Factors Associated with the Incidence of Reduced Audit Quality Behaviors

Abstract:     
The purpose of this study is to develop and test a more comprehensive model of factors that explain reduced audit quality (RAQ) behaviors. Specifically, this study investigates the relationship between the incidence of RAQ behaviors and auditors' personality characteristics, auditors' professional characteristics, auditing firms' quality control and review procedures, auditing firm structure, and auditors' perceptions of time budget pressure. The results suggest that auditors' perceived strength of their firm's quality control and review procedures and auditors' perceived strength of their firm's penalties for committing RAQ acts are inversely related to incidences of RAQ behaviors. Also, auditors' need for approval and need for achievement are inversely related to RAQ behaviors. No other significant relationships between RAQ behaviors and other potential explanatory factors were found. These findings suggest that firms should evaluate their control, review, and disciplinary procedures over audit program execution and improve their auditors' understanding of procedures and penalties.

JEL Classification: M40, M49

Accepted Paper Series