It modifies the monitoring role. FC Report that breach. Detection relates to competence of the auditor. So auditors have to convince the market they are competent and independent. The first year of an audit costs more.
Reputation gives auditors the incentive to be independent.
The present value of the auditor's services decreases. The auditor bears costs. Thus, audit firms guard their reputations carefully. Loss of membership meant lost fees. Watts and Zimmerman studies fall into this group.