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Asset securitizations and audit effort
Conference paper   Open access

Asset securitizations and audit effort

Y.Y. Zhang, G.S. Monroe, D. Gasbarro, G. Cullen and G. Shailer
24th Australasian Finance and Banking Conference (Sydney, NSW, Australia, 14/12/2011–16/12/2011)
2011
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Abstract

Asset securitizations increase audit complexity and audit risks, which are expected to increase audit effort. We predict auditors became more sensitive to banks’ asset securitization risks in light of their role in bank failures and the financial downturn that commenced in 2007. Using bank holding company data from 2003 to 2009, we find that asset securitization risks (retained interests) are associated with bank audit fees during, but not before, the global financial crisis. This suggests auditors were previously less attentive to securitization risks before the GFC. The results are consistent with auditors previously treating securitizations as asset sales rather than recourse debt.

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