Wisconsin School of Business

Karla Johnstone

Professor - Accounting & Information Systems
EY Professor in Accounting

Karla Johnstone is the EY Professor at the University of Wisconsin – Madison School of Business. She received her PhD from the University of Connecticut in 1997 and has spent her entire career at Wisconsin. Her research interests include 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, among others. She has published over 40 papers in leading journals, including Journal of Accounting Research, The Accounting Review, Contemporary Accounting Research, and Auditing: A Journal of Practice & Theory. Karla has served on the Executive Committee of the Auditing Section of the AAA in the role of treasurer, and she is now serving as the Vice President. She was previously an Associate Editor at Accounting Horizons and is currently serving as an Editor at Auditing: A Journal of Practice & Theory and she serves on numerous other editorial boards at other journals, both in the U.S. and internationally. Her teaching interests are focused in auditing, both at the undergraduate and graduate levels. She is also a co-author on auditing textbook.
 

Selected Accepted Journal Articles


Kim, S. & Johnstone, K. (2015). Multi-Disciplinary Teams and Biased Evidence Processing: Implications from the Greenhouse Gas Assurance Setting. Auditing: A Journal of Practice & Theory

Selected Published Journal Articles


Keune, M. & Johnstone, K. (2015). Audit committee incentives and the resolution of detected misstatements. Auditing: A Journal of Practice & Theory (34), 109-137.
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. doi: 10.2308/acch-50115.
Hoitash, R. & Hoitash, U. & Johnstone, K. (2012). Internal control material weaknesses and CFO compensation. Contemporary Accounting Research (29), 768-803. doi: 10.1111/j.1911-3846.2011.01122.x.
Johnstone, K. & Keune, M. (2012). Materiality Judgments and the Resolution of Detected Misstatements: The Role of Managers, Auditors, and Audit Committees. The Accounting Review (87), 1641-1677. doi: 10.2308/accr-50185.
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. doi: 10.1007/s11142-011-9153-8.
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. doi: 10.1111/j.1911-3846.2010.01037.x.
Johnstone, K. & Hammersley, J. & Kadous, K. (2011). How Do Audit Seniors Respond to Heightened Fraud Risk?. Auditing: A Journal of Practice & Theory (30), 81-101. doi: 10.2308/ajpt-10110.
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 (4), C12-C19. doi: 10.2308/ciia.2010.4.1.C12.
Bedard, J. & Johnstone, K. (2010). Audit partner tenure and audit planning and pricing. Auditing: A Journal of Practice & Theory (29), 45-70. doi: 10.2308/aud.2010.29.2.45.
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. & Rittenberg, L. & Christ, M. & Anderson, U. (2010). Effective sizing of internal audit departments. Institute of Internal Auditors (2010), 1-80.
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 (17), 27-39. doi: 10.2308/iace.2002.17.1.27.
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), 19-53. doi: 10.2308/acch.2009.23.1.19.
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. doi: 10.1016/j.adiac.2008.05.006.
Ettredge, M. & Bedard, J. & Johnstone, K. (2008). Empirical tests of audit budget dynamics. Behavioral Research in Accounting (20), 1-18. doi: 10.2308/bria.2008.20.2.1.
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), A1-A11. doi: 10.2308/ciia.2007.1.1.A1.
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. doi: 10.2308/aud.2005.24.s-1.195.
Adams, F. & Bedard, J. & Johnstone, K. (2005). Information asymmetry and competitive bidding in the market for audit services. Economic Inquiry (43), 417-425. doi: 10.1093/ei/cbi028.
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. doi: 10.2308/aud.2004.23.1.53.
Bedard, J. & Johnstone, K. (2004). Earnings manipulation risk, corporate governance risk, and auditors' planning and pricing decisions. The Accounting Review (79), 277-304. doi: 10.2308/accr.2001.76.2.199.
Johnstone, K. & Bedard, J. & Ettredge, M. (2004). The effects of competitive bidding on engagement planning and pricing. Contemporary Accounting Research (21), 25-53. doi: 10.1506/47TF-WHQ1-RG39-8JX4.
Bedard, J. & Johnstone, K. (2004). Audit firm portfolio management decisions. Journal of Accounting Research (42), 1-32. doi: 10.1111/j.1475-679X.2004.00153.x.
Mutzako, S. & Johnstone, K. & Mayhew, B. & Rittenberg, L. (2004). Does Audit Firm Liability Status Affect IPO Pricing? Evidence from the Shift to Limited Liability Partnerships. Auditing: A Journal of Practice & Theory (3), 53-67.
Johnstone, K. & Bedard, J. (2003). Risk management in client acceptance decisions. The Accounting Review (78), 1003-1025. doi: 10.2308/accr.2003.78.4.1003.
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. doi: 10.1016/j.accinf.2003.05.001.
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. doi: 10.2308/aud.2002.21.2.97.
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. doi: 10.2308/aud.2002.21.1.47.
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. doi: 10.1037/0022-0663.94.2.305.
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. doi: 10.2308/iace.2002.17.2.123.
Johnstone, K. (2001). Risk, experience, and auditors' client acceptance decisions. National Public Accountant (46), 27-38.
Johnstone, K. & Sutton, M. & Warfield, T. (2001). Antecedents and consequences of independence risk: Framework for analysis. Accounting Horizons (15), 1-18. doi: 10.2308/acch.2001.15.1.1.
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. doi: 10.2308/accr.2001.76.2.199.
Trotman, K. & Grambling, A. & Johnstone, K. & Kaplan, S. & Mayhew, B. & Reimers, R. & Schwartz, H. & Wright, B. (2000). Twenty-five Years of Audit Research.
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. doi: 10.2308/aud.2000.19.1.1.
Ashbaugh, H. & Johnstone, K. & Warfield, T. (1999). Corporate reporting on the internet. Accounting Horizons (13), 241-257. doi: 10.2308/acch.1999.13.3.241.
Johnstone, K. & Biggs, S. (1998). Problem-based learning: Introduction, analysis, and accounting curricula implications. Journal of Accounting Education (16), 407-427. doi: 10.1016/S0748-5751(98)00026-8.
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.

