Client Deadline Concentration in Audit Offices and Audit Quality

• Published in: Auditing : a journal of practice and theory 2019-11, Vol.38 (4), p.55-75
• Main Authors: Czerney, Keith, Jang, Daun, Omer, Thomas C.
• Format: Article
• Language: English
• Subjects: Audit engagements; Auditing profession; Auditing standards; Audits; Deadlines; Financial reporting; Financial statements; Public companies; Quality control
• ISSN: 0278-0380; 1558-7991
• DOI: 10.2308/ajpt-52386

This research investigates the effect on audit quality of concentrated public company financial statement filing deadlines in audit offices. Audit offices must effectively manage their resources to meet clients' audit service requirements. When an audit office has deadlines that are more concentrated in time, effective resource management is of greater importance to reduce the likelihood of audit failure. Drawing on relevant research from the auditing and management literatures, we hypothesize and find that audit quality is lower when an audit office's clients' financial statement deadlines concentrate in time, which we term client deadline concentration. The significant, negative effect of client deadline concentration on audit quality is incremental to the effects of other resource-based constraints from the prior literature and to controls for unobservable differences in audit offices that explain a significant amount of the variation in audit quality outcomes. JEL Classifications: M40; M41; M42; M48. Data Availability: Data are available from public sources identified in the text.