Shifting styles: Do auditor performance levels influence the review process?

• Date: 01 November 2018
• DOI: http://doi.org/10.1111/ijau.12140
• Author: J. Gregory Jenkins,Christine Gimbar,Gabriel Saucedo,Nicole S. Wright
• Published date: 01 November 2018

ORIGINAL ARTICLE

Shifting styles: Do auditor performance levels influence the

review process?

Christine Gimbar

1

|J. Gregory Jenkins

2

|Gabriel Saucedo

3

|Nicole S. Wright

4

1

Driehaus College of Business, DePaul

University, Chicago, Illinois, USA

2

Raymond J. Harbert College of Business,

Auburn University, Auburn, Alabama

3

Albers School of Business and Economics,

Seattle University, Seattle, Washington

4

School of Accounting, College of Business,

James Madison University, Harrisonburg, VA

Correspondence

Nicole S. Wright, James Madison University,

School of Accounting, College of Business,

James Madison University, 421 Bluestone Dr.,

Harrisonburg, VA 22807.

Email: wrightns@jmu.edu

We examine communication behaviors during the audit review process using a survey

of audit partners, managers, and in‐charge/senior associates from each Big 4 account-

ing firm and one international accounting firm. We inquire about reviewers' preferred

communication style when discussing review notes with preparers of varying perfor-

mance levels, their likelihood of taking over the audit work of preparers due to either

a lack of a response or an inappropriate response to a review note, and their propen-

sity to self‐correct preparers' documentation along with the reasons for doing so

instead of leaving a review note. Consistent with expectations, results indicate that

reviewers are more likely to discuss review notes face to face with below‐average‐

performing subordinates than with above‐average‐performing subordinates, and

instead use alternative forms of communication with above‐average performers. Fur-

ther, we find that reviewers self‐correct and/or update documentation themselves

more frequently for below‐average subordinates than for above‐average subordi-

nates. Supplemental analysis reveals that reviewers are likely to revise the work of

subordinates, whether below average or above average, for a variety of reasons,

including ease of doing so, efficiency, and pending deadlines.

KEYWORDS

audit documentation, audit review process,auditor professional development, feedback style,

reviewer self‐correction

1|INTRODUCTION

In 2010, the Public Company Accounting Oversight Board expressed

concerns over insufficient supervision on audit engagements (PCAOB,

2010a). Despite these concerns, prior research finds that auditors

spend a significant amount of their time on the supervision and review

process. For example, Fargher, Mayorga, and Trotman (2005) report

that 50% of audit manager time and 30% of total audit hours are allo-

cated to the review process. Further, in an address at the Auditing

Section Midyear Meeting of the American Accounting Association,

KPMG's then vice chair of audit practice, Scott Marcello, expressed

concerns that audit leaders have become “professional reviewers”

due to the amount of time spent reviewing workpapers (Marcello,

January 2017). The importance of the review process can be viewed

as threefold: First, auditing standards require reviews of audit docu-

mentation to ensure audit quality (American Institute of Certified Pub-

lic Accountants [AICPA], 2012; PCAOB, 2010bb). Second, the review

process is an important coaching tool for inexperienced auditors

(Kornberger, Justesen, & Mouritsen, 2011). And third, the review pro-

cess plays a crucial role in overall job satisfaction and employee reten-

tion (Vera‐Muñoz, Ho, & Chow, 2006).

Considering the important role the review process plays in audi-

tors' professional development and recent regulatory concerns, our

study examines the preferred communication methods and self‐

correction tendencies (i.e., a reviewer's decision to complete audit

work and prepare related documentation themselves without leaving

a review note for a subordinate) that audit reviewers engage in with

audit documentation preparers (hereafter preparers) at varying perfor-

mance levels. Specifically, we investigate how reviewers alter their

Data availability: The survey instrument is available from the authors upon

request.

Received: 10 January 2018 Revised: 6 August 2018 Accepted: 11 August 2018

DOI: 10.1111/ijau.12140

554 © 2018 John Wiley & Sons Ltd Int J Audit. 2018;22:554–567.wileyonlinelibrary.com/journal/ijau