Audit quality and COVID-19 restrictions

Gong, Sabrina; Ho, Nam; Jin, Justin Yiqiang; Kanagaretnam, Kiridaran

doi:10.1108/maj-11-2021-3383

Cited by 25 publications

(30 citation statements)

References 37 publications

(42 reference statements)

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“…First, our study has shown that the level of remote working directly affects audit efficiency, but not audit quality or auditors' job satisfaction. This finding, generated from a sample of current external auditors in 2022, reflects that auditors have adapted to remote or hybrid auditing adequately, compared with findings reported at the beginning of COVID‐19 shutdown (Gong et al, 2022; Hazaea et al, 2022; Jin et al, 2022; Thompson, 2022). Second, our study could help key stakeholders understand what has changed from on‐site audits to remote audits and how these changes reshape audit quality, audit efficiency, and auditors' job satisfaction from practitioners' perspectives.…”

Section: Discussionmentioning

confidence: 68%

Section: Moderation Regression Analysesmentioning

confidence: 70%

“…The increased distance is associated with auditors' divergent thinking and high time pressure, which consequently increases the likelihood for RAQP behaviours (Thompson, 2022). In Jin et al's (2022) sample of Chinese auditors, audit quality is lower when auditors switch to remote auditing following the outbreak of the pandemic; they also found this negative effect of remote auditing is more pronounced for nonlocal or short-tenured auditors. The Saudi Arabian and Yemeni auditor samples also showed decreased audit quality due to the devastating effect of the pandemic on audit fees, audit procedures, and auditor compensation (Hazaea et al, 2022).…”

Section: Audit Qualitymentioning

confidence: 94%

“…On the one hand, remote auditing is found to reduce audit quality. For example, Gong et al (2022) found the restrictions due to COVID‐19 has led auditors to struggle with resource or judgement‐intensive account (e.g., inventory and R&D expenditures), therefore resulting in lower audit quality. Traditionally, decentralized audit offices allow for increased proximity between audit teams and clients, which improves auditors' interaction efficiency with clients.…”

Section: Literature Reviewmentioning

confidence: 99%

“…We define audit success when the audit exhibits high audit quality, high audit efficiency, and high auditors' job satisfaction. Existing studies have reported variances in the audit quality (Gong et al, 2022; Handoko & Lindawati, 2021; Jin et al, 2022; Thompson, 2022), audit efficiency (Choudhury et al, 2021; Farcane et al, 2023), and auditors' satisfaction (Aquino et al, 2022; Grant et al, 2018; Rani et al, 2018) from on‐site audits to remote audits. To answer the critical question of how to ensure audit quality and efficiency and retain audit employees in the remote auditing environment, research efforts are needed to systematically understand what leads to variances in audit quality, audit efficiency, and auditors' job satisfaction.…”

Section: Introductionmentioning

confidence: 99%

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Impact of remote audit on audit quality, audit efficiency, and auditors' job satisfaction

Goel

Williams

2023

Int J Auditing

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The audit profession has experienced a digital transformation over the last decade with a rapid shift towards remote auditing forced by the recent COVID pandemic. This shift has led to changes related to the way auditors work and perceive. Through a survey of external auditors, this study addresses how the changes from on‐site audits to remote audits affect audit success (i.e., audit quality, audit efficiency, and auditors' job satisfaction); we also explore dispositional and situational factors that contribute to remote audit success. Our results show that working remotely leads to high audit efficiency. Auditors' flexibility management competency leads to high remote audit quality and efficiency; and a physical working environment conducive for concentrating on audit tasks is positively associated with audit efficiency and auditors' job satisfaction for remote audits. We also found that working remotely could enhance audit quality and efficiency when the audit firm provides sufficient support to auditors. Our study provides insights for audit firms, regulators, and other stakeholders as they evaluate the many challenges the audit profession faces in achieving remote audit success.

