Audit Quality Reduction Research Articles

Audit Quality Reduction Behavior: A Literature Review

Audit quality has become an important issue for accounting professionals. The phenomenon of audit quality criticism from stakeholders such as users of financial statements and the government who shows dissatisfaction with financial statements will pressure auditors to improve audit quality. Auditors do not always apply audit procedures in the audit program. Audit quality behavior is defined as the auditor's actions during the audit process by reducing the effectiveness of existing audit evidence. This study aims to discuss the behavior of audit quality reduction a review of the existing literature related to that issues and then identify empirical evidence from previous research. Data collection techniques through search in national and international journals and selected based on related keywords, audit quality reduction. Based on the results of previous research, it is known that time pressure, work-family conflict, high work stress levels, audit fees, and experience can affect the behavior of decreasing audit quality. In contrast, work-family conflict and experience have no significant effect. The implications of the results of this study are expected to provide an in-depth understanding of the factors that affect the reduction of audit quality so that it can be used as evaluation material to improve audit quality.

Adoption of the ISA 500 and its Impact on Audit Quality and Fraud Reduction: Evidence from Iraq

This study aims to demonstrate how adopting the international auditing standard 500 will improve audit quality in audit agencies. The Financial Supervision Bureau auditors and the possibility of benefiting from the research results prompted a recommendation to the Auditor Profession Council to adopt the two international standards of evidence and to accomplish the study's objective; the Auditor Profession Council has adopted these standards. A questionnaire form was adopted for this purpose, and 100 questionnaires were distributed to a sample of auditors in Iraqi auditing agencies and 100 questionnaires to auditors in the Federal Financial Supervision Bureau. All 200 distributed questionnaires were retrieved, and the data were analyzed using the statistical analysis programs SPSS 23 and Amos to test hypotheses based on the path analysis model. The research concluded that the Iraqi Accounting and Supervisory Standards Board must adopt International Auditing Standard 500 due to the impact of this standard on audit quality and fraud reduction.

The Effect of Audit Quality on Fraud Reduction: A Moderating Role of International Financial Reporting Standards (IFRS) Adoption in Malaysia and Indonesia

Purpose: This study examines the relationship between audit quality and fraud reduction as well as investigates the adoption of IFRS in developing countries which is Malaysia and Indonesia to provide a comparison between IFRS adopter (Malaysia) and non-adopter (Indonesia) countries in the relationship between audit quality and fraud reduction. Theoretical framework: This study applies two main theories; Policeman Theory and Institutional Theory. Design/methodology/approach: The research data covers listed companies in Malaysia and Indonesia. The total number of firms is 643 from the year 2015 to 2020 with 2502 total observations. Findings: The findings indicate that audit tenure, return on assets (ROA) and size have a significant and positive relationship in the reduction of fraud in Malaysia but audit fee, leverage and size have a significant and negative relationship in the reduction of fraud in Malaysia. Similarly, this study found that audit fee, leverage, return on assets (ROA) and audit tenure has a positive and significant relationship in the reduction of fraud in Indonesia. Besides, size have a negative and significant relationship in the reduction of fraud in Indonesia. This study also found that IFRS has a moderate effect on the relationship between audit fees and audit tenure towards fraud reduction in Malaysia and Indonesia. Research, Practical & Social implications: Future studies are encouraged to examine the effects of Sharia Compliance on the quality of audit processes and the reduction of fraud, especially in areas where Islamic finance is common. It is also suggested that future research should expand the statistical methods used beyond the Ordinary Least Squares (OLS) model to potentially include Logistic Regression Models (LRM). This could lead to a significant improvement in the accuracy and dependability of the research outcomes. Originality/value: The study provides valuable insights into the relationship between audit quality and fraud reduction, as well as the moderating effect of IFRS in Malaysia and Indonesia. The findings have significant practical implications for policymakers, companies, and auditors looking to improve the regulation of auditing practices and reduce the occurrence of fraud.

