A Multi-Method Study of the Effects of Eliminating Time Entry on Audit Timeliness and Related Auditor and Client Perceptions

44 Pages Posted: 23 Jun 2020

See all articles by Erin M Hawkins

Erin M Hawkins

Clemson University

Andrew H. Newman

University of South Carolina

Jesse C. Robertson

University of North Texas

Chad M. Stefaniak

University of South Carolina

Jeremy Vinson

Clemson University

Date Written: May 1, 2020

Abstract

Public accounting firms traditionally use a billable time entry (BTE) model to assist in budgeting engagements, evaluating personnel, and determining audit fees. However, research has identified drawbacks including time pressure and incentives to engage in audit quality-reducing behavior. Relatively little research examines alternative budgeting models. We conduct a multi-method study to examine the effects of an alternative, No-BTE model recently implemented as a pilot program by a large, regional public accounting firm. Results from proprietary audit engagement archival data indicate the No-BTE model did not have an incremental effect on audit preparer time above and beyond that observed in non-pilot engagements. Survey results indicate auditors who participated in the No-BTE pilot program perceive it can improve elements of audit quality, reduce apprehension over performance evaluations, and improve work/life balance. Survey results from clients did not identify drawbacks. We offer implications for practice and research suggestions on this novel budgeting approach.

Keywords: Time Budgets; Beyond Budgeting; Auditing; Public Accounting; Billable Hours

Suggested Citation

Hawkins, Erin M and Newman, Andrew H. and Robertson, Jesse C. and Stefaniak, Chad M. and Vinson, Jeremy, A Multi-Method Study of the Effects of Eliminating Time Entry on Audit Timeliness and Related Auditor and Client Perceptions (May 1, 2020). Available at SSRN: https://ssrn.com/abstract=3613751 or http://dx.doi.org/10.2139/ssrn.3613751

Erin M Hawkins

Clemson University ( email )

Clemson, SC 29634
United States

Andrew H. Newman

University of South Carolina ( email )

Columbia, SC
United States

Jesse C. Robertson

University of North Texas ( email )

1155 Union Circle #305340
Denton, TX 76203
United States

Chad M. Stefaniak (Contact Author)

University of South Carolina ( email )

701 Main Street
Columbia, SC 29208
United States

Jeremy Vinson

Clemson University ( email )

101 Sikes Ave
Clemson, SC 29634
United States

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