Wisconsin School of Business

Karla Johnstone

Professor

Professor - Accounting & Information Systems
Ernst & Young Professorship in Accounting

Karla Johnstone, Ernst & Young Professorship in Accounting holds a Ph.D and CPA is a professor at the Wisconsin School of Business.

She teaches auditing, and her research investigates auditor decision making, including auditors' client acceptance and continuance decisions, how fraud risk and fraud brainstorming affect audit planning and audit fees, client-auditor negotiation, and audit budget-setting processes. She has also published various articles on accounting curriculum effectiveness, along with an auditing textbook. Professor Johnstone serves on the editorial boards of several academic journals, and is active in the Auditing Section of the American Accounting Association, currently serving on the Executive Committee in the role of Treasurer.
 

Selected Published Journal Articles

Hoitash, R., Hoitash, U., & Johnstone, K. (2012). Internal control material weaknesses and CFO compensation. Contemporary Accounting Research (29), 768-803.
Anderson, U., Christ, M., Johnstone, K., & Rittenberg, L. (2012). A post-SOX examination of factors associated with the size of internal audit functions. Accounting Horizons (26), 167-191.
Johnstone, K., & Keune, M. (2012). Materiality Judgments and the Resolution of Detected Misstatements: The Role of Managers, Auditors, and Audit Committees. The Accounting Review
Ettredge, M., Johnstone, K., Stone, M., & Wang, Q. (2011). The effects of firm size, corporate governance quality, and bad news on disclosure compliance. Review of Accounting Studies (46), 866-889.
Johnstone, K., Li, C., & Rupley, K. (2011). Changes in corporate governance associated with the revelation of internal control material weaknesses and their subsequent remediation. Contemporary Accounting Research (28), 1-53.
Johnstone, K., Hammersley, J., & Kadous, K. (2011). How Do Audit Seniors Respond to Heightened Fraud Risk?. (30), 81-101.
Bedard, J., & Johnstone, K. (2010). Audit partner tenure and audit planning and pricing. Auditing: A Journal of Practice & Theory
Bedard, J., Johnstone, K., & Smith, E. (2010). Audit quality indicators: A status update on possible public disclosures and insights from audit practice. Current Issues in Auditing
Johnstone, K., Rittenberg, L., Christ, M., & Anderson, U. (2010). Effective sizing of internal audit departments. Institute of Internal Auditors (2010), 1-80.
Johnstone, K., Rittenberg, L., Christ, M., & Anderson, U. (2010). Effective sizing of internal audit departments for colleges and universities. Institute of Internal Auditors (2010), 1-66.
Johnstone, K., & Brown, H. (2009). Resolving disputed financial reporting issues: Effects of auditor negotiation experience and engagement risk on negotiation process and outcome. Auditing: A Journal of Practice & Theory
Bedard, J., Johnstone, K., & Smith, E. (2009). How good is your audit firm?. National Association of Corporate Directors - Directorship Magazine (June/July), 64-67.
Keune, M., Johnstone, K., & . (2009). Staff accounting bulletin No. 108 disclosures: Descriptive evidence from the revelation of accounting misstatements. Accounting Horizons (March)
Bedard, J., Ettredge, M., & Johnstone, K. (2008). Fee pressure and the longitudinal dynamics of audit engagement budgeting and reporting. Advances in Accounting (24), 32-40.
Ettredge, M., Bedard, J., & Johnstone, K. (2008). Empirical tests of audit budget dynamics. Behavioral Research in Accounting (20), 1-18.
Bedard, J., Ettredge, M., & Johnstone, K. (2007). Using electronic audit workpaper systemsin audit practice: Task analysis, learning, and resistance. Advances in Accounting Behavioral Research (10), 29-53.
Bedard, J., Ettredge, M., Jackson, C., & Johnstone, K. (2007). Knowledge, experience and work-around behaviors: Electronic media in the professional audit environment. Journal of Business and Behavioral Sciences (16), 131-160.
Bellovary, J., & Johnstone, K. (2007). Descriptive evidence from audit practice on SAS No. 99 brainstorming activities. Current Issues in Auditing (1)