Audit Quality Reduction Behavior: A Literature Review

Audit quality has become an important issue for accounting professionals. The phenomenon of audit quality criticism from stakeholders such as users of financial statements and the government who shows dissatisfaction with financial statements will pressure auditors to improve audit quality. Auditors do not always apply audit procedures in the audit program. Audit quality behavior is defined as the auditor's actions during the audit process by reducing the effectiveness of existing audit evidence. This study aims to discuss the behavior of audit quality reduction a review of the existing literature related to that issues and then identify empirical evidence from previous research. Data collection techniques through search in national and international journals and selected based on related keywords, audit quality reduction. Based on the results of previous research, it is known that time pressure, work-family conflict, high work stress levels, audit fees, and experience can affect the behavior of decreasing audit quality. In contrast, work-family conflict and experience have no significant effect. The implications of the results of this study are expected to provide an in-depth understanding of the factors that affect the reduction of audit quality so that it can be used as evaluation material to improve audit quality.

The effect of audit team's emotional intelligence on reduced audit quality behavior in audit firms: Considering the mediating effect of team trust and the moderating effect of knowledge sharing.

Reduced audit quality behavior is widespread in the auditor's practice and is an important factor threatening audit quality. Some prior studies have investigated the relationship between auditors' psychological contract violation and reduced audit quality behavior. However, the research of relationship between emotional intelligence (EI) and auditors' behavior is still in its infancy despite the fact that the auditing profession would benefit greatly from improving audit team's EI. This study examines whether and why the audit team's EI restrains the audit quality reduction behavior in audit firms. In the study, our hypotheses are tested using a data set collected from 326 respondents in Chinese audit firms. The results are as follows: firstly, audit team's EI is directly negatively related to reduced audit quality behavior. Secondly, EI is indirectly related to reduced audit quality behavior, through team trust. The results of structural equation modeling (SEM) indicate a mediation model where team trust is negatively related to reduced audit quality behavior. Thirdly, knowledge sharing is a significant mechanism that moderates the effects of different types of EI on audit quality reduction behavior. In the audit team with high knowledge sharing, the audit team's EI can refrain the audit quality reduction behavior; In the audit team with low knowledge sharing, the audit team's EI has no significant effect on audit quality reduction behavior. This study expands the factors affecting audit quality to the psychological level of audit teams, enriches the literature on audit team's behavior characteristics, and provides direct evidence for the relationship between audit team's psychological characteristics and audit quality.

FACTORS AFFECTING ACCEPTANCE OF AUDITOR'S DYSFUNCTIONAL BEHAVIOR AND CONSEQUENCES ON THE QUALITY OF AUDIT RESULTS AT PUBLIC ACCOUNTING OFFICES IN BALI

This study aims to analyze work stress, time budget pressure, locus of control and auditor personality type on auditor dysfunctional behavior and its consequences on the quality of audit results. The theories used in this research are Theory of Attitudinal Change. The independent variables of this research are work stress, time budget pressure, locus of control and personality type. The dependent variable is the quality of the audit results. Also, the mediating variable is auditor dysfunctional behavior. This research was conducted at a registered public accounting firm in Bali using a questionnaire distributed to auditors who at least become team leaders in audit assignments. The data analysis technique used is the Partial Least Square (PLS) approach. The results showed that audit time budget pressure and locus of control had a positive effect on work stress. Furthermore, work stress, audit time budget pressure and locus of control have a positive effect on audit quality reduction behavior. The results also show that work stress, time budget pressure, external locus of control and personality type have a positive effect on auditor dysfunctional behavior. Furthermore, the dysfunctional behavior of auditors has a negative effect on the quality of audit results.

Auditor dysfunctional behavior mediates the effect of locus of control, turnover intention, and time budget pressure on audit quality

Dysfunctional behavior that can directly affect audit quality is referred to as audit quality reduction behaviors. The research aims to study the mediating role of the auditor dysfunctional behavior towards the effect of locus of control, turnover intention, and time budget pressure on audit quality. Sample consists of 151 public accounting firms in Bali. Data are collected using a 1 to 4 Likert-Like Scale questionnaire. Data analysis using SEM PLS finds that external locus of control, turnover intention, and time budget pressure have negative effect on audit quality; external locus of control, turnover intention, and time budget pressure have positive effect on the dysfunctional behavior of auditors; auditor's dysfunctional behavior negatively affects audit quality; and auditor dysfunctional behavior mediates the effect of external locus of control, turnover intention, and time budget pressure on audit quality.

