Does gender affect qualifying decisions? Evidence from public sector audits

Abstract

This study presents novel evidence of gender differencesinpublic sector audits. Auditors of public sector entities face lower litigation risks and lower market pressures than those ofprivate entities. Thus, our analysis is more likely to capture gender differences in professional competence than in economic incentives.We test the study hypotheses regarding gender differences in ‘qualifying’ audit reports using a sample of Spanish public universities (2010–2020). We find thatfemale and male auditors are equally likely to issue qualified opinions. However, their reasons for qualification differ, with womenbeing more likely to qualify reportsbecause of scope limitations. In joint audits, gender-diverse audit partners are more likely to increase scope limitations. These results suggest that women are more conservative than men are when assessing the impact of audit scope limitations, with no gender differences in responses to material misstatements.