk, attributable to the impact of the recession on continuing clients. A net decrease in audit and auditor business risks is also attributable to continuing clients over this period, as increases for new clients are offset by reductions due to departing clients. Overall, the results, which should be of interest to regulators, indicate that Big 4 firms continued to balance their portfolio with risk in mind.

view more