THE EFFECT OF JOB CONTEXT AND COVID-19 ON PERCEIVED AUDIT QUALITY BEHAVIOUR:

The unprecedented impact of Covid-19 pandemic has caused untoward consequences to almost all professions and auditors are no exception. This study investigated perceived audit quality reduction behaviour through job context, COVID-10 effect and mediated by job satisfaction. An online survey involving 103 junior auditors were conducted during the Covid-19 lockdown and that the collected data were analysed using partial least square (PLS). The results revealed that human capital training and perceived compensation can reduce perceived audit quality reduction behaviour during the pandemic while other factors such as time pressure and role ambiguity do not contribute to perceived audit quality reduction behaviour. Job satisfaction also has a significant relationship with perceived audit quality reduction behaviour but it does not mediate any relationship between job context factors and perceived audit quality reduction behaviour. The findings provide new insights into the effect of COVID-19 on audit quality reduction behaviour and its influence on the job context factors. Inevitably, in the midst of pandemic, human capital training appears to be insurmountable and such skills facilitation and knowledge if not being prioritised would likely to impede the auditing process. As a consequence, audit personnel in particular; the audit managers, directors and partners should take heed of the essential human development in the relevant auditing profession over time. Our research findings revealed that COVID-19 pandemic had a profound effect on audit quality behaviour and its influence on the job context factors. It is therefore imperative for audit profession to prepare for such unprecedented and the perceived long-lasting endemic that had thus far impacted to a significant extent on people all around the world.

Peran Moderasi Komitmen Profesional terhadap Perilaku Reduksi Kualitas Audit Periode Pandemi Covid-19

The aims of this study was to examine the effect of time budget pressure and locus of control on the behavior of auditors performing audit quality reduction behavior in the midst of the covid-19 pandemic. In addition, to find out profesional commitment to moderate the effect of time budget pressure and locus of control on audit quality reduction behavior in the midst of the covid-19 pandemic. The population in this study are auditors who work in Public Accounting Firms, the sampling method used purposive sampling and obtained a sample of 64 respondents who collected data using google form. Data analysis used multiple linear regression and moderated regression analysis (MRA). This study found that external locus of control had a positive effect on audit quality reduction behavior and the moderating role of profesional commitment was not supported. This study implies that auditors can adapt to current conditions except for auditors who have an external locus of control and policy makers can pay attention to this.

Factors that affect dysfunctional audit behaviour: A study to understand external auditor’s role as the guardians of strong and justice organizations (Goal 16 sustainable development goals)

This study aimed to investigate factors that affect dysfunctional audit behavior, represented by audit quality reduction and underreporting time. Using 117 questionnaires distributed to auditors in Jakarta, a multiple regression analysis is performed to test the hypothesis. The results showed that perceived time budget pressure and continuous professional commitment positively influence audit quality reduction and underreporting time. While professional commitment, affective, type of personality, and auditor position in audit firms negatively affect audit quality reduction and underreporting time. Besides, competencies negatively affect audit quality reduction and do not affect the underreporting of time. On the other hand, normative professional commitment and independence do not affect audit quality reduction and underreporting time. These results indicate that public accountants have played a role in achieving a more transparent and accountable audit firm, SDGs goals no 16.

Behaviour models of audit quality reduction associated with auditor’s work stress

The current study’s main aim is to examine a behaviour model of reducing audit quality in relation to auditor work stress. The study was performed in 2020 and the cases in the current research were auditors of the Audit Board of the Republic of Indonesia (BPK), auditors of the Development Finance Audit Board (BPKP) and public accounting firm (KAP) auditors in South Sulawesi Province. The sample numbers is determined according to the sample size needed via data investigation employing the Partial Least Square approach, using a random sampling method. The data collected by utilizing a questionnaire and questionnaire data, which can be analyzed as many as 97. The output of this study indicate: (1) the long period pressure cause increase auditor working stress; (2) the long period pressure cause the reduction of audit quality behaviour; (3) the long period conflict cause increase auditors’ working stress; (4) the high role conflict cause increasement the audit quality reduction behaviour; (5) external locus of control cause increasement auditors’ working stress; (6) external locus of control will increase audit quality reduction behaviour, and (7) high work stress cause reduction of audit quality behaviour.

