Dysfunctional behaviour in the modern audit environment: the effect of time budget pressure and auditors’ personality type on reduced audit quality practices
Gundry, Leanne C
The nature of the audit environment means that users of financial statements have no way of assessing the quality of work that is carried out during an audit. Because of this, research is needed to determine what variables cause auditors to engage in dysfunctional behaviours when carrying out audit steps. This study examines the effect that time budget pressure and personality type have on the likelihood that auditors will engage in two ‘reduced audit quality practices’ — prematurely signing off an audit step and accepting a weak client explanation. This was achieved by administering a questionnaire to 168 members of NZICA working in audit, to assess the likelihood they would engage in these two RAQPs in different time budget pressure situations and also to assess their personality type. The results of this study found that a positive relationship exists between time budget pressure and the likelihood that auditors will engage in one RAQP — premature signoff. It was also found that the personality type of the auditor directly affects their propensity to engage in RAQPs, rather than interacting with time budget pressure as originally hypothesised. These results have many implications for auditors in practice regarding the effect of time budgets that are set and the types of people they employ, and this raises a number of directions for future research in this area.
Degree Name: Bachelor of Commerce with Honours
Degree Discipline: Accountancy and Business Law
Research Type: Dissertation