In My Opinion: Theory Is Not Belief

Lightner, Jerry P.

doi:10.2307/4444182

Cited by 1 publication

(2 citation statements)

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“…McDaniel (1990) shows that time pressures force auditors to make suboptimal trade-offs of effective procedures to produce an efficient audit outcome. Specific trade-offs include signing off on work papers before sufficient evidence has been gathered (Alderman & Deitrick, 1982;Kelley & Margheim, 1990;Reckers et al, 1997) or intentionally under-reporting hours worked to meet a time budget (Kelley & Margheim, 1990;Lightner et al, 1982). It is also likely that the audit engagement disruptions caused by switches to smaller offices will hinder knowledge sharing among team members more than switches to larger offices where the infrastructure to encourage knowledge sharing is more developed.…”

Section: Hypothesesmentioning

confidence: 99%

“…We further assume that absorbing a new client into an engagement office represents a shock to a potentially resource-constrained environment (Sweeney & Summers, 2002). Prior research finds that time pressures negatively impact audit quality (DeZoort & Lord, 1997) through underreporting of time (Kelley & Margheim, 1990;Lightner et al, 1982) and signing off on working papers without obtaining sufficient evidence to support assertions (Alderman & Deitrick, 1982;Kelley & Margheim, 1990;Reckers et al, 1997). Building on this evidence, we formulate predictions based on the size of the absorbing office relative to the size of the departing office.…”

Section: Introductionmentioning

confidence: 99%

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An Examination of Audit Quality Surrounding Within-Firm Engagement Office Changes

Greiner

Higgs

Smith

2021

Journal of Accounting, Auditing & Finance

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We examine the relation between within-firm office changes and audit quality in the United States. Our primary analysis documents a reduction in audit quality, measured using abnormal discretionary accruals and restatements, when the client is transferred to a smaller within-firm office (downsize effect). We are unable to find evidence that clients experience significant improvement in audit quality among transfers to a larger within-firm office (upsize effect). We then condition our sample on the change in the number of public clients of the receiving office to better understand the source of the underlying association. We find that our downsize effect is driven by offices experiencing a decrease in the number of public clients, suggesting that our main association is not entirely the result of resource constraints for the receiving office. We posit that this finding is consistent with audit quality deterioration among within-firm office changes to smaller offices driven, in part, by the receiving office’s inability to adequately overcome the knowledge transfer frictions that accompany a move to a new office. Our findings offer empirical evidence on consequences of within-firm office changes and are particularly relevant to regulators and preparers.

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Section: Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%