Auditor-in-Charge Characteristics and Going-concern Reporting
2014 (English)In: Contemporary Accounting Research, ISSN 0823-9150, E-ISSN 1911-3846, Vol. 31, no 2, 531-550 p.Article in journal (Refereed) Published
We examine the effect of auditor-in-charge characteristics on audit quality using the propensity to issue a going-concern opinion as the measure of audit quality. We extend the sparse literature on auditor-in-charge characteristics by investigating how audit quality is related to the number of audit assignments and the age of the auditor. First, there is a concern that a very large number of assignments negatively affect the time and effort invested in each assignment and that the auditor may take shortcuts in important audit procedures in order to save time. Second, based on theories on career stage, older auditors may lack inherent motivation to invest enough effort in training activities and learning auditing standards. We use a sample of 1,145 privately held small and medium-sized enterprises (SMEs) that filed for bankruptcy between October 2008 and September 2009. Our results show a negative association between the number of audit assignments held by the auditor-in-charge and audit quality, and we find that the age of the auditor-in-charge is negatively associated with audit quality. This study shows that auditor-in-charge characteristics are important determinants for audit quality in private companies and suggests that regulators should pay attention to these quality concerns and evaluate whether an upper limit on the number of assignments held would be an effective way of improving audit quality.
Place, publisher, year, edition, pages
The Canadian Academic Accounting Association , 2014. Vol. 31, no 2, 531-550 p.
Research subject Business Studies
IdentifiersURN: urn:nbn:se:umu:diva-88602DOI: 10.1111/1911-3846.12035ISI: 000337949600011OAI: oai:DiVA.org:umu-88602DiVA: diva2:716473