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Section: Discussionmentioning

confidence: 68%

Section: Moderation Regression Analysesmentioning

confidence: 70%

Section: Audit Qualitymentioning

confidence: 94%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Impact of remote audit on audit quality, audit efficiency, and auditors' job satisfaction

Goel

Williams

2023

Int J Auditing

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Changes in accounting estimates during the COVID-19 pandemic in the USA

Li,

Luo

2023

ARA

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PurposeThe authors investigate how managers adapt their financial reporting and disclosure practices in response to the COVID-19 pandemic through changes in accounting estimates (CAEs).Design/methodology/approachThe authors define the pandemic period as starting on March 1, 2020. The sample consists of 9,575 CAEs disclosed in quarterly (10-Qs) and annual (10-Ks) financial reports by US firms between January 1, 2004 and May 31, 2022. The authors perform multivariate analyses of the impact of the COVID-19 pandemic on the incidence of CAEs and on whether the impact of CAEs on firms' financial performance and reporting quality changes during the pandemic.FindingsIn the examination of the CAE footnote disclosures in the quarterly (10-Qs) and annual (10-Ks) reports of US companies, the authors find no evidence that the incidence of CAEs in 10-Ks or the number of firms reporting CAEs are significantly different in the pre-pandemic and pandemic periods, but the incidence of CAEs in 10-Qs is significantly higher in the pandemic period than in the pre-pandemic period. The authors also find that the number of CAEs related to revenue recognition increase significantly in the pandemic period, but CAEs in other categories decrease, with the sharpest drop seen in the liabilities category. Further investigation suggests that although the dollar impact of 10-K CAEs on current financial statements is higher during the pandemic period, firms with CAEs, especially positive CAEs, in either 10-Ks or 10-Qs are less likely to use CAEs to boost earnings in the pandemic period. However, the authors find evidence that firms tend to use CAEs to “big bath” current earnings and create reserve for future period. The authors have not observed any significant differences in how the various phases of the pandemic affect the reporting of CAEs. Additionally, there is no evidence to suggest that financially distressed firms report more or fewer CAEs during the pandemic.Practical implicationsThe results are consistent with the notion that, during the pandemic, firms exercise greater caution in their CAE disclosures, refraining from using CAEs as a means of boosting earnings but as a strategy to create reserve for future period. The paper highlights the challenges that various stakeholders face when assessing a company's current and future financial performance based on management's accounting estimates.Originality/valueThis study captures the impact of the COVID-19 pandemic on the incidence of CAEs and CAEs' impact on the financial performance and financial reporting quality of firms during the pandemic.

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Remote auditing and its impacts on auditors’ work and work-life balance: auditors’ perceptions and implications

Lorentzon,

Fotoh,

Mugwira

2023

ARJ

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Purpose This paper aims to explore the impacts of remote auditing on auditors’ work and work-life balance. Design/methodology/approach This paper adopted a qualitative online survey approach using open-ended reflections from 98 highly experienced auditors. The survey design aligns with a “Big Q” approach to qualitative data. The reflections were interpreted through the theoretical lens of the social presence theory. Findings Auditors underscore that remote auditing has improved their work-life balance since it offers flexibility, greater autonomy and efficient use of time. However, they believe less social contact due to remote auditing can hurt their work. Research limitations/implications This study aimed to holistically comprehend the concept of work-life balance in a remote auditing setting. Therefore, the study refrained from making comparisons based on demographic information (e.g. gender, experience and type of audit firm). Practical implications The findings highlight the need for adopting flexible work arrangements that prioritise auditors’ well-being. This is critical for making the audit profession attractive and enhancing overall audit quality. Updated regulatory guidance and controls are needed concerning the use of technologies in remote auditing to ensure high-quality audits. Social implications The findings of this study can positively reshape public perception of the audit profession. Firstly, enhanced work-life balance can improve audit quality. Secondly, incorporating emerging technologies in auditing can result in society perceiving auditors as adaptive to innovation and technological advancement that has been touted for their potential for enhancing the efficiency and effectiveness of audit and audit quality, potentially enhancing societal trust in auditing. Originality/value The findings of this study complement the auditing literature that has mainly focused on the traditional work paradigm, requiring in-person presence. The authors identify potential challenges emanating from auditors’ remote work and propose solutions for audit firms to improve work-life balance in a remote work setting.

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Audit quality and COVID-19 restrictions

Cited by 25 publications

References 37 publications

Impact of remote audit on audit quality, audit efficiency, and auditors' job satisfaction

Impact of remote audit on audit quality, audit efficiency, and auditors' job satisfaction

Changes in accounting estimates during the COVID-19 pandemic in the USA

Remote auditing and its impacts on auditors’ work and work-life balance: auditors’ perceptions and implications

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