Client Deadline Concentration in Audit Offices and Audit Quality

AUDITING: A Journal of Practice and Theory (2018)

51 Pages Posted: 14 Apr 2017 Last revised: 17 Feb 2019

See all articles by Keith Czerney

Keith Czerney

University of Missouri-Columbia

Daun Jang

California State University, Sacramento, College of Business, Department of Accountancy

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy

Date Written: July 23, 2018

Abstract

This research investigates the effect on audit quality of concentrated public company financial statement filing deadlines in audit offices. Audit offices must effectively manage their resources to meet their clients’ audit service demands. For audit offices with clients that have filing deadlines concentrated in time, resource management is of greater importance because, when constrained or not managed effectively, resources can impair audit quality. We draw on the resource constraints and multiple project resource allocation literatures in auditing and management, respectively, to hypothesize that audit quality is lower when an audit office’s clients’ financial statement deadlines concentrate in time, which we term client deadline concentration. Using multiple proxies for audit quality, we find an economically significant negative association between an audit office’s client deadline concentration and audit quality. This significant effect is incremental to the effects of other resource-based constraints from the prior literature and to controls for unobservable differences in audit offices that explain a significant amount of the variation in audit quality outcomes. In light of our findings, audit offices might more carefully consider the relative timing of client deadlines when accepting or continuing client engagements and when making resource-related decisions.

Keywords: audit quality, deadline concentration, audit offices

JEL Classification: M40, M41, M42, M48

Suggested Citation

Czerney, Keith and Jang, Daun and Omer, Thomas C., Client Deadline Concentration in Audit Offices and Audit Quality (July 23, 2018). AUDITING: A Journal of Practice and Theory (2018), Available at SSRN: https://ssrn.com/abstract=2949124 or http://dx.doi.org/10.2139/ssrn.2949124

Keith Czerney (Contact Author)

University of Missouri-Columbia ( email )

College of Business
Columbia, MO 65211
United States

Daun Jang

California State University, Sacramento, College of Business, Department of Accountancy ( email )

6000 J Street
Sacramento, CA 95819-6082
United States

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

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