ABSTRACT This study investigates the association between audit team virtuality and audit quality‐threatening behaviour (AQTB). Although virtuality theory suggests that high virtuality can hinder team interactions, virtuality‐in‐paradox theory shows such tools can simultaneously create isolation and efficiency, reduce interpersonal bias and empower timely task completion. This suggests that structural and perceived aspects of virtuality have a more complex influence on team behaviour. Paradox‐in‐virtuality theory is applied to explain how virtuality affects audit team behaviour. Data were collected from 335 auditors across 185 audit team engagements at a Big 4 audit firm using a questionnaire survey. Ordered logistic regression analysis and robustness tests are applied. Results show that audit team virtuality is associated with AQTB. Teams that rely more heavily on communication technologies report higher levels of AQTB, whereas teams experiencing greater synchronicity and higher information quality report lower levels of AQTB. However, the interaction analyses reveal important nuances: When synchronicity occurs together with high technology use, AQTB increases, but when information quality is high, whether combined with technology use or with synchronicity, AQTB becomes less frequent. The consequences are analysed, and future research prospects are discussed. This research contributes to audit quality and audit team literature by identifying determinants of AQTB at the team level. Insights into audit team behaviour are valuable for practitioners adapting to new communication technologies. Contributions are made to team virtuality research and behavioural outcomes by testing its three dimensions in professional audit practice.
ABSTRACT Proponents of mandatory auditing claim that auditing reduces the risk of tax evasion and that firms disregarding tax payments distort competition because they operate with lower costs than firms that meet their tax obligations. To investigate this, we analyse data from a credit reference agency to examine whether unaudited firms are more likely than audited firms to fail to pay income taxes and value‐added taxes up to 4 years prior to bankruptcy. We also examine the association between auditing and tax avoidance prior to bankruptcy and find mixed results, with some evidence suggesting that audited firms engage in greater tax avoidance than unaudited firms. In conclusion, our results indicate that auditing is associated with a higher likelihood of tax‐payment compliance among failing firms. At the same time, we find only limited evidence that auditing systematically affects tax avoidance behaviour or increases tax revenues through higher tax payments.
ABSTRACT Although extensive work links intrapreneurship to individual and contextual factors, little is known about how auditors' self‐perceived leadership styles, as exercised in their supervisory roles, and job satisfaction combine in specific configurations to explain intrapreneurial intention in professional service firms. This study investigates how auditors' transformational, transactional and passive leadership styles interact with job satisfaction to explain their willingness to engage in intrapreneurial behaviour within a Big Four accounting firm. Data were collected from 89 auditors via a self‐administered, cross‐sectional questionnaire. We applied fuzzy‐set qualitative comparative analysis (fsQCA) within a set‐theoretic multimethod research (SMMR) design, implemented in R (RStudio) using the SetMethods and smmr packages, together with SPSS. Set‐theoretic findings show that no single condition is necessary; instead, configurations including transformational and transactional leadership styles, in some cases combined with high job satisfaction, are sufficient to explain intrapreneurial intention, whereas configurations including passive‐avoidant leadership explain the absence of intrapreneurial intention. Although audit quality itself is not measured in this study, the link between intrapreneurship and audit effectiveness is invoked here solely as a theoretical background drawn from prior studies. Based on the findings, auditing and other knowledge‐intensive firms should avoid passive leadership and invest in leadership development (transformational and transactional with contingent rewards) and human resource practices that increase job satisfaction. Such initiatives can help nurture internal innovation capacity, improve retention and foster sustained intrapreneurial behaviour, with potential positive spillovers across the professional services ecosystem.
Several scholars have argued that intuition plays a significant role in auditor judgement and decision-making (JDM); however, there is limited scientific insight into whether, to what extent and how intuition is perceived in practice. This mixed-methods field study explores the perceived use of intuition in auditing. Following a survey of 290 auditors and 18 interviews, we found that although auditors often perceived using their intuition, some associated this with risks and challenges. Moreover, the auditors' perceived use of intuition was related to various individual characteristics, such as job level, and organizational characteristics, including bureaucratic organizational culture and firm size. Importantly, the auditors frequently reported integrating intuition into their JDM, emphasizing the need to acknowledge intuition as a non-negligible element of JDM in both audit practice and research. Based on these insights, we propose recommendations for further study to understand and integrate intuition better within the auditing profession.
This study examines how auditors adjust their risk responses to the COVID-19 pandemic, an exogenous shock that heightened uncertainty and constrained access to audit evidence. Using manually collected audit-procedure disclosures from Key Audit Matters (KAMs) for Chinese A-share listed companies from 2017 to 2022, we employ a generalized difference-in-differences design to identify changes in auditors' procedural and evaluative responses. Auditor risk responses are measured through variations in internal control testing, substantive audit procedures and expert consultations. We find that auditors in more severely affected regions intensified internal control testing, expanded substantive procedures and relied more on expert consultations. Mechanism tests indicate that heightened going-concern risk plays a limited role, whereas constrained access to audit evidence is the primary channel, particularly for expert consultations. The effects are stronger for firms with greater strategic risk, complexity and external scrutiny and for audits conducted by industry specialists, female partners and more sceptical auditors, but weaker for longer tenured auditors. Enhanced audit responses are associated with lower stock price synchronicity, lower discretionary accruals and longer audit delays. Our findings provide evidence on how auditors adapt audit procedures and evaluations under extreme uncertainty and demonstrate the value of KAM disclosures for understanding reported audit responses.
