The discussion of the benefit of an audit partner’s signature should include the source of this recommendation: The Treasury’s Advisory Committee on the Auditing Profession, which included some of the most renowned experts on the profession and its standards, report is dated October 6, 2008. On this topic, they said:

“…The Committee believes that the engagement partner’s signature on the auditor’s report would increase transparency and accountability. Therefore, the Committee recommends that the PCAOB undertake a standard-setting initiative to consider mandating the engagement partner’s signature on the auditor’s report. The Committee notes the signature requirement should not impose on any signing partner any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of an auditing firm.”

Notice they say that no further liability should be imposed than whatever a partner has as a member of an auditing firm, a partnership. The audit firms are not corporations where all liability for bad acts imbues to some anonymous corporate entity. The firms are still partnerships of equity partners who accept liability for each other’s acts in return for being able to share profits amongst themselves alone. The transparency is not only for the benefit of shareholders, their client, via a public duty and the public franchise, but their own partners who should want individual accountability for errors, omissions, fraudulent and negligence on the part of their brethren.

Think about it in terms of a fraternity. Although the whole organization may stand behind a brother even when they make a mistake, there is still the individual responsibility that must be accepted and which can be imposed, if not financially (for example they can kick him out, ban him from fraternity benefits) then at least on an ongoing basis via monitoring and ongoing peer pressure to behave and live within the rules for the good of all. An individual signature on an audit report encourages acknowledgement of that obligation both in front of the public but also in front of their fellow partners. There is no hiding from their client or their colleagues.
Francine

I would hope it has the effect of making partners more cognizant of what the firm is signing and more involved in the details. But you’re right, it’s hard to quantify the benefit.

no, but part of it is to hold partners accountable for the adequacy of their engagements.

I’m not a lawyer, but I suspect there is far greater legal liability to an individual for them signing an audit opinion, as compared to having the partnership sign it. Is the solution to improving the audit industry really going to be to discourage people from wanting to become a partner?

So you say there’s no proof of the benefit – how could there be? Would it require that much more effort from partners that we couldn’t just find out?