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This study aims to extend recent research analyzing the effect of auditor busyness on audit quality. Specifically, this study explores the effect on audit quality of a change of fiscal year-end to or from an audit firm’s busy period.

Empirical archival.

When firms change their fiscal year-end to a period when the auditor is less busy, client firms are rewarded with lower audit fees and auditors are rewarded with a reduction in required effort. This study finds no difference in the level of audit quality after a change in fiscal year-end.

There are significant implications for audit firms as they may gain cost advantages by successfully promoting off-season fiscal year-ends, and reduce the negative effect on employees associated with “busy season” stress. Similarly, client firms may find that audit costs are reduced when they adopt a less “busy” fiscal year-end.

These results have policy implications for regulators because regulators often dictate the fiscal year-end for certain industries or traded securities. Such dictates may thus introduce inefficiencies into the market for audit services.

These results should guide regulators in their decisions to dictate fiscal year-ends and firms in their choice of reporting periods.

The purpose of this paper is to examine the potential effect of busy season resource constraints on the selection of a new auditor, conditioned upon the status of the prior auditor.

The paper employs multivariate logistic regressions for a sample of firms that changed auditors between 1979 and 2005 to explore the empirical correlations between having a December fiscal year-end (FYE) and non-lateral switches.

The paper finds that non-BigN clients with December FYEs are less likely to switch to BigN auditors than those with non-December FYEs prior to the enactment of the Sarbanes-Oxley Act (SOX). This trend subsides after SOX. For firms with BigN predecessor auditors, fiscal year-end appears to have insignificant influence on auditor switching.

The findings suggest that upwardly mobile clients face greater audit supply constraints compared to clients already being audited by a BigN firm during the traditional busy season. However, the curbing influence on switching upwards erodes after SOX.

This study is to show the impact of supplier capacity constraints on audit production and structural changes within the auditing profession.

The findings can further the understanding of the determinants of auditor-client realignment, given that the paper identifies and explores the effects of having a December FYE on subsequent auditor appointments, conditioned upon the status of the prior auditor.

Auditing is seasonal, with the majority of U.S. public companies having a December fiscal year-end. This results in an audit “busy season” and “off-season” with a non-trivial seasonal impact on the pricing of audit services. We apply an economic framework that explains how audit seasonality affects both the magnitude and the price elasticity of audit demand and audit supply. We find that the audit busy season is associated with an audit fee premium of approximately 10% based on a meta-analysis of 97 analyses from 18 audit fee studies of U.S public companies. A meta-regression of the contextual differences in research design between studies reveals that examining only Big N attenuates the busy season effect size but does not eliminate it, and that the busy season effect size may be larger post-SOX.

Setting audit fees is a persistent source of stress for auditors who must, on one hand, comply with the increasing government regulations that generally cause costs to rise; and on the other hand, respond to client pressures to keep audit fees down. In the post-scandal environment of Enron, WorldCom, and the demise of Arthur Andersen, policy makers have introduced additional costs for auditors by increasing regulations and creating a new industry watchdog – the Public Company Accounting Oversight Board (PCAOB). In this environment of constant pricing-cost tension for the auditor, the purpose of this paper is to examine audit fee trends over an extended period, 2000-2014.

The authors calculate the unexpected audit fees using the audit fee model. The authors examine audit fee trends while controlling for changes due to inflation, auditor wages, and other audit fee determinants.

The key findings indicate that audit fees increased in response to the promulgation of new audit regulations requiring additional audit work, the Sarbanes-Oxley (SOX) Act of 2002 and Auditing Standard No. 2 in 2004. Additionally, the authors find that audit fees decreased after new regulations alleviating audit work, namely the passage of Auditing Standard No. 5 in 2007, and remained unchanged when new regulations had a minimal impact on audit work, namely the Dodd-Frank Act of 2010.

The findings of this research are relevant to audit clients, auditors, and regulators as they weigh the cost and benefits of significant new audit regulations and their impacts on audit fees.

Using the more recent US data, the results in this paper show how events changed audit fee trends in recent years. The findings indicate that audit fees increased after the passage of new audit regulations such as the SOX Act of 2002, Auditing Standards No. 2 in 2004, and decreased after the passage of Auditing Standards No. 5 in 2007.

This study aims to examine the relationship between the attributes of audit firms (Big 4, audit fees, busy season, audit firm tenure and audit partner gender) and the impact of these attributes on key audit matters (KAM) readability in Malaysia.

The auditor's reports and financial data were analysed from a sample of FTSE 100 Malaysia-listed companies for the fiscal years 2017–2019, consisting of 258 observations. Panel regression analyses were conducted to evaluate the possible associations between audit firm attributes and KAM readability. The Flesch reading ease score and Coleman–Liau index were applied to measure KAM readability.

The findings show that female audit partners significantly impact KAM readability; further analysis also revealed that companies audited by Big 4 audit firms and higher audit fees tend to report a more readable KAM disclosure in the FTSE 100 in Malaysia.

The regression results provide empirical evidence of the influence of audit firm attributes on KAM readability. This study also examined important corporate governance players, such as external auditors and those charged with governance, who form the audit committee's qualities when analysing the determinants of KAM reporting variations in Malaysia.

