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Planned audit hours: Do auditors use a same as last year strategy?

Advances in Accounting Behavioral Research

ISBN: 978-0-76230-784-5, eISBN: 978-1-84950-104-0

Publication date: 15 June 2001

Abstract

Audit efficiency is a key to audit firm success in the competitive marketplace for audit services (Mock & Wright, 1993). Reducing planned audit hours is one strategy auditors can use to be more efficient (Bierstaker & Wright, 1998). Yet, anecdotal evidence from practicing auditors suggests they often use a “same as last year” approach and some prior research indicates that auditors tend to “anchor” on the prior year plan (Kinney & Uecher, 1982, Wright, 1988; Bedard, 1989; Mock & Wright, 1999).

This research provides evidence on auditors' willingness to depart from the prior year actual hours when developing a current year audit plan. An initial case presents auditors with a simple request to be efficient, a second case requests auditors to be efficient when presented with a prior year material error highlighted on the trial balance, and a third case requests auditors to be efficient when presented with a prior year material error in one audit area but no errors in other areas.

The results for all three cases indicate that auditors did not use a “same as last year” strategy. Instead they planned the current year audit hours significantly below the prior year actual hours and provided a variety of techniques that could be used to improve audit efficiency.

Citation

Callahan Hill, M. (2001), "Planned audit hours: Do auditors use a same as last year strategy?", Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 4), Emerald Group Publishing Limited, Leeds, pp. 281-302. https://doi.org/10.1016/S1474-7979(01)04077-7

Publisher

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Emerald Group Publishing Limited

Copyright © 2001, Emerald Group Publishing Limited