187 AUDITING: A JOURNAL OF PRACTICE & THEORY Vol. 27, No. 1 May 2008 pp. 187–218 Risk Monitoring and Control in Audit Firms: A Research Synthesis Jean C. Bedard, Donald R. Deis, Mary B. Curtis, and J. Gregory Jenkins SUMMARY: This paper summarizes the research literature related to audit firm quality control, with a dual purpose: (1) to provide information on the current state of knowl- edge with regard to the ways in which audit firms monitor and control firm-level risk; and (2) to identify specific areas in which there is currently insufficient research. We review literature on a number of specific topics under the overall heading of firm-level risk monitoring and control, including: client acceptance / continuance procedures, au- ditor independence (partner and firm rotation, employing former auditors, nonaudit ser- vices, partner compensation), electronic decision aids, consultation units, procedures for communicating weaknesses and taking corrective action, and review of engage- ment activities (including engagement quality reviews, peer reviews, and regulatory inspections). We conclude with a discussion of research relevant to the issue of whether smaller audit firms should be subject to the same level of quality control regulation as larger firms. Keywords: audit firm quality control; risk monitoring; auditing standards; independence risk; whistle-blowing; decision aids. INTRODUCTION T he purpose of this paper is to review academic research relevant to audit firm quality control (AFQC); i.e., audit firms’ assessment and control of risk that auditing stan- dards, professional values or the public interest might be violated. 1 At this crucial 1 The Auditing Section of the American Accounting Association recently convened teams of accounting research- ers to summarize research on current or future potential agenda topics of the Public Company Accounting Oversight Board (PCAOB). These topics were originally proposed by the Board’s staff and Standing Advisory Group (SAG). The authors were asked to review the literature on audit firm quality control, including processes of risk assessment and monitoring by audit firms. This paper presents our findings relevant to those topics. Jean C. Bedard is a Professor at Bentley College and a Professorial Visiting Fellow at the University of New South Wales, Donald R. Deis is a Professor at Texas A&M University– Corpus Christi, Mary B. Curtis is an Associate Professor at the University of North Texas, and J. Gregory Jenkins is an Associate Professor at Virginia Polytechnic Institute & State University. We acknowledge the helpful comments received from Nancy Bagranoff, Michael Bamber, Joe Brazel, Joe Carcello, Jeff Cohen, Mark Covaleski, Mark Dirsmith, Dana Hermanson, Julia Higgs, Gary Holstrum, Jim Hunton, Steve Kaplan, Hun Tong Tan, Paul Williams, conference participants of the 2007 PCAOB Symposium, Dan Simunic(the editor), and two anonymous reviewers. Submitted: October 2006 Accepted: August 2007