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FAR Literature Review - Audit Production Prof. Joseph Gerakos PhD Prof. Chad Syverson Ulrike Thürheimer Details
 

Production is the process by which inputs are transformed into outputs through factors of production. In the case of an audit, audit effort (labor and time) is expended to produce assurance over client financial statements (O’Keefe, Simunic, and Stein 1994). As is typical for services, labor is the most important factor in the production of audits. Although audit production is crucial to understanding the economics of auditing, the literature on audit production is sparse due to the difficulty of observing and measuring the factors of production. Specifically, the lack of access to internal audit firm information makes it difficult for researchers to observe and measure production inputs. Moreover, the credence good nature of an audit makes it difficult to observe audit output (i.e., the level of assurance).

Authors

Prof. Joseph Gerakos PhD

Associate Professor of Business Administration Tuck School of business

Prof. Chad Syverson
Ulrike Thürheimer
FAR Practice Note - Audit Production Prof. Joseph Gerakos PhD Prof. Chad Syverson Ulrike Thürheimer Details
 

Production is the process by which inputs are transformed into outputs through factors of production. In the case of an audit, audit effort (labor and time) is used to produce assurance over client financial statements.

As is typical for services, labor is the most important factor in the production of audits. Although audit production is crucial to understanding the economics of auditing, the literature on audit production is sparse due to the difficulty of observing and measuring the factors of production.

Authors

Prof. Joseph Gerakos PhD

Associate Professor of Business Administration Tuck School of business

Prof. Chad Syverson
Ulrike Thürheimer