Working Papers


Johnstone, K. & Earley, C. & Westermann, K. (2014). A novice perspective on learning in the accounting profession.
Dennis, S. & Griffin, J. & Johnstone, K. (2014). Auditor Communication of Material Imprecision and Nonprofessional Investors' Judgments.
Johnstone, K. & Dennis, S. (2014). Contemporary fraud brainstorming practices: Evidence from the field.

Presentations


Accounting and Finance Association of Australia and New Zealand Annual Conference ( 2014 ) Improving the Quality of Greenhouse Gas Emissions Assurance with an Understanding and Reduction of Biased Processing of Evidence

2013 ANCAAR Conference ( 2013 ) Keynote Remarks at 2013 ANCAAR

2013 AAA Annual Meeting ( 2013 ) Discussion Comments on "City-level human capital and audit markets"

International Symposium on Audit Research ( 2012 ) Client supply chain relationships, audit firm selection, and implications for audit quality and pricing

European Accounting Association Annual Meeting ( 2012 ) Client supply chain relationships, audit firm selection, and implications for audit quality and pricing

18th Annual Conference of the Multinational Finance Society ( 2011 ) Internal Control Material Weaknesses and CFO Compensation

Mid-year Auditing Section Conference ( 2011 ) Audit committee members' and executives' financial incentives and the materiality of financial statement misstatements

University of Kansas/Deloitte LLP Research Symposium ( 2010 ) Audit committee members' and executives' financial incentives and the materiality of financial statement misstatements

Annual Meeting ( 2009 ) 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 ( 2009 ) Does control-related information enhance fraud detection?

University of Wisconsin School of Business ( 2008 ) 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 ( 2008 ) Does control-related information enhance fraud detection?

