Certified Public Accountant (CPA) Firm

Similar to the accounting firm, the CPA firm is comprised of CPA dedicated to the provision of professional accounting services to its clientele with the additional oversight and expertise that CPAs bring to the table.Like the field itself, many CPA firms have experienced some fundamental shifts in their direction and scope over the years.

According to Ahmed Belkaoui and Janice Monti-Belkaoui (1991), the conditions that caused the demand for auditor services may also serve to explain some of the observed auditor changes that various studies have tried to indicate. For example, in their examination of 620 of the largest U.S. firms over the 1957-1965 period, Burton and Roberts reported that, of 137 auditor changes, most were due to such institutional factors as certified public accountant (CPA) firm mergers and client need for additional professional services; only 6% of the changes were a result of client dissatisfaction with the CPA firm's services. In an effort to reduce fees, some firms may be inclined to switch to non-national CPA firms.

The results found by Bedingfield and Loeb contradict earlier findings of a general preference for a well-known CPA firm among third parties, especially underwriters. A survey by the firm of Deloitte, Haskins and Sells found technical competence to be the most important criterion for CPA-firm selection, and that such factors as declining quality of work, excessive fees, poor working relationships with the client's personnel, and diminished CPA-firm reputation were as likely to motivate an auditor change.Finally, a survey conducted by Eichensever and Shields found changes in the relative levels of fees and working relationships to be the two most important considerations in auditor-change decisions.

Empirical test results were, nonetheless, consistent with the concept that price levels (fees) are important considerations in all buying (auditor selection) contexts, but that the importance of various non-price CPA firms attributes was dependent upon client size and CPA firm comparison contexts. Client size appeared to be a particularly significant intervening variable in comparisons between Big Eight and Non-Big Eight CPA firms. In these types of comparisons, the perceived quality of working relationships appeared important for smaller clients, while more obviously structural variables such as geographical coverage and the range of service offered appeared significant for larger clients (Knapp & Elikai, 1987).

For all these studies though, nine reasons appear to have been used for auditor switches, namely:

1. New management chose to replace auditors,
2. There was a need for additional services,
3. There was a need for new financing and the broker or banker suggested an auditor change,
4. There was dissatisfaction with services offered,
6. There was a change due to mergers,
7. There was a management desire for a national firm,
8. There was a poor working relationship with the audit firm,
9. The engagement partner was inaccessible (Knapp & Elikai, 1987, p. 86).