Because time is a scarce commodity, the auditor should weigh the cost/benefit tradeoffs in extending the audit research process. The researcher should address the problem until he or she has eliminated all reasonable doubt relating to the issue, recognizing the hidden costs of making an improper audit decision.
Enforcement of professional audit work occurs at many levels. Quality control reviews are expected within a CPA firm. Peer reviews are conducted by other firms. The PCAOB conducts inspections of CPA firms. The inspections are generally used for the enhancement of the audit process but also used for PCAOB enforcement sanctions. Audit quality has improved because of PCAOB inspection reports. The SEC can still issue an Accounting and Auditing Enforcement Release on a CPA firm. Litigation results in a review of audit quality. Besides the legal damages from an association with a negligent audit, the auditor can face criminal penalties; SEC, FTC, and other government sanctions; loss of reputation among the auditor's peers; and a significant loss of existing clients in a competitive environment.
If sloppy audit work is revealed to the public through failures of major corporations or investment vehicles, pressure is placed on Congress to change the audit environment, as happened under Sarbanes-Oxley. As congressional and other investigations continue in financial reform, only time will reveal the effects on the audit environment.