The Effects of Time Budget Pressure and Intentionality on Audit Supervisors' Response to Audit Staff False Sign‐Off

Abstract

Based on theory from the psychology literature and results from prior false sign‐off research, we develop hypotheses and then conduct an experiment to assess the reporting intentions of audit supervisors who discover that a staff member under their supervision has committed false sign‐off. The experiment manipulated the level of time budget pressure on the audit engagement and the staff member's intentionality. Results indicate that audit supervisors are more likely to report the false sign‐off when (1) the audit staff member was working under conditions of low time budget pressure versus high time budget pressure and (2) the staff member committed the false sign‐off intentionally versus unintentionally as a result of confusion over what was expected. The paper concludes with a discussion of its limitations, suggestions for future research, as well as implications for practice.

Keywords: false sign‐off, audit quality, time budget pressure, intentionality