Impact of remote audit on audit quality, audit efficiency, and auditors' job satisfaction

• Published date: 01 April 2023
• Author: Yueqi Li,Sanjay Goel,Kevin Williams
• Date: 01 April 2023
• DOI: http://doi.org/10.1111/ijau.12306

ORIGINAL ARTICLE

Impact of remote audit on audit quality, audit efficiency, and

auditors' job satisfaction

Yueqi Li | Sanjay Goel | Kevin Williams

Department of Information Sciences and

Technology, University at Albany, State

University of New York, Albany, New York,

USA

Correspondence

Yueqi Li, University at Albany, State University

of New York, 1400 Washington Ave, Albany,

NY 12222, USA.

Email: yli69@albany.edu and

yueqili.yuki77@gmail.com

Funding information

This research did not receive any specific grant

from funding agencies in the public,

commercial, or not-for-profit sectors.

The audit profession has experienced a digital transformation over the last decade

with a rapid shift towards remote auditing forced by the recent COVID pandemic.

This shift has led to changes related to the way auditors work and perceive. Through

a survey of external auditors, this study addresses how the changes from on-site

audits to remote audits affect audit success (i.e., audit quality, audit efficiency, and

auditors' job satisfaction); we also explore dispositional and situational factors that

contribute to remote audit success. Our results show that working remotely leads to

high audit efficiency. Auditors' flexibility management competency leads to high

remote audit quality and efficiency; and a physical working environment conducive

for concentrating on audit tasks is positively associated with audit efficiency and

auditors' job satisfaction for remote audits. We also found that working remotely

could enhance audit quality and efficiency when the audit firm provides sufficient

support to auditors. Our study provides insights for audit firms, regulators, and other

stakeholders as they evaluate the many challenges the audit profession faces in

achieving remote audit success.

KEYWORDS

audit efficiency, audit quality, external auditor, job satisfaction, on-site audits, remote audits

1|INTRODUCTION

Although theworld has reopened past the pandemic, many new strate-

gies that companies have introduced in response to the pandemic

remain and continue to redefine the way we live, work, and run busi-

nesses (Toh, 2020). Although remote audits proved to be feasible and

efficientduring the pandemic, many accountingfirms have allowed their

auditors to work remotely indefinitely (Kostem, 2021;PWC,2022;

Taylor, 2021). Prior to COVID-19, there was about 2% of audits being

conductedremotely; the percentageof remote audits jumped to38% in

2020; and in theyear of 2021, there were 79% of auditsthat were con-

ducted remotelyor hybrid internationally(Aivazi, 2022).

Remote auditing is not new; auditors have historically performed

remote audits due to the benefits of scope extension, timing flexibil-

ity, and reduced costs of the audit process (Russell & Wilson, 2013;

Teeter et al., 2010). External auditors are responsible for obtaining

reasonable assurance that financial statements are free of material

misstatements (Public Company Accounting Oversight Board

[PCAOB], 2007); their opinions are of great interest to financial state-

ment users. Audit engagements involve extensive communication

with clients (i.e., clients' staff, management, and audit committees),

on-site inspections and observations, and internal collaboration within

the audit team; being remote may result in enormous changes to

these audit processes. Changes in auditors' workload (Jin et al., 2022)

and audit supervision (Thompson, 2022) have also been observed as

audits went remote. In addition, auditors are required to assess risks

accurately and exhibit professional scepticism during an audit

(PCAOB, 2010); the lack of social presence during remote audits may

prevent auditors from practicing sufficient professional scepticism

(Sorensen & Ortegren, 2021). In addition, conducting remote audits

leads auditors to embrace emerging digital technologies and rely on

technology (Kalia, 2020). Although conducting audit activities

remotely has become a new norm in the audit profession, there have

been no effective regulations that guide remote audits or scientific

research that has systematically studied how the change from on-site

to remote audits affects audit success.

Received: 26 August 2022 Revised: 18 January 2023 Accepted: 19 January 2023

DOI: 10.1111/ijau.12306

130 © 2023 John Wiley & Sons Ltd. Int J Audit. 2023;27:130–149.wileyonlinelibrary.com/journal/ijau

External audits provide confidence to investors in the truthfulness

of financial reports and therefore enhance transparency and account-

ability in capital markets. Audit quality, audit efficiency, and auditors'

job satisfaction have been frequently studied in the literature in the

efforts of maintaining a highly effective and productive audit work-

force. To illustrate, there has been rich literature on auditor perfor-

mance, and the reduced audit quality practices (RAQPs) have been

frequently used as an audit-specific construct for job performance

(Gundry & Liyanarachchi, 2007; Malone & Roberts, 1996; Smith

et al., 2018). RAQP refers to intentional actions taken by an auditor

that reduce the acceptable standard of audit quality (e.g., accepted

weak client explanations) (Smith et al., 2018; Svanberg &

Öhman, 2013). As audit efficiency improves client satisfaction

(Iskandar et al., 2010) and makes the audit firm competitive, auditors

who are highly effective and efficient in their work are rewarded

(Persellin et al., 2019). Auditors' job satisfaction is also an important

factor in retaining valuable auditor employees, as it reduces staff turn-

over intentions (Drew, 2015). We define audit success when the audit

exhibits high audit quality, high audit efficiency, and high auditors' job

satisfaction. Existing studies have reported variances in the audit qual-

ity (Gong et al., 2022; Handoko & Lindawati, 2021; Jin et al., 2022;

