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The association between audit manager and auditor-in-charge experience, effort and risk responsiveness
journal contributionposted on 2019-08-01, 00:00 authored by Christine ContessottoChristine Contessotto, W Robert Knechel, Robyn Moroney
Audit quality is dependent on the experience and effort of the audit team to identify and respond to client risks (risk responsiveness). Central to each audit team are the core role holders who plan and execute the audit. While many studies treat the partner as the primary core role holder, the manager and auditor-in-charge (AIC) are also important to an engagement. Using proprietary Australian data for listed and non-listed engagements from two mid-tier firms, we analyse the association between the experience and relative effort of the manager and AIC and risk responsiveness. We find that a manager's client-specific experience is associated with risk responsiveness, but only for non-listed clients. However, we find no evidence that the general or industry experience of a manager, or the general, industry or client-specific experience of the AIC, is associated with risk responsiveness. Nor do we find that the effort levels of a manager or AIC are associated with risk responsiveness. In supplemental analysis, we find that the client-specific experience and relative effort of the partner is associated with risk responsiveness. These results suggests that managers can provide an important, albeit limited, contribution to the audit that goes beyond the core role of the partner.
JournalAuditing: a journal of practice and theory
Pagination121 - 147
PublisherAmerican Accounting Association
LocationLakewood Ranch, Fla.
Publication classificationC Journal article; C1 Refereed article in a scholarly journal
Copyright notice2018, Auditing: A Journal of Practice and Theory
CategoriesNo categories selected
core role holderaudit experienceindustry experienceclient-specific experiencerisk responseSocial SciencesBusiness, FinanceBusiness & Economicsrisk responsivenessINTERNAL CONTROL JUDGMENTSDECISION-MAKING RESEARCHINDUSTRY SPECIALIZATIONPARTNER TENUREQUALITY INSIGHTSCLIENT RISKKNOWLEDGEIDENTIFICATIONPERFORMANCEMODEL