Cybersecurity Breaches and Audit Outcomes

Authors: Sara Dehaiman Alqahtani

Abstract:

Cybersecurity breaches present significant operational, reputational, and financial challenges, raising questions about how firms and their auditors respond under heightened risk. This study examines whether breaches influence three key audit outcomes: auditor changes, engagement partner rotations, and going concern opinions. Contrary to expectations, the findings show that breached firms are less likely to change auditors or engagement partners and are also less likely to receive going concern opinions. These results suggest that rather than signaling reform through frequent turnover or cautionary opinions, firms and auditors may rely on established relationships and the auditor’s in-depth knowledge to navigate post-breach complexities. Notably, technology firms experiencing breaches are more inclined to switch auditors, reflecting distinct accountability pressures in industries where cybersecurity risks are particularly salient. Overall, these findings highlight that stability, rather than disruption, often characterizes audit responses to cyber incidents, informing ongoing debates about audit quality, risk management, and regulatory guidance in an era of escalating cybersecurity threats.

Keywords: auditor changes, cybersecurity breaches, engagement partner rotations, going concern opinions