Adams, F., Bedard, J., & Johnstone, K. (2005). Information asymmetry and competitive bidding in the market for audit services. Economic Inquiry (43), 417-425.
Johnstone, K. (2005). Discussion comments on Negotiations over accounting issues: The congruency of audit partner and chief financial office recalls. Auditing: A Journal of Practice & Theory (24), 195-196.
Johnstone, K., Bedard, J., & Ettredge, M. (2004). The effects of competitive bidding on engagement planning and pricing. Contemporary Accounting Research (21), 25-53.
Muzatko, S., Johnstone, K., Mayhew, B., & Rittenberg, L. (2004). An empirical investigation of IPO underpricing and the change to the LLP organization of audit firms. Auditing: A Journal of Practice & Theory (23), 53-67.
Bedard, J., & Johnstone, K. (2004). Earnings manipulation risk, corporate governance risk, and auditors' planning and pricing decisions. The Accounting Review (79), 277-304.
Bedard, J., & Johnstone, K. (2004). Audit firm portfolio management decisions. Journal of Accounting Research (42), 1-32.
Bedard, J., Jackson, C., Johnstone, K., & Ettredge, M. (2003). The effect of training on auditors' acceptance of an electronic work system. International Journal of Accounting Information Systems (4), 227-250.
Johnstone, K., & Bedard, J. (2003). Risk management in client acceptance decisions. The Accounting Review (78), 1003-1025.
Bell, T., Bedard, J., Johnstone, K., & Smith, E. (2002). KRisk: A computerized decision-aid for client acceptance and continuance risk assessments. Auditing: A Journal of Practice & Theory (21), 97-113.
Ashbaugh, H., Johnstone, K., & Warfield, T. (2002). Outcome assessment of a writing-skill improvement initiative: Results and methodological implications. Issues in Accounting Education (17), 123-148.
Johnstone, K., & Muzatko, S. (2002). Resolving difficult accounting issues: A case study in client-auditor interaction. Issues in Accounting Education (17), 27-39.
Johnstone, K., Bedard, J., & Biggs, S. (2002). Aggressive client reporting: Factors affecting auditors' generation of financial reporting alternatives. Auditing: A Journal of Practice & Theory (21), 47-65.
Warfield, T., Skaife, H., & Johnstone, K. (2002). Effects of Repeated Practice and Contextual Writing Experiences on College Students' Writing Skills. Journal of Educational Psychology, 11.
Johnstone, K., Ashbaugh, H., & Warfield, T. (2002). Effects of repeated practice and contextual-writing experiences on college students' writing skills. Journal of Educational Psychology (94), 305-315.
Ashbaugh, H., Johnstone, K., & Warfield, T. (2001). Enhancing student writing skills with professional experience. The Learning Link at the University of Wisconsin - Madison (2), 2.
Johnstone, K. (2001). Risk, experience, and auditors' client acceptance decisions. National Public Accountant (46), 27-38.
Johnstone, K., & Bedard, J. (2001). Engagement planning, bid pricing, and client response in the market for initial attest engagements. The Accounting Review (76), 199-220.
Johnstone, K., Sutton, M., & Warfield, T. (2001). Antecedents and consequences of independence risk: Framework for analysis. Accounting Horizons (15), 1-18.
Ashbaugh, H., & Johnstone, K. (2000). Developing students' technical knowledge and professional skills: A sequence of short cases in Intermediate Financial Accounting. Issues in Accounting Education (15), 67-88.
Johnstone, K. (2000). Client acceptance decisions: Simultaneous effects of client business risk, audit risk, auditor business risk, and risk adaptation. Auditing: A Journal of Practice & Theory (19), 1-25.
Ashbaugh, H., Johnstone, K., & Warfield, T. (1999). Corporate reporting on the internet. Accounting Horizons (13), 241-257.
Johnstone, K., & Biggs, S. (1998). Problem-based learning: Introduction, analysis, and accounting curricula implications. Journal of Accounting Education (16), 407-427.
Johnstone, K., Bedard, J., & Biggs, S. (1996). Framing effects and output interference in a concurring partner review context: Theory and exploratory evidence. Deloitte & Touche/University of Kansas Symposium Proceedings (8), 165-193.