This paper aims to examine the effect of the auditors’ burnout determinates on audit quality and performance. It also analyses whether the demographic characteristics of gender, age group, education and job positions affect auditors’ decisions for burnout, audit quality and performance.

A questionnaire was distributed on a sample of auditors in the top ten auditing firms in an emerging market including the Big 4. Factor analysis, correlation matrix and structural equation modeling were used for the analysis of the collected data and testing the developed hypotheses.

The results show that burnout has negative consequences for both the auditor and the auditing firm. While good organizational climate has a negative significant association with audit quality, nonethical decisions and audit performance, role clarity has positive significant association with the audit quality and performance and has an insignificant association with nonethical decisions. Also, turnover intention has significant positive association with nonethical decision, audit quality and performance.

This research is among the first to focus on auditor’s burnout determinates on audit quality and performance in an emerging market characterized by different socioeconomic, political and cultural factors compared with those of developed markets. Auditors, regulators and professional policymakers can benefit from the results of this research.

This paper aims to investigate whether the two dominant financial reporting regimes, US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), are associated with audit pricing and audit report lags.

In 2007, the US SEC eliminated the requirement for foreign registrants to reconcile their financial statements to US GAAP from IFRS. In this post-reconciliation setting in the USA, the authors use panel ordinary least square regressions to examine a sample of foreign firms cross-listed in the USA reporting under IFRS and US domestic firms reporting under US GAAP during the fiscal year 2007–2019.

The authors find that the firms reporting under IFRS have longer audit report lags than firms reporting under US GAAP. In addition, the authors find that firms reporting under IFRS pay higher audit fees than their US GAAP counterparts. The results are robust after controlling for the firm- and country-specific characteristics as well as using propensity-score matching.

To the best of the authors’ knowledge, this study is the first to provide empirical evidence that the differences between the two reporting regimes are associated with auditor behavior, possibly through additional audit efforts and audit complexity associated with auditing the principle-based IFRS relative to the rule-based US GAAP.

The authors investigate whether the different tenure phases of executives have a differential effect on audit pricing. Two alternate views – career concern and power – can explain the effect of executives’ tenure on audit pricing. This paper aims to determine, which viewpoint dominates in explaining the relationship between audit pricing and executive tenure phases.

Using a sample of 11,198 firm-year observations from 2007 to 2016, the authors adopt an ordinary least squares regression model to assess the impact of the middle and long phases of executives’ tenure on audit fees.

Audit fees are significantly lower when executives enter the middle and long phases of tenure. The reduction in audit fees is greatest as both chief executive officers and chief financial officers enter the long tenure phase. Although audit fees gradually decrease as executive tenure is extended, they start increasing two years before the end of executive tenure. Furthermore, the negative association between the executive tenure phase and audit fees is greater when the executive is appointed externally. Finally, the long phase of executive tenure also mitigates the positive relationship between audit fees and internal control weaknesses.

This study is based on US data. Future research may extend this study to other countries.

The findings are important to firms, practitioners and academicians, particularly, as the length of tenure of top executives has increased in recent years. By documenting that executives’ middle and long tenure phases reduce audit fees, the findings highlight the importance of maintaining executives in the firm. Finally, the findings have implications for investors, policymakers and auditors to identify companies with high audit risk.

This study is the first to document the impact of executives’ middle and long tenure phases on audit fees.

The purpose of this study is to examine how auditors would react when there are exogenous negative shocks to their client portfolios.

Using a sample of 31,256 firm-year observations (2001–2016), the authors investigate whether industry shocks to a subset of an auditor’s clients distract the auditor and affect the professional skepticism applied in the audits of other clients.

The authors find that clients of distracted auditors are more likely to meet or beat analyst consensus forecasts, suggesting that auditors’ professional skepticism is compromised by distractive events. The cross-sectional analyses reveal that the negative impact of the distractive events on audit quality is more pronounced when the distracted auditors audit less important clients, face lower third-party legal liabilities and experience higher growth. Using an alternative measure of audit quality, the additional analysis shows that clients of distracted auditors exhibit a higher probability of restating their earnings in subsequent years. Overall, the empirical evidence suggests that when distracted, auditors render lower quality audit.

The study complements recent work by Cassell et al. (2019), which shows that the 2008–2009 financial crisis affected the quality of the audits of nonbank clients of bank-specialized auditors. While Cassell et al. (2019) focus on one shock (financial crisis) to one industry (i.e. the financial services industry), the study examines more frequent shocks over a wide range of industries to identify the potential effects of distractive events, improving the generalizability of the findings to all industries and all auditors (specialist and nonspecialist) in nonrecession periods.

Accounting work is characterized by high job demands and tight deadlines. With less task variety, accounting work is susceptible to employee disengagement. This paper aims to examine the role of enhanced performance management practices as intervention mechanism to the disengagement among accountants.

A total of 105 accountants participated in an online survey, answering self and social reports. Hypotheses were tested using regression analyses.

Enhanced performance management practices promote engagement among accountants. In turn, engagement promotes job satisfaction and affective commitment among accountants.

Further studies are necessary to test the study’s findings. Future research should focus on replicating this study in other settings.

Performance planning and implementation are critical to enhancing accountants’ work attitudes and behaviors.

The accounting literature has consistently addressed negative accounting work outcomes from the perspective of burnout (a negative approach). This paper addresses the issue from the perspective of engagement (a positive approach).