Audit Quality Reduction Behavior: Locus Of Control, Job Stress, Time Pressure

This study aims to examine the effect of locus of control and job stress on audit time budget pressure and its implications on the behavior of KAP audit quality reduction in Bali. Data used by using a questionnaire. The sample in this study amounted to 35 respondent. The data analysis technique used is path analysis. The test results show that locus of control and job stress has a positive effect on audit time budget pressure. Audit time budget pressure has a positive effect on quality reduction behavior in an audit. Furthermore, audit time budget pressure mediates the effect of locus of control and job stress on audit quality reduction behavior. The coefficient of the indirect effect of job stress on the behavior of the reduction of the quality of the audit through the budget pressure audits provides a greater effect than a direct effect of path coefficient value of job stress on the behavior of the reduction of the quality of the audit.

Mediating effect of work stress on the influence of time pressure, work–family conflict and role ambiguity on audit quality reduction behavior

PurposeThis study aims to determine the direct and mediating effects of time pressure, work–family conflict, role ambiguity, work stress and audit quality reduction behavior.Design/methodology/approachThe sample selection in this research is done by purposive sampling method based on the criteria specified by the researcher. In addition, random sample selection does not necessarily produce a sample that can represent auditors at all levels and types of Kantor Akuntan Publik (KAP). This research uses quantitative analysis with approach of structural equation modeling (SEM) method to analyze direct and indirect effect. The main method for data analysis is SEM.FindingsBased on the results of the research note that time pressure, work–family conflict and role ambiguity each have a significant effect on work stress. In testing the direct effect on audit quality reduction behavior, only time pressure influential significant, while work–family conflict and role ambiguity not significant. However, in the test of indirect influence/influence of mediation, there is a significant influence on all tests that time pressure, work–family conflict and role ambiguity each have a significant effect on audit quality reduction behavior through work stress.Originality/valueThe originality of this paper is in SEM used by involving new variable which is work–family conflict. The research location is public accounting offices (KAP) in Indonesia.

PENGARUH TEKANAN WAKTU AUDIT DAN LOCUS OF CONTROL TERHADAP TINDAKAN YANG MENURUNKAN KUALITAS AUDIT

The objective of this study is to investigate the effect of audit time pressure and locus of control on reduced audit quality. Based on the literature review, it was hypothesized that audit time pressure and locus of control have a significant effect on reduced audit quality. This research was done on auditors of audit firms listing Bapepam-Lembaga Keuangan (LK). Data was collected through questionnaires. The respondents of this research are junior auditors, senior, supervisor, and manager. Data were analyzed using path analysis for testing hypothesis. The results show that audit time pressure and locus of control have a significant effect on reduced audit quality. Spesifically, this study indicate that auditors who experience greater level of time pressure are more likely to commit reduced audit quality. Under conditions of excessive time pressure, auditors failed to adequately use all relevant decision cues. The results also indicate that auditors who are more likely to engage in reduced audit quality tend to possess an external locus of control. This indicate that the personality characteristics (instance, locus of control) play a role increasing audit quality. Since an external locus of control is associated with higher acceptance of audit quality reduction behaviors, audit firms may need to tailor their professional development programs and management practices to reflect an auditor’s locus of control.

Tekanan Anggaran Waktu, Locus of Control, Kinerja dan Niat Mengundurkan Diri: Perilaku Audit Disfungsional

This research aims to examine and to provide empirical evidence on the influence of time budget pressure, locus of control, performance and turnover intention to dysfunctional audit behavior. The dysfunctional audit behavior examined are audit quality reduction behavior (AQR) and underreporting of time (URT) behavior. This research uses survey method by using questionnaire to collect the data. The sample of this research is the auditor who work in Public Accounting Firm in East Java and are chosen by using purposive sampling technique. The data analysis uses Partial Least Square. The findings of this study prove that time budget pressure has a positive effect on dysfunctional audit behavior, locus of control has a positive effect on dysfunctional audit behavior, there is no negative effect of performance on dysfunctional audit behavior and there is positive influence of turnover intention to dysfunctional audit behavior. The finding of this study contributes to the development of accounting theory on behaviorism that is the attribution theory which states that the source of auditor behavior can be derived from internal factors and external factors. The results of this study can also be used as a reference for future researchers in the related field.

