The Effect of the Social Mismatch between Staff Auditors and Client Management on the Collection of Audit Evidence

Abstract

This study provides both survey and experimental evidence to consider how social interactions between staff-level auditors and client management may affect staff auditors' perceptions and influence their decisions regarding the collection of audit evidence. During fieldwork, staff-level auditors have extensive interaction with client management. Survey evidence suggests that these staff-level auditors are often “mismatched” with client management, in terms of their experience, age, and accounting knowledge. Experimental results indicate that staff-level auditors may reduce the extent to which they collect evidence to avoid these interactions. Finally, the use of email communication with client management helped to mitigate the reduction in evidence collected caused by avoiding in-person interactions. Interestingly, when not collecting all the evidence, approximately half of the participants documented their findings in a vague or inappropriate manner, which would likely reduce the likelihood that reviewing auditors would identify a problem. Given the extent of audit evidence collected by young staff auditors, these findings have direct implications for workpaper and audit quality. Data Availability: Data and materials used in this study are available upon request.

It Goes without Saying: The Effects of Intrinsic Motivational Orientation, Leadership Emphasis of Intrinsic Goals, and Audit Issue Ambiguity on Speaking Up

“…Most audit evidence is gathered by low-level audit team members (Bennett and Hatfield 2013), making upward communication of potential audit issues critical to effective and efficient audits. Accordingly, it is important to understand factors that inhibit and promote staff auditors' willingness to speak up about potentially important audit issues.…”

The impact of emotional intelligence on auditor judgment

“…Staff and senior auditors tend to interact with the lower levels of the client's management when conducting inquiries during the audit and are therefore likely to be influenced by client pressures (Bennett & Hatfield, 2013). Second, staff accountants and audit seniors were selected as participants to provide the best match between participants and the task of interest.…”

Does lowballing impair audit quality? Evidence from client accruals surrounding analyst forecasts

“…The National Commission on Fraudulent Financial Reporting (NCFFR) (Treadway Commission) echoed this concern and warns that significant audit fee pressure and the resulting pressure to reduce audit staff, time budgets and partner involvement can conflict with audit quality (NCFFR, 1987). In addition, while audit fees are set at the top levels of the firm and fee discounts are a competitive response on the part of the firm to attract new business (DeAngelo, 1981), the burden of completing the audit falls largely on the audit staff (López and Peters, 2012;Bennett and Hatfield, 2013). Prior behavioral research shows that time budget pressures in particular create incentive for, and cause audit staff to engage in, reduced audit quality acts to complete the audit (e.g., accepting questionable audit evidence, skipping audit procedures, etc.)…”