Education, Experience, and Audit Effort

Posted: 30 Jan 2017

See all articles by Limei Che

Limei Che

University College of Southeast Norway

John Christian Langli

BI Norwegian Business School - Department of Accounting, Auditing and Business Analytics

Tobias Svanström

University of Umea; Norwegian School of Management (BI)

Date Written: January 30, 2017

Abstract

This paper examines how audit effort, measured by the estimated number of audit hours used to perform the clients’ audits, is associated with engagement partners’ formal education, continuing professional education (CPE), and professional experience. Although the literature provides considerable evidence for the determinants of audit fees, our understanding of how audit effort is related to these partner characteristics is limited. The aim of this paper is to shed light on partner specific factors that may influence how much audit effort they and their team members exert. Using a sample of 1,738 unique partners and 178,770 client-year observations, we find evidence that auditors with a master’s degree exert more effort than those with a bachelor’s degree. We also find a positive relation between audit effort and CPE. The relation between audit effort and professional experience is non-linear: the least experienced auditors put in the least effort, moderately experienced auditors exert the most effort, while the effort level of the most experienced auditors is in between. Our finding is robust to a number of sensitivity tests.

Keywords: Audit effort, engagement partner, formal education, continuing professional education, professional experience

Suggested Citation

Che, Limei and Langli, John Christian and Svanström, Tobias, Education, Experience, and Audit Effort (January 30, 2017). Available at SSRN: https://ssrn.com/abstract=2907990 or http://dx.doi.org/10.2139/ssrn.2907990

Limei Che

University College of Southeast Norway

3603 Kongsberg, 3679
Norway

John Christian Langli

BI Norwegian Business School - Department of Accounting, Auditing and Business Analytics ( email )

N-0442 Oslo
Norway

Tobias Svanström (Contact Author)

University of Umea ( email )

Norwegian School of Management (BI) ( email )

Nydalsveien 37
Oslo, 0484
Norway

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