Enabling research to improve audit quality

Voor studenten en jonge accountants is de keuze tussen een Big 4- en een non-Big 4-kantoor belangrijk voor hun verdere loopbaan. Inzicht in de verschillen tussen Big 4- en non-Big 4-kantoren kan deze kantoren helpen bij het aantrekken, ontwikkelen en behouden van talent. Op basis van een vragenlijst onder 161 werkzame jonge accountants in de controlepraktijk bij Nederlandse Big 4- en non-Big 4-kantoren is onderzocht of jonge accountants verschillen ervaren in hun werk-privébalans en ontwikkelingsmogelijkheden. Ook is onderzocht of bij een Big 4- of non-Big 4-kantoor werkzame jonge accountants verschillende persoonlijkheidskenmerken hebben. De onderzoeksresultaten wijzen op een duidelijke afweging tussen werkdruk enerzijds en ontwikkelinfrastructuur anderzijds. Kantoren kunnen deze afweging gebruiken om zich te positioneren ten aanzien van potentiële medewerkers.

While prior studies have examined specific aspects of attracting and retaining qualified auditors, an integrative framework for understanding the different stages of an auditor career and how these stages interact over time to shape auditor human capital and professional identity is lacking. We address this gap by synthesizing the literature along the Auditor Career Path framework, which we conceptualize as comprising six stages: Attraction, Recruitment, Onboarding, Development, Retention, and Separation. By organizing and integrating existing research within this framework, we identify gaps in the current understanding of auditors’ career paths, including how frictions and interventions at one stage propagate to others, and derive insights to help audit firms more effectively attract, develop, and retain their human capital, while also outlining a research agenda that connects these stages for future work.

The extent to which audit quality meets the expectations of stakeholders can lead to heated debates. One reason is that the level of attained audit quality is comprised of objective and subjective elements. In this paper we propose a set of measures defined by the output the user of financial statements expects: error detection and correction and opinions/advice based on sufficient audit evidence. We argue that detection/correction and opinions are determined by input factors like adequate effort and team composition and choice of the adequate procedures. These audit-firm choices, in turn depend on an adequate assessment of the auditee characteristics by the audit firm which assessment, in turn, is determined by the structure or the audit firm itself.

Four insights from the literature on the effects of AI on audit practice

1. AI is improving audit quality and efficiency

The literature consistently shows that, when properly implemented, AI strengthens audit effectiveness. AI helps auditors to identify fraud risks, detect misstatements, analyze entire populations of transactions rather than samples, and reduce human error. What is more, it automates repetitive and time-consuming tasks, allowing audits to be completed more efficiently.

Key message: Overall, AI is enhancing both the effectiveness and efficiency of audit engagements, supporting the profession’s ability to provide timely and reliable assurance.

2. AI changes auditors’ work experience in both positive and negative ways

AI introduces new demands on individual auditors by requiring additional skills and creating uncertainty about future professional roles. These developments may increase mental load and psychological strain. At the same time, AI reduces auditors’ workload and involvement in repetitive tasks, enabling them to focus on more meaningful and value-adding work. The result is a dual effect, where AI simultaneously increases stress while also improving job experience and perceived meaningfulness of auditors’ work.

Key message: Understanding how AI affects auditors’ well-being, engagement, motivation, and job satisfaction is highly relevant.

3. Professional judgment becomes the central challenge

An important concern emerging from the literature is the effect of AI on auditors’ professional judgment and skills. As AI increasingly handles data collection, processing, and basic analytical work, auditors have fewer opportunities to engage in experiential learning, which is essential for building professional judgment and expertise. Reduced exposure to traditional audit tasks may hinder the development of professional expertise and skepticism, particularly among junior auditors. This risk is amplified by the fact that AI can sometimes produce inaccurate outputs that require careful critical evaluation. This creates a challenge: AI imperfections increase the need for critical judgment while potentially weakening some of the mechanisms through which that judgment is developed.

Key message: Future success with AI in auditing will depend not only on technological capabilities but also on maintaining and strengthening auditors’ professional skepticism, independent judgment, and ability to challenge AI-generated outputs.

4. AI should be viewed as an interconnected system of benefits and risks

The literature review demonstrates that AI simultaneously creates resources and demands for audit practice. Improvements in accuracy and efficiency may coexist with deskilling, increased cognitive demands, and challenges to professional judgment. These effects do not operate independently. They influence and potentially offset one another.

Key message: The ultimate impact of AI on auditing will depend not on any single effect, but on how its benefits and risks combine and evolve over time.

Auditors are selected and paid for by the organizations they audit. Policymakers are concerned that this structure influences auditor independence which, in turn, impairs quality. Accordingly, policymakers consider whether audit quality is enhanced if the auditor is appointed by an external (independent) party.

The authors study the working of such a model in a natural setting for local subsidiary audits conducted by the big-4 as part of group audits, where the local auditor is either assigned to the subsidiary through parent firm management or self-selected by the subsidiary.

The authors find that audit partners assigned to subsidiaries receive less information from the auditee, issue fewer going concern opinions, identify fewer control deficiencies, identify and correct fewer misstatements, and are less likely to constrain earnings management compared to self-selected auditors.

Some further preliminary evidence the authors collect suggests that assigned auditors produce lower audit quality through effort reduction.

Audit firms across jurisdictions face a persistent and increasingly acute challenge in attracting and retaining early-career audit talent. A commonly cited explanation for this trend is that today’s students and junior professionals are less willing to accept the demanding working conditions traditionally associated with auditing. While workload and work-life balance undoubtedly play an important role, this explanation implicitly assumes that students possess an accurate understanding of what early-career audit work actually entails.

We argue that this assumption is questionable. Drawing on evidence from our recent Accounting Horizons study (Dierynck, Marangoni, Peters, and Weijers 2025), we suggest that an important, but underappreciated, driver of the audit talent shortage is an expectations-reality gap: a systematic mismatch between what students believe the junior auditor role involves and what junior auditors actually experience in practice. Understanding this gap is critical for audit practice. If students base their career decisions on inaccurate or overly pessimistic beliefs about audit work, firms may lose potential entrants before recruitment efforts can meaningfully engage them. Moreover, misaligned expectations at entry may contribute to early dissatisfaction and turnover, further weakening the talent pipeline.