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.

Audit firms are rapidly integrating Generative AI (GenAI) into their workflows. While these tools can enhance efficiency and support complex judgments, the key challenge is not whether AI provides useful input, but whether auditors use it appropriately. The literature shows that auditors’ reliance on AI is shaped more by behavioral responses, system design, and organizational context than by the underlying technology. Three insights emerge.

First, auditors face a calibration problem. They may under-rely on AI due to algorithm aversion, discounting AI-based evidence, relative to human experts, even when it is equally reliable. At the same time, they may over-rely on AI when outputs appear authoritative, fluent, or easy to use. Both problems impair audit quality: under-reliance biases judgments toward management, while over-reliance reduces professional skepticism.

Second, reliance depends critically on how AI is designed and embedded in the audit process. Features such as perceived control (e.g., the ability to provide input), adaptability of algorithms, and task–technology-fit influence whether auditors trust and use AI outputs. AI is more effective when it aligns with task uncertainty and complexity, and when auditors can meaningfully engage with the system. Poorly designed or poorly communicated tools risk being ignored or misused.

Third, AI affects not only decisions but also how auditors think about decisions. GenAI can improve understanding of complex evidence and help auditors better identify when to raise issues, particularly in remote settings. However, AI can also inflate confidence while reducing self-monitoring, making auditors less aware of when they may be wrong. This creates a risk of overconfidence and inappropriate reliance.

Overall, the literature highlights that successful AI adoption is also a behavioral and organizational challenge, not just a technological one. To realize the benefits of AI, audit firms should consider three key levers. First, governance: providing clear guidance on when and how AI should be used and evaluated. Second, design and communication: ensuring that tools align with task demands and enable auditors to meaningfully engage with the system. Third, training and oversight: developing auditors’ ability to critically assess AI outputs and appropriately calibrate their reliance.

This literature note provides insights into how auditors assess and respond to fraud risks. Overall, the evidence shows that fraud audit effectiveness depends not only on standards and technical guidance, but also on judgment structures, cognitive framing, team dynamics, and tone at the top.

First, auditors often recognize heightened fraud risk but can fail to translate that recognition into targeted, effective audit responses. Instead, they frequently rely on increases in sample sizes rather than designing substantive procedures focused specifically on the fraud area. Encouragingly, identifying more fraud-focused risk factors may enable auditors to more effectively modify standard audit programs in response to fraud risks.

Second, how fraud risk assessment is structured and framed significantly influences auditor judgments. Expanding the traditional fraud triangle to incorporate management capability leads to higher fraud risk assessments. Presenting fraud information in frequency formats rather than probabilities improves judgments when fraud base rates are low. Compared to using a holistic fraud assessment approach, decomposing the likelihood and magnitude assessments makes the low likelihood of fraud more salient and leads to lower fraud risk assessments. These findings suggest that judgment aids with respect to fraud must be carefully designed and evaluated.

Third, audit team dynamics and leadership emphasis on professional skepticism play a critical role. Audit teams’ high-quality fraud brainstorming strengthens the relations between risk factors, risk assessments, and audit responses. Moreover, partner emphasis on professional skepticism improves both the effectiveness and efficiency of auditors’ fraud judgments.

Collectively, the literature highlights that improving fraud risk assessments and responses requires a multifaceted effort. Audit firms should focus on strengthening auditor fraud cue recognition, promoting targeted responses, refining fraud risk assessment aids, improving brainstorming practices, and reinforcing a tone at the top that prioritizes professional skepticism and audit effectiveness.

Auditors often seek both formal and informal advice from a variety of sources, including
specialists (e.g., IT, valuation, tax, and/or forensic experts), national offices, and engagement
team members. This literature note reviews six academic studies on auditors’ use of advice
and its impact on their professional judgment and audit quality.

Specialists provide critical expertise, yet prior research finds that auditors often limit expert
involvement due to concerns about budgets, deadlines, and client relationships. Furthermore,
misaligned perceptions and communication gaps between auditors and specialists reduce
effective knowledge sharing and integration of expertise. The need to balance between
professionalism and client service further adds to the complexity of the issue.

The quality of auditor-specialist relationships and the strength of shared team identity can
influence auditors’ reliance on specialist advice. Positive relationships facilitate integration
and mutual understanding, while strained relationships can hinder audit effectiveness.
However, a strong identity or social bond may create trust heuristics (i.e., auditors overly rely
on the advice regardless of its quality). Excessive dependence on seeking explicit
knowledge – knowledge that can be accessed more efficiently elsewhere – from colleagues
can harm auditor reputation and performance.

