Who Bears the Pen? Audit Partner–Manager Report Signatures, Multilevel Accountability and Audit Quality in China

Using data pertaining to China's mandatory two‐signature regime, under which a certified public accountant licensed as an audit manager can serve as an audit report signatory, we examine whether reallocating accountability within the audit engagement team is associated with audit quality. We find that audit reports signed by an audit partner and manager are of higher quality than those signed by two audit partners. Additional analyses show that this effect is especially pronounced among audit clients with complex operations and that signing by a partner and manager is associated with improved audit efficiency due to reductions in audit report lags and audit fees. Our study extends audit accountability research by providing novel evidence that the identity combination of audit partner and manager signatories changes accountability pressure across hierarchical levels and process versus outcome audit engagement responsibilities, with implications for audit effort, scepticism and issue escalation within the audit engagement team.