Selected Submitted Journal Articles

Johnstone, K., Ittonen, K., & Myllymaki, E. (2011). Characteristics of individual audit partners and their client portfolios: Effects on discretionary accruals and audit fees. European Accounting Review

Submitted Working Papers

Hammersley, J., Johnstone, K., & Kadous, K. (2010). How do audit seniors respond to heightened fraud risk?. Auditing: A Journal of Practice & Theory
Johnstone, K., Li, C., & Luo, S. Client supply chain relationships, audit firm selection, and implications for audit quality and pricing.
Keune, M., & Johnstone, K. Audit committee members' and executives' financial incentives and the materiality of financial statement misstatements. not yet submitted

Presentations

International Symposium on Audit Research
Client supply chain relationships, audit firm selection, and implications for audit quality and pricing

European Accounting Association Annual Meeting
Client supply chain relationships, audit firm selection, and implications for audit quality and pricing

18th Annual Conference of the Multinational Finance Society
Internal Control Material Weaknesses and CFO Compensation

Mid-year Auditing Section Conference
Audit committee members' and executives' financial incentives and the materiality of financial statement misstatements

University of Kansas/Deloitte LLP Research Symposium
Audit committee members' and executives' financial incentives and the materiality of financial statement misstatements

Annual Meeting
How do manager and auditor incentives affect the correction of detected misstatements? Evidence from Staff Accounting Bulletin No. 108 disclosures

Mid-year Auditing Section Conference
Does control-related information enhance fraud detection?

University of Wisconsin School of Business
How do manager and auditor incentives affect the correction of detected misstatements? Evidence from Staff Accounting Buletin No. 108 disclosures

University of Illinois/KPMG Research Conference
Does control-related information enhance fraud detection?

Annual Meeting
Inferences from the revelation of previously uncorrected accounting misstatements

Deloitte LLP and University of Kansas Auditing Conference
Does control-related information enhance fraud detection?

Research Workshop Brown Bag Presentation
Inferences from the revelation of previously uncorrected accounting misstatements

Mid-year Auditing Section Conference
Internal governance, external governance, and internal control remediation

Mid-Year Auditing Section Conference
The effects of internal control quality, CFO characteristics, and board of director strength on CFO annual compensation

Research Workshop
The dynamics of audit risk response and portfolio change

Research Workshop
The effects of internal control quality, CFO characteristics, and board of director strength on CFO annual compensation

Annual Meeting
Audit time budget dynamics

Research Workshop
The effects of internal control quality, CFO characteristics, and board of director strength on CFO annual compensation

Research Workshop
The effects of internal control quality, CFO characteristics, and board of director strength on CFO annual compensation

Research Workshop
A theory of compliance with disclosure requirements: Empirical tests

Midyear Auditing Section Conference
A longitudinal comparison of auditors' response to client risk in the Sarbanes-Oxley era

Accounting, Behavior and Organizations Conference
Audit time budgeting dynamics

Research Workshop
A longitudinal comparison of auditors' resposne to client risk in the Sarbanes-Oxley era

Research Workshop
A longitudinal comparison of auditors' response to client risk in the Sarbanes-Oxley era

American Accounting Association-Mid-year Auditing Section Conference
Audit-client bid-seeking behavior: Modeling private negotiation versus competitive bidding

American Accounting Assocation Auditing Section Midyear Conference
Audit-Client Bid-Seeking Behavior: Modeling Private Negotiation versus Auctions


Audit firm portfolio management decisions

International Symposium on Audit Research
Audit firm portfolio management decisions


Audit firm portfolio management decisions


Earnings manipulation risk, corporate governance risk, and auditors' planning and pricing decisions

American Accounting Association - Mid-year Auditing Section Conference
Antecedents and consequences of independence risk: Framework for analysis

Accounting, Behavior, and Organizations Section Conference
Risk management in client acceptance decisions

American Accounting Assocation - Auditing Section Conference
Behavioral research in auditing: Past, present, and future research

American Accounting Association Annual Meeting
The effects of competitive bidding on engagement planning and pricing


Antecedents and consequences of independence risk: Framework for analysis

Boston Area Research Colloquium
Risk management in client acceptance decisions

Mid-year Auditing Section Conference
Engagement planning, bid pricing, and client response in the market for initial attest engagements


Risk management in client acceptance decisions

University of Illinois Symposium on Audit Research
Risk management in client acceptance decisions

Photograph of Karla Johnstone

Karla Johnstone

Professor
 
Professor | Accounting & Information Systems
Ernst & Young Professorship in Accounting
(608) 234-1052
4133C Grainger Hall