ScienceNot yet confirmed elsewhere1 publisher2 min readPublished
Audit offices with more partners and managers per employee had fewer misstatements
University at Buffalo researchers found that audit offices with a higher share of partners and managers had fewer misstatements across more than 41,000 audits. The association bears on how offices staff teams and on the PCAOB's proposed disclosure of partner and manager involvement.
The Scientist · Science desk
What happened
- The sample covers more than 5,700 companies audited by 20 large U.S. accounting firms between 2008 and 2022.
- Employment data came from Revelio Labs, which builds structured data sets from more than 500 million LinkedIn profiles.
- Offices with higher proportions of partners and managers also had fewer problems identified during regulatory inspections.
- The association was strongest in more complex audits and in offices whose staff were more satisfied with senior management.
Why it matters
- constraint Office leaders can plan toward more partners and managers per employee, but an association across 20 firms cannot say how many an office needs or what one more hire would change.
- exposure An office with few partners and managers per employee and complex clients sits where the link was strongest, and inspection findings were one of the two outcomes covered.
- capability If the disclosure is adopted, investors could compare offices on supervisory involvement. The rank-count version of that measure tracked outcomes at 20 large firms, and smaller firms fall outside the sample.
The study, published in Contemporary Accounting Research [10], covers more than 41,000 audits, but not 41,000 companies [2]. Spread over more than 5,700 companies, that is about seven audits per company [12], so the same clients recur across the sample. The summary does not report an effect size or say how the analysis treated repeat audits of one client.
The supervision measure counts people by rank. The researchers sorted employees into partners, managers and other audit staff to calculate supervision for each office [4]. In their results, the office-level ratio of partners and nonpartner managers to audit staff worked as a useful gauge of audit quality [11].
The two moderating patterns, complex audits and employee satisfaction with senior management [6], fit a supervision story. Co-author Joshua Khavis gave the reasoning for complexity: "Even nonpartner managers provide context, judgment and feedback that can help employees recognize problems earlier and make better decisions, especially when the work is complex," Khavis said [9].
A second account fits as well. Well-run offices may both keep more senior people and produce cleaner audits, with employee satisfaction as one more sign of it. An association cannot separate the two. In our view the finding holds as a description of these 20 firms [2], on two conditions: that repeat audits were handled properly in the analysis, and that the ratio is picking up supervision.
According to co-author Brandon Szerwo, the PCAOB has proposed that audit firms disclose partner and manager involvement in reviewing and supporting the audit work [7]. He called it "information that could help investors and others better evaluate audit quality" [8]. The thing this study doesn't tell you is how much of a manager's time a given engagement received. In our view that is nearer to what the proposal asks firms to report than a rank count is.
What to watch
- Whether the PCAOB adopts the disclosure, and whether it defines involvement as headcount mix or as hours of review on each engagement.
- A study that follows the same offices as their staffing changes, to test whether adding managers moves misstatement rates.
- Replication at firms outside the 20 large ones sampled here.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence55
- Adoption
- Insufficient
- Hype gap+15
- Incentives
- Insufficient
- Confidence60
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
New research from the University at Buffalo School of Management found that offices with higher proportions of partners and managers had fewer financial misstatements.
ReportedSupportedSource: Khavis, Szerwo and Li, Contemporary Accounting Research (2026), as summarized by phys.orgView cited source - [2]
The researchers analyzed more than 41,000 audits of more than 5,700 companies at 20 large U.S. accounting firms from 2008 to 2022.
- [3]
The accounting employment data were obtained from Revelio Labs, which converts data from more than 500 million LinkedIn profiles into structured proprietary data sets.
- [4]
The researchers grouped employees into partners, managers and other audit staff to calculate managerial supervision across offices.
- [5]
Offices with higher proportions of partners and managers had fewer problems identified during regulatory inspections.
- [6]
The relationship was stronger for more complex audits and in offices where employees reported higher satisfaction with senior management.
- [7]
According to study co-author Brandon Szerwo, the Public Company Accounting Oversight Board has proposed requiring audit firms to disclose partner and manager involvement in reviewing and supporting the audit work.
ReportedSupportedSource: Brandon Szerwo, associate professor of accounting and law, UB School of ManagementView cited source - [8]
Szerwo described the proposed disclosure as "information that could help investors and others better evaluate audit quality."
ReportedSupportedSource: Brandon Szerwo, associate professor of accounting and law, UB School of ManagementView cited source - [9]
"Even nonpartner managers provide context, judgment and feedback that can help employees recognize problems earlier and make better decisions, especially when the work is complex," Khavis said.
ReportedSupportedSource: Joshua Khavis, assistant professor of accounting and law, UB School of ManagementView cited source - [10]
The study, Staffing Leverage at the Audit Office and Audit Quality, was published in Contemporary Accounting Research in 2026.
ReportedSupportedSource: phys.org citation of Khavis et al., Contemporary Accounting Research (2026)View cited source - [11]
The researchers found that an office's ratio of partners and nonpartner managers to audit employees is a useful indicator of audit quality.
- [12]
More than 41,000 audits across more than 5,700 companies works out to about seven audits per company (both source figures are lower bounds, so the ratio is approximate).
Sources
1 independent publisher whose own reporting we read for this story.
- phys.orgNew study finds the staffing structure of an audit office improves outcomes
1 article · October 12, 2026
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