Annual Meeting ( 2008 ) Inferences from the revelation of previously uncorrected accounting misstatements

Deloitte LLP and University of Kansas Auditing Conference ( 2008 ) Does control-related information enhance fraud detection?

Research Workshop Brown Bag Presentation ( 2008 ) Inferences from the revelation of previously uncorrected accounting misstatements

Mid-year Auditing Section Conference ( 2008 ) Internal governance, external governance, and internal control remediation

Mid-Year Auditing Section Conference ( 2008 ) The effects of internal control quality, CFO characteristics, and board of director strength on CFO annual compensation

Research Workshop ( 2007 ) The dynamics of audit risk response and portfolio change

Research Workshop ( 2007 ) The effects of internal control quality, CFO characteristics, and board of director strength on CFO annual compensation

Annual Meeting ( 2007 ) Audit time budget dynamics

Research Workshop ( 2007 ) The effects of internal control quality, CFO characteristics, and board of director strength on CFO annual compensation

Research Workshop ( 2007 ) The effects of internal control quality, CFO characteristics, and board of director strength on CFO annual compensation

Research Workshop ( 2006 ) A theory of compliance with disclosure requirements: Empirical tests

Midyear Auditing Section Conference ( 2006 ) A longitudinal comparison of auditors' response to client risk in the Sarbanes-Oxley era

Accounting, Behavior and Organizations Conference ( 2005 ) Audit time budgeting dynamics

Research Workshop ( 2005 ) A longitudinal comparison of auditors' resposne to client risk in the Sarbanes-Oxley era

Research Workshop ( 2005 ) A longitudinal comparison of auditors' response to client risk in the Sarbanes-Oxley era

American Accounting Association-Mid-year Auditing Section Conference ( 2004 ) Audit-client bid-seeking behavior: Modeling private negotiation versus competitive bidding

( 2003 ) Audit firm portfolio management decisions

International Symposium on Audit Research ( 2003 ) Audit firm portfolio management decisions

( 2002 ) Audit firm portfolio management decisions

( 2002 ) Earnings manipulation risk, corporate governance risk, and auditors' planning and pricing decisions

American Accounting Association - Mid-year Auditing Section Conference ( 2001 ) Antecedents and consequences of independence risk: Framework for analysis

Accounting, Behavior, and Organizations Section Conference ( 2000 ) Risk management in client acceptance decisions

American Accounting Assocation - Auditing Section Conference ( 2000 ) Behavioral research in auditing: Past, present, and future research

American Accounting Association Annual Meeting ( 2000 ) The effects of competitive bidding on engagement planning and pricing

( 2000 ) Antecedents and consequences of independence risk: Framework for analysis

Boston Area Research Colloquium ( 2000 ) Risk management in client acceptance decisions

Mid-year Auditing Section Conference ( 2000 ) Engagement planning, bid pricing, and client response in the market for initial attest engagements

( 2000 ) Risk management in client acceptance decisions

University of Illinois Symposium on Audit Research ( 2000 ) Risk management in client acceptance decisions


Undergraduate Courses


Info Tech Risk&Assurance Serv
Course DescriptionOperational and information systems auditing; risk analysis, electronic evidence; computerized audit and assurance techniques; internal auditing and outsourcing; analytical techniques; auditor judgment; control concepts, business process risk analysis; reporting on controls and business processes; expanding technology and assurance.
(AIS 631 Section 1), Spring 2009.

Info Tech Risk&Assurance Serv
Course DescriptionOperational and information systems auditing; risk analysis, electronic evidence; computerized audit and assurance techniques; internal auditing and outsourcing; analytical techniques; auditor judgment; control concepts, business process risk analysis; reporting on controls and business processes; expanding technology and assurance.
(AIS 631 Section 2), Spring 2009.

Info Tech Risk&Assurance Serv
Course DescriptionOperational and information systems auditing; risk analysis, electronic evidence; computerized audit and assurance techniques; internal auditing and outsourcing; analytical techniques; auditor judgment; control concepts, business process risk analysis; reporting on controls and business processes; expanding technology and assurance.
(AIS 631 Section 1), Spring 2010.

