Auditor Assignments and Audit Quality

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Author(s)

  • Yongliang Wu
  • Zihui Li
  • Min Zhang
  • Shengbao Zhai

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)160-187
Journal / PublicationAustralian Accounting Review
Volume33
Issue number2
Online published12 Apr 2023
Publication statusPublished - Jun 2023

Abstract

Given the important role of individual auditors in the audit process, appropriate staffing is an essential issue in audit firms. Using unique audit data for both listed and private companies in China, we define the downward mismatch between auditors and clients as an inappropriate assignment of the engagement auditors who are supposed to serve only private companies, but sign the audit reports of public companies. We find that the downward mismatch leads to poor audit quality. The results are robust to various tests, including using alternative proxies, adopting the Propensity Score Matching (PSM) procedure, and controlling for auditor–client fixed effects and audit firm-level mismatch. Additional analyses reveal that the negative effect of downward mismatch on audit quality is less pronounced for audit firms with more education and training expenditures, with more informatisation expenditures, and with more partners available. Moreover, this negative effect is more pronounced when clients’ business is more complex. Our findings shed light on the importance of staffing assignment decisions within the audit firm. © 2023 CPA Australia.

Bibliographic Note

Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).

Citation Format(s)

Auditor Assignments and Audit Quality. / Wu, Yongliang; Li, Zihui; Zhang, Min et al.
In: Australian Accounting Review, Vol. 33, No. 2, 06.2023, p. 160-187.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review