The Influence of Audit Time Budget Pressure on Reduced Audit Quality Behavior

Objective – The purpose of this study is to examine the effect of audit time budget pressure on audit quality reduction behavior conducted by auditors in Indonesia.Design/methodology – 240 respondents for current study where auditors in Indonesia served as the sample. Multivariate technique was deployed to data analysis using AMOS - structural equation modeling. Results – The results of this study indicate that the audit quality reduction behavior occurs in the audit assignment practices and this is becoming a concern in audit profession. Research finding statistically highlighted that there is a positive and significant relationship between time budget pressure and audit quality reduction behavior. Keywords Audit Quality, Time budget pressure, Reduce Audit Quality Behavior

PENGARUH TEKANAN WAKTU AUDIT DAN LOCUS OF CONTROL TERHADAP TINDAKAN YANG MENURUNKAN KUALITAS AUDIT

The objective of this study is to investigate the effect of audit time pressure and locus of control on reduced audit quality. Based on the literature review, it was hypothesized that audit time pressure and locus of control have a significant effect on reduced audit quality. This research was done on auditors of audit firms listing Bapepam-Lembaga Keuangan (LK). Data was collected through questionnaires. The respondents of this research are junior auditors, senior, supervisor, and manager. Data were analyzed using path analysis for testing hypothesis. The results show that audit time pressure and locus of control have a significant effect on reduced audit quality. Spesifically, this study indicate that auditors who experience greater level of time pressure are more likely to commit reduced audit quality. Under conditions of excessive time pressure, auditors failed to adequately use all relevant decision cues. The results also indicate that auditors who are more likely to engage in reduced audit quality tend to possess an external locus of control. This indicate that the personality characteristics (instance, locus of control) play a role increasing audit quality. Since an external locus of control is associated with higher acceptance of audit quality reduction behaviors, audit firms may need to tailor their professional development programs and management practices to reflect an auditor’s locus of control.

Dysfunctional audit behaviour: an exploratory study in Malaysia

PurposeThe quality of the opinion provided by audit firms is an important determinant of their long‐term survival, but audit quality is difficult to gauge, which makes it particularly sensitive to the behaviour of the individuals who carry on audit work. This paper seeks to identify the incidence of dysfunctional audit behaviours and audit quality reduction behaviours, actions taken by an auditor during engagement that reduce evidence‐gathering effectiveness.Design/methodology/approachThe paper is based on a survey of 244 auditors working in small/medium and big audit firms in Malaysia.FindingsThe paper identifies key variables leading to dysfunctional audit behaviour.Research limitations/implicationsThe paper is subject to the normal limitations associated with survey research.Practical implicationsThe paper provides basic empirical evidence of a potentially serious risk of dysfunctional behaviours that may impair audit quality.Originality/valueThe paper provides empirical evidence to address the concerns of the Malaysian regulatory authorities regarding audit quality.

An experimental market analysis of auditor work-level reduction decisions

Abstract In this paper, we use an experimental market to test the link between competitive fee pressure and its alleged downstream consequences: time pressure and audit quality reduction. To induce fee pressure, transaction (auditor switching) costs, which have been found to be associated with fee lowballing in prior research, are manipulated in a competitive bidding environment. Our results show that (after controlling for subject skill level) the presence of transactions costs induces lower audit fees in first year engagements which result in significantly lower time budget levels selected and then, in turn, significantly higher levels of audit work-level reductions. Also, confirming prior survey results on the causes of audit quality reduction acts, we find that subjects encountering lower perceived misstatement rates select significantly lower time budgets and then, in turn, evidence significantly higher audit work-level reductions. These findings lend support to regulators' assertions about the link between fee competition and the potential for reductions in audit quality.

Audit quality, auditor behaviour and the psychological contract

The quality of the opinion provided by audit firms is an important determinant of their long-term survival. However, audit quality is difficult to gauge, which makes it particularly sensitive to the behaviour of the individuals who carry on audit work. Differences of interest between partners and other firm members can then have adverse consequences on the work motivation of field auditors. In particular, audit quality reduction behaviours are defined as actions taken by an auditor during an engagement that reduce evidence-gathering effectiveness inappropriately. These acts can threaten audit quality or damage the reputation of the profession. This paper, which is based on a survey of 170 audit seniors working in large audit firms in France, uses a model based on 'psychological contract' assessment and affective commitment to account for audit quality reduction behaviours by the respondents. The results show that the psychological contract elements dealing with the professional aspect of auditing are the most influential, and that affective commitment is correlated to social but not to technical quality reduction behaviours. The perception, by the respondents, of the quality of the review process is also significant. Some implications of these results for the future of auditing are drawn.