Info Tech Risk&Assurance Serv
Course DescriptionOperational and information systems auditing; risk analysis, electronic evidence; computerized audit and assurance techniques; internal auditing and outsourcing; analytical techniques; auditor judgment; control concepts, business process risk analysis; reporting on controls and business processes; expanding technology and assurance.
(AIS 631 Section 2), Spring 2010.

Audit and Assurance Services
Course DescriptionGeneral principles, including preparation of working papers and various kinds of reports.
(AIS 630 Section 1), Spring 2009.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2001.

Audit and Assurance Services
Course DescriptionGeneral principles, including preparation of working papers and various kinds of reports.
(ACC 630), Fall 2001.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2002.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2002.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2002.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2003.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2003.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2003.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2005.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2005.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(ACC 630), Fall 2005.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(AIS 630 Section 1), Spring 2010.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(AIS 630), Fall 2006.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(AIS 630), Fall 2006.

Audit and Assurance Services
Course DescriptionEvolution of assurance services; role of assurance services as part of corporate governance; professional standards and ethical concepts; evidence concepts and evaluation of evidence, business and information technology risk analysis, the audit risk model, assurance reports, and development of audit and assurance programs.
(AIS 630), Fall 2006.

Audit and Assurance Services
Course DescriptionGeneral principles, including preparation of working papers and various kinds of reports.
(AIS 630 Section 3), Fall 2010.

Auditing
Course DescriptionGeneral principles, including preparation of working papers and various kinds of reports.
(AIS 630 Section 1), Fall 2007.

Auditing
Course DescriptionGeneral principles, including preparation of working papers and various kinds of reports.
(AIS 630 Section 2), Fall 2007.

Auditing
Course DescriptionGeneral principles, including preparation of working papers and various kinds of reports.
(AIS 630 Section 3), Fall 2007.

Reading and Research
Course DescriptionPhD student supervision-Sean Dennis
(AIS 399), Spring 2013.

Reading and Research
Course DescriptionPhD student supervision-Sean Dennis
(AIS 399), Summer 2013.

Reading and Research
Course DescriptionPhD student supervision-Sean Dennis
(AIS 399), Fall 2013.



Graduate Courses


Readings and Research PhD
Course DescriptionIndividual work to complete dissertation requirement of Ph.D. program.
(AIS 999 Section 1), Spring 2008.

Readng & Rsch-Accountng PhD
Course DescriptionIndividual work to complete dissertation requirement of Ph.D. program.
(ACC 999 Section 77), Fall 2008.

Readng & Rsch-Accountng PhD
Course DescriptionIndividual work to complete dissertation requirement of Ph.D. program.
(AIS 999 Section 77), Spring 2009.



Learning/Teaching Oriented Publications


Rittenberg, L. & Johnstone, K. & Gramling, A. & Schweiger, B. (2009). Auditing: A Business Risk Approach.
Warfield, T. & Skaife, H. & Johnstone, K. (2002). Effects of Repeated Practice and Contextual Writing Experiences on College Students' Writing Skills. Journal of Educational Psychology (94), 305-315. doi: 10.1037/0022-0663.94.2.305.
Johnstone, K. & Muzatko, S. (2002). Resolving difficult accounting issues: A case study in client-auditor interaction. Issues in Accounting Education (17), 27-39. doi: 10.5555/1558-7983-17.1.1.
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.
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. doi: 10.2308/iace.2000.15.1.67.
Rittenberg, L. & Schwieger, B. & Johnstone, K. Auditing, Concepts for a Changing Environment, 6th ed.: Auditing, Concepts for a Changing Environment, 6th ed.Hi , 830.

Editorial and Reviewing Activities


Auditing: A Journal of Practice and Theory - January 2014 - December 2016
Editor

Accounting and Finance - January 2012 - December 2017
Editorial Board Member


Photograph of Karla Johnstone

Karla Johnstone

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