Auditor Skill Demands and Audit Quality: Evidence from Job Postings

Abstract

Recent labor economics research argues that technological advances have increased the demand for cognitive and social skills to complement its use. Given the push to adopt emerging technologies in the audit profession, we examine audit offices’ demand for these skills from their auditors and whether these skills relate to audit quality. Using a novel dataset of online job postings by accounting firms, we document substantial variation in the demand for auditors’ cognitive and social skills both across and within accounting firms, suggesting that audit offices are not homogeneous in their demand for such skills. We find that the demand for auditors’ cognitive and social skills (i) increased over our sample period of 2010-2019 and (ii) is positively associated with audit quality. Further, both of these associations are more pronounced for audit offices that hire more tech-employees and engage more complex clients. Taken together, our findings suggest that an audit office’s demand for cognitive and social skills represents an important attribute that can affect audit quality.