In this paper, we examine how senior auditors’ perceptions of their portfolios relate to audit quality-threatening behaviors (QTBs). Using survey data from 231 senior auditors across five audit firms in the Netherlands, we explore whether perceived workload and commercial focus hinder their performance. Our results show that both perceived workload and commercial focus are positively associated with QTBs, indicating that these factors contribute to lower audit quality.

We also examine whether job resources and personality traits moderate these relationships. An office culture with open communication can reduce the positive link between commercial focus and QTBs. In contrast, senior auditors’ grandiose narcissism strengthens the relationship between perceived workload and QTBs, suggesting that narcissistic auditors may be more inclined to cut corners when they feel overloaded.

Based on interviews with 17 audit practitioners, this study examines how audit firms allocate clients to audit partners and manage their partners’ workloads. We find that audit firms increasingly prioritize quality over other incentives when assigning partners to clients. This shift is driven by a more centralized decision-making process, supported by growing demand for audit services and staff shortages, which make central allocation more common. At the same time, firms still struggle to fully apply this quality focus in practice. Constraints such as limited staff availability, commercial incentives and mandatory rotation complicate the allocation process.

Our findings also show that individual auditors play an important role in allocation decisions. Firms often accommodate personal preferences, for example by matching partners with clients they enjoy working with or clients located conveniently. Strategic motives, such as enhancing professional identity, status or gaining new skills, also influence the process. While some of these considerations support learning, others may conflict with the aim of prioritizing quality.

We further observe that audit firms regularly meet certain client requests due to economic ties. Finally, the monitoring of client allocation is relatively weak. Although firms screen for quality at the start and end of engagements, ongoing quality evaluations are more ad hoc. Firms tend to make meaningful adjustments only when serious issues arise during the audit.

In this paper, we investigate gender differences in the workload allocation process. Using a sample of 3,852 auditor-year observations and 107,213 firm-year observations from Belgium, we find that female auditors are associated with lower total and new workload levels, as measured by the number of (new) clients and the total assets of the (new) clients they serve. We find that the effect of gender on workload is particularly strong for auditors in the early stages of their careers. Furthermore, we find that female auditors are associated with higher audit quality; however, this effect largely disappears when controlling for workload. Our results suggest that differences in workload allocation may be a factor contributing to variations in audit quality levels between female and male auditors. That is, male auditors audit significantly more clients, which may constitute a risk factor to the audit quality they provide.

As advanced audit data analytics (ADA), including artificial intelligence, become increasingly sophisticated, auditor consultations with in-house ADA specialists are likely to become commonplace. We examine whether auditors’ prior ADA consultation experience affects their superiors’ reliance on their ADA work performed independently of specialists. On the one hand, learning from ADA specialists through prior consultation may enhance auditors’ technological proficiency, increasing their superiors’ reliance on their ADA testing. On the other hand, a known history of consultation may signal dependence on specialists. This signal may conflict with superiors’ expectations that auditors can perform ADA tasks independently, triggering a backlash effect that ultimately undermines reliance.  

In an experiment, we find that when an audit senior has prior experience consulting with ADA specialists, audit managers evaluate the senior as more competent, yet rely less on the senior’s independent ADA work. This pattern is consistent with a backlash effect. Prior consultation experience leads to lower superior reliance even when the subordinate’s ADA skills are low. This unexpected result is concerning, as backlash may discourage consultation even among auditors who need it most for learning and skill development (i.e., those with lower ADA skills). Our findings highlight the importance of managing the interpersonal dynamics of engagement teams when incorporating ADA into audits. 

As advanced audit data analytics (ADA), including artificial intelligence, become increasingly sophisticated, auditor consultations with in-house ADA specialists are likely to become commonplace. We examine whether auditors’ prior ADA consultation experience affects their superiors’ reliance on the auditors’ ADA work performed independently of specialists.

On one hand, learning through prior specialist consultation may enhance auditors’ technological proficiency, increasing superiors’ reliance on their ADA testing. On the other hand, a history of consultation may signal dependence on specialists. This signal may conflict with superiors’ expectations that auditors can perform ADA tasks independently and trigger a backlash effect that ultimately undermines reliance.

In an experiment, we find that when an audit senior has prior experience consulting with ADA specialists, audit managers evaluate the senior as more competent, yet rely less on the senior’s independent ADA work. This pattern is consistent with a backlash effect. We observe that this backlash effect occurs even when the subordinate’s ADA skills are low. This unexpected result is concerning, as backlash may discourage consultation even among auditors with lower ADA skills who need it most for learning and skill development.

Our findings highlight the importance of managing interpersonal dynamics within engagement teams when incorporating ADA into audits.