Flu Season, Human Capital Resources, and Audit Outcomes
56 Pages Posted: 24 Aug 2018 Last revised: 1 Feb 2019
Date Written: January 2019
This study examines whether influenza (flu), a threat to human capital resources, is associated with audit outcomes. Because the peak months of flu season overlap with audit busy season, we examine whether audit offices most impacted by the flu will be associated with adverse audit outcomes. We test our hypotheses using flu data collected from the Centers for Disease Control and Prevention (CDC) and find that audit quality suffers, audit report lag is prolonged, and audit production costs increase in audit offices most impacted by the flu. This association extends to Big 4 but not non-Big 4 auditors. Examining Big 4 offices that serve complex clients, we find that the effect of the flu is heightened when the need for auditors’ client specific knowledge and judgment is stronger. This study informs regulators and practitioners with a vested interest in threats to auditor judgment and audit quality.
Keywords: Influenza, audit quality, going concern, audit delay, audit fees, human capital, resource management, influenza
JEL Classification: I10, I12, E24, J24, M41, M42, M54
Suggested Citation: Suggested Citation