Auditorss Joint Engagements and Audit Quality: Evidence from Italian Private Companies

Abstract

This study examines the effect of auditors’ collaboration in engagements on knowledge transfer, auditor expertise and the resulting audit outcomes. I invoke insights from the network literature to analyze a sample of individual auditors who are appointed to multiple shared engagements with other auditors. My results suggest that auditors develop knowledge, expertise and contacts through collaboration with other auditors and this leads to both higher audit quality and fees. Overall, my findings suggest that shared engagements facilitate knowledge transfer and increase auditor expertise.