Flu Season, Human Capital Resources, and Audit Outcomes

56 Pages Posted: 24 Aug 2018 Last revised: 1 Feb 2019

See all articles by Landi Morris

Landi Morris

Bentley University

Rani Hoitash

Bentley University - Department of Accountancy

Date Written: January 2019

Abstract

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

Morris, Landi and Hoitash, Rani, Flu Season, Human Capital Resources, and Audit Outcomes (January 2019). Available at SSRN: https://ssrn.com/abstract=3231579 or http://dx.doi.org/10.2139/ssrn.3231579

Landi Morris

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

Rani Hoitash (Contact Author)

Bentley University - Department of Accountancy ( email )

175 Forest Street
Waltham, MA 02452-4705
United States

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