Auditor Skill Demands and Audit Quality: Evidence from Job Postings

Abstract

This study empirically examines the relation between audit quality and auditors’ cognitive and social skills. Using a novel dataset of online job postings by accounting firms, we document substantial variation in the stated demand for auditors’ cognitive and social skills, suggesting that audit offices are not homogeneous in their preferences for such skills. We find a positive relation between audit quality and the prevalence of cognitive and social skills within an audit office’s job postings. This association is stronger for audit engagements that are more complex or require greater coordination, suggesting that cognitive and social skills are particularly important in engagements where effective communication and knowledge transfer, as well as sound professional judgement and skepticism, are needed. The association is also stronger for audit offices with greater investments in new technology, consistent with the complementary relation between cognitive and social skills and the use of technology. Overall, our study offers among the first empirical evidence linking specific auditor skills to audit quality.

Keywords: Auditor skill demands, audit quality, job postings