Auditors' time pressure: does ethical culture support audit quality?

Auditors' time pressure: does ethical culture support audit quality? Purpose – The purpose of this paper is to address the impact of ethical culture on audit quality under conditions of time budget pressure. The study also tests the relationship between ethical culture and time budget pressure. Design/methodology/approach – The study is based on a field survey of financial auditors employed by audit firms operating in Sweden. Findings – The study finds relationships between three ethical culture factors and reduced audit quality acts. The ethical environment and the use of penalties to enforce ethical norms are negatively related to reduced audit quality acts, whereas the demand for obedience to authorities is positively related to reduced audit quality acts. Underreporting of time is not related to ethical culture, but is positively related to time budget pressure. Finally, the study finds a relationship between two ethical culture factors and time budget pressure, indicating a possible causal relationship, but ethical culture does not mediate an indirect effect of time budget pressure on reduced audit quality acts. Originality/value – This is the first study to report the effect of ethical culture on dysfunctional auditor behavior using actual self‐reported frequencies of reduced audit quality acts and underreporting of time as data. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Auditing Journal Emerald Publishing

Auditors' time pressure: does ethical culture support audit quality?

Managerial Auditing Journal, Volume 28 (7): 20 – Jul 19, 2013

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Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
0268-6902
DOI
10.1108/MAJ-10-2012-0761
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to address the impact of ethical culture on audit quality under conditions of time budget pressure. The study also tests the relationship between ethical culture and time budget pressure. Design/methodology/approach – The study is based on a field survey of financial auditors employed by audit firms operating in Sweden. Findings – The study finds relationships between three ethical culture factors and reduced audit quality acts. The ethical environment and the use of penalties to enforce ethical norms are negatively related to reduced audit quality acts, whereas the demand for obedience to authorities is positively related to reduced audit quality acts. Underreporting of time is not related to ethical culture, but is positively related to time budget pressure. Finally, the study finds a relationship between two ethical culture factors and time budget pressure, indicating a possible causal relationship, but ethical culture does not mediate an indirect effect of time budget pressure on reduced audit quality acts. Originality/value – This is the first study to report the effect of ethical culture on dysfunctional auditor behavior using actual self‐reported frequencies of reduced audit quality acts and underreporting of time as data.

Journal

Managerial Auditing JournalEmerald Publishing

Published: Jul 19, 2013

Keywords: Auditing; Ethics; Sweden; Auditors; Audit quality; Ethical culture; Time budget pressure

References

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