Time pressure, task complexity, and audit effectiveness

Abstract

PurposeThe purpose of this paper is to examine the relationships among time pressure (TP), task complexity (TC), and audit effectiveness (AE). It is motivated by the conflicting results reported in prior TP studies.Design/methodology/approachThe research hypotheses are developed using McGrath's interactional model of the Yerkes‐Dodson Law. Data are collected using a two‐treatment field experiment involving 63 public accountants.FindingsThe results show a negative, interactional relationship among TP, TC, and AE.Research limitations/implicationsThe first limitation concerns the non‐random procedure used to recruit public accounting firms and auditors. Second, there is the less than perfect operationalization of the TC construct.Practical implicationsFirst, the findings suggest that public accounting firms may need to resist the urge to reduce the time allowed for performing compliance tests, and provide training to improve the detection rate for all type of compliance deviations. Second, the fact that the rate of change in AE, in response to changes in TP, is different for the two audit tasks studied, suggests that it may not be appropriate for audit planners to assume a uniform TP effect across the various tasks involved in an audit. This insight has implication for the trade‐offs between the lower direct audit costs associated with tighter time budgets, and possible increases in audit risk associated with lower AE.Originality/valueTwo unique aspects of this paper are the operationalization of TP as a continuous random variable and the use of z‐scores to standardize the AE measure.

Explaining the influence of time budget pressure on audit quality in Sweden

“…These indicators are in line with measures used in other studies (Bowrin & King, 2010;Gundry & Liyanarachchi, 2007;Coram et al, 2003;Malone & Roberts, 1996;Kelley & Margheim, 1990). Thus, the questions for the two indicators are: (i) 'Do you feel time budget pressure from the budget you are working on?'…”

“…For instance, López and Peters (2010) found a positive relationship between clients' abnormal accruals and the auditors' workload. Hence, TBP could entail quality-threatening/-reducing behaviour (Bowrin & King, 2010;Ettredge et al, 2008;Gundry & Liyanarachchi, 2007;Pierce & Sweeney, 2003Coram et al, 2003;AndersonGough et al, 2001;Malone & Roberts, 1996;Otley & Pierce, 1996a, 1996bKelley & Margheim, 1990;Alderman & Deitrick, 1982). Premature sign-off, i.e.…”

“…The relationship between TBP and AQ has been discussed in the literature (Bowrin & King, 2010;Liyanarachchi & McNamara, 2007;Coram et al, 2004;Coram, Ng, & Woodliff, 2003;Otley & Pierce, 1996a). However, the studies mentioned have been performed with small samples and have focused on Anglo-Saxon countries.…”

“…In their effort to meet market expectations on AQ and price (Bowrin and King, 2010) they are trying be more market-oriented, more customer-oriented as well as more business process-oriented (Broberg et al, 2014). Audit firms adopt regular business stances (e.g.…”

What explains the extent and content of social disclosures in Swedish municipalities’ annual reports

“…For instance, López and Peters (2010) found a positive relationship between clients' abnormal accruals and the auditors' workload. Hence, TBP could entail quality-threatening/-reducing behaviour (Bowrin & King, 2010;Ettredge et al, 2008;Gundry & Liyanarachchi, 2007;Pierce & Sweeney, 2003Coram et al, 2003;Anderson-Gough et al, 2001;Malone & Roberts, 1996;Otley & Pierce, 1996a, 1996bKelley & Margheim, 1990;Alderman & Deitrick, 1982). Premature sign-off, i.e.…”