EconPapers    
Economics at your fingertips  
 

Responsiveness of Auditors to the Audit Risk Standards: Unique Evidence from Big 4 Audit Firms

Lasse Niemi, W. Robert Knechel, Hannu Ojala and Jill Collis

Accounting in Europe, 2018, vol. 15, issue 1, 33-54

Abstract: We examine the effect of changes in audit risk standards on the conduct of financial statement audits in a European setting. We investigate this by analysing the audit hours and audit fees for clients of Big 4 audit firms in Finland in 1996 and 2010. Our results show that audit firms became more sensitive to clients’ business risk due to the introduction of the new audit risk standards, with more audit hours allocated to owner-managed companies in 2010 than in 1996, and fewer audit hours allocated to low-risk clients in 2010 than in 1996. Also, the labour mix in the audit team changed for owner-managed companies, with a greater work load carried by junior auditors in 2010 than in 1996. Regarding the price of audit, we find an increase in audit fees for clients with high business risk, while audit fees remained at roughly the same level for low-risk clients. These findings should be of interest to the auditing profession and those involved in the development of auditing regulations.

Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1080/17449480.2018.1431398 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:acceur:v:15:y:2018:i:1:p:33-54

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAIE20

Access Statistics for this article

Accounting in Europe is currently edited by Lisa Evans

More articles in Accounting in Europe from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2018-12-01
Handle: RePEc:taf:acceur:v:15:y:2018:i:1:p:33-54