Taking on Too Much, Too Soon? An Exploration of Experiential Learning of Novice Auditors in an Offshoring Setting

Abstract

SUMMARY Outsourcing and offshoring have become common practice among audit firms and have introduced dynamic changes to the experiences of novice auditors. Tasks once performed by novice auditors are now performed by firm members outside the core audit team, which in turn frees up novice auditors to perform different types of tasks. We utilize a 2 × 2 mixed design to manipulate the task type and the order in which tasks are performed to answer questions about knowledge acquisition among novice auditors. We examine accuracy on a confirmations task and sequential learning experienced by novice auditors. Our results show that the type of experience is important to novice auditors' performance as is the order in which these experiences occur. Based on our findings, we provide recommendations for improving novice auditors training and on the job experience in the changing environment of audits.

Does Auditor Resilience Mitigate the Effects of Multiple Team Memberships on Quality Threatening Behaviors?

“…Third, and more broadly, the results of our study potentially have implications for the offshoring of audit work, where part of the audit tasks are delegated to an external provider (Downey 2018;Popova and Wright 2019;Canning, O'Dwyer, and Boomsma 2022). Lower-level audit tasks (e.g., accounts receivable confirmations and bank confirmations) are then performed by auditors located in the offshore offices (Downey 2018).…”

“…While offshoring seems to lead to more cost-efficient and timely audits, the effects on the learning processes of junior auditors are mixed. While Canning et al ( 2022) document a stifling effect on junior auditors' experiential learning, Popova and Wright (2019) find that offshoring of audit tasks may benefit experiential learning. As such, our study may be helpful in contextualizing these mixed results of offshoring.…”

“…Specifically, our results suggest that more resilient junior auditors reap the benefits of working in an offshore setting, as it may stimulate them to "enhance their people management, critical thinking, and communications skills" (Canning et al 2022, 75). Yet, for less resilient auditors, it may actually deprive them of the possibility for learning, undermining their capacity to perform higher-level tasks (Popova and Wright 2019).…”

Novice Auditors and Audits of Fair Values: Knowledge and Skill Requirements*

“…Saunders et al (2022) report that more than 85% of staff auditors (including first year audit staff) perform tests of details on accounts such as goodwill and deferred taxes. Popova and Wright (2019) observe that recent changes to audit methodology, whereby lower-level audit tasks are outsourced to firm members outside the core audit team or offshore, lead to (i) novice auditors not having an opportunity to obtain experiences to build on for subsequent audits and (ii) novice auditors focusing on higher-level audit tasks early in their career. A recently released AICPA practice analysis report (AICPA 2019) indicates that newly licensed Certified Public Accountants' (CPAs) scope of practice encompasses audit evaluation of fair values (FVs), such as FV investments in securities, including audit testing of model inputs and related assumptions.…”