2022B03 - Auditors’ use of specialists and group centric tendencies under time pressure and inspection risk (Dr. C. Pietsch)

Why?

This study examines how time budget pressure affects auditors’ use of the work of a specialist and whether these effects can be mitigated by inspection risk, a strong one-team identity, and auditors’ paradox mindset. Regulators and academics across the globe (a) recognize time budget pressure as one of the main causes of reduced audit quality; (b) frequently identify deficiencies in auditors’ use of the work of specialists; and (c) find that, due to fear of regulatory inspection results, auditors manage inspection risks through their effort allocation.

What?

To examine our predictions, we will conduct an experiment with practicing auditors who will be asked to act as in-charge senior on the audit of a client’s goodwill impairment analysis. We will examine the (a) likelihood, (b) timing, and (c) extent of specialist involvement in the audit of the client’s fair value of equity and (d) auditors’ reasonableness judgments and (e) follow-up procedures to concerns identified by the specialist.