Thompson, 2022), audit efficiency (Choudhury et al., 2021; Farcane

et al., 2023), and auditors' satisfaction (Aquino et al., 2022; Grant

et al., 2018; Rani et al., 2018) from on-site audits to remote audits. To

answer the critical question of how to ensure audit quality and effi-

ciency and retain audit employees in the remote auditing environ-

ment, research efforts are needed to systematically understand what

leads to variances in audit quality, audit efficiency, and auditors' job

satisfaction. Remote work is associated with many changes in the

external audit profession (i.e., auditors' practices of professional scep-

ticism, monitoring environment, workload, technology reliance, and

communications), it is critical to understand what these changes are

and how these changes are affecting audit quality, audit efficiency,

and auditors' satisfaction. Although the remote auditing is also associ-

ated with changes in digitalization and working modes, new factors

that contribute to remote audit success need to be explored.

In this study, we attempt to identify the factors that impact

remote audit success. This study first interviews current external audit

practitioners to identify remote audit success factors and validate our

observations from the literature of the changes from on-site to

remote audits. We further conduct a survey sample of 160 current

external audit practitioners who have had exposures to remote audits

to verify our findings from the literature and interviews. We also test

how these changes correlate with auditors' general audit quality, audit

efficiency, and auditors' job satisfaction during remote working. We

also aim to understand new dispositional and situational factors that

enhance audit quality, audit efficiency, and auditors' job satisfaction.

Our research shows that the intensity of working remotely only

affects audit efficiency; however, it does not impact audit quality or

auditors' job satisfaction. We tested several factors that are associ-

ated with audit quality, including technology reliance, workload,

fatigue, frustration, scepticism level, team communication and interac-

tion, monitoring, leadership style, clients' communications. The results

showed that changes in technology reliance were positively correlated

with audit quality, audit efficiency, and auditors' job satisfaction;

changes in fatigue and frustration were both correlated with low audit

efficiency; changes toward risk-seeking attitude were correlated with

low audit quality; and team overall interaction, clients' cooperation,

and communication efficiency were all correlated with high audit effi-

ciency. We also found that flexibility management competency was

associated with high audit quality and audit efficiency; a physical

working environment conducive for concentrating on audit tasks was

associated with high job satisfaction and audit efficiency. In addition,

organizational support was found to be a significant and positive mod-

erator on the relationships between remote work and audit quality

and between remote work and audit efficiency. These results will

inform current audit firms and regulators about how to enhance

remote audit success from audit practitioners' perspectives, as well as

to enrich the current audit literature by defining newly demanded dis-

positional factor (flexibility management competency) and situational

factors (i.e., organizational support and physical working environment)

that contribute to audit success. Our study calls for audit firms' efforts

in providing sufficient support to remote auditors, including firm-level

guidance, training, and resources to support remote auditing.

The rest of the paper is organized as follows: Section 2provides a

review of the relevant extant literature; Section 3provides our meth-

odology, followed by results in Section 4and a discussion of findings

and implications in Section 5. Section 6presents a brief on conclu-

sions from our work as well as some limitations.

2|LITERATURE REVIEW

The literature review covers the extant literature on remote auditing,

audit quality, audit efficiency, and auditors' job satisfaction. The litera-

ture review leads to our three research questions that are also pre-

sented in this section. We, subsequently, discuss the factors that

influence the audit success measures and present our hypotheses.

2.1 |Remote auditing

Remote auditing is not new. However, the COVID-19 pandemic has

pushed remote auditing to a higher level, if not totally. Today, many

accounting firms that have adopted a remote working approach have

allowed their employees to continue remote working indefinitely

(Schiavo, 2021). Remote audits, in short, are audits performed virtually

rather than on-site with a client (Shneyder, 2020). Remote auditing is

also known as e-auditing (Russell & Wilson, 2013), which generally

refers to the use of information and communication technologies to

gather information and communicate when the face-to-face option is

not possible or desired. Castka et al. (2020) see remote auditing as a

form of technology-enhanced auditing, which means employing tech-

nologies for audit data collection, recording, sharing, and analyses.

Although conducting many audit activities virtually is now possible,

thanks to advanced technologies, some audit evidence collection

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