Time Pressure, Training Activities and Dysfunctional Auditor Behaviour: Evidence from Small Audit Firms

• Date: 01 March 2016
• DOI: http://doi.org/10.1111/ijau.12054
• Published date: 01 March 2016

Time Pressure, Training Activities and Dysfunctional Auditor Behaviour:

Evidence from Small Audit Firms

Tobias Svanström

Umeå School of Business and Economics

This study tests the association between time pressure, training activities and dysfunctional auditor behaviour in

small audit firms. Based on survey responses from 235 certified auditors working in small audit firms in Sweden,

the analysis shows that perceived time pressure is positively associated with dysfunctional auditor behaviour,

while the level of participation in training activities such as workshops and seminars is negatively associated with

dysfunctional auditorbehaviour. These findings suggest that auditquality is at risk when auditors experience high

levels of time pressure but also that auditorswho frequently take part in training activities to a lesser extent engage

in dysfunctional auditor behaviour.

Key words: Dysfunctional auditor behaviour, time pressure, training activities, small audit firms.

INTRODUCTION

Much attention has been given recently to audit quality

by regulators and researchers (Francis, 2011; Knechel

et al., 2013; European Union, 2014; IAASB, 2014). The

concept of audit quality is, however, difficult to define or

describe, and there is still little consensus on how to

measure it. Common approaches to measure audit quality

involve earnings management indicators, restatements

and auditor reporting (for reviews, see Francis, 2004,

2011; Knechel et al., 2013; Langli & Svanström, 2014). If

the audit process and the behaviour of auditors in the

audit process are of key interest, however, an alternative

approach to capture dimensions of audit quality is to ask

auditors about the undertaking of quality reducing acts,

i.e. dysfunctional auditor behaviour.

Prior research on the determinants of dysfunctional

auditor behaviouris relatively limited, which suggests the

need for further investigation into factors that facilitate

and hinder this kind of behaviour that is difficult to

detect but ultimately reduces audit quality. The existing

literature has focused on time savings and time-budget

achievements as the main incentives for dysfunctional

behaviour (Kelley & Margheim, 1990; Coram, Ng &

Woodliff, 2004; Gundry & Liyanarachchi, 2007).

Dysfunctional behaviours such as signing off on an audit

step or accepting weak client explanations could,

however, be relatedalso to a lack of sufficient competence.

In this study, the association between time pressure,

training activities and dysfunctional auditor behaviour is

tested for a sample of small audit firms.

Faced with time pressure, auditors can respond either

functionally or dysfunctionally (DeZoort & Lord, 1997).

Functional behaviour would include working harder,

requesting an increase in one’s time budget, using more

efficient audit techniques and charging all time properly.

However, due to the impact of time budgets on career

development and other constraints, not all auditors

will find functional behaviour a possible or desirable

solution and will instead resort to types of dysfunctional

behaviour (Pierce & Sweeney, 2004; Gundry &

Liyanarachchi, 2007). In contrast to prior literature, this

study tests the association between time pressure and

dysfunctional auditor behaviour among experienced

auditors working in small audit firms where working

conditions and incentives are very different from those of

large audit firms (McNamara & Liyanarachchi, 2008).

There are characteristics of this setting that could have

an impact on the association between time pressure and

dysfunctional auditor behaviour. First, there are limited

possibilities in small audit firms to delegateaudit work to

colleagues for the time-pressured auditor. Second, there

are reasons to believe that large (Big 4) and small audit

firms (non-Big 4) attract and hire individuals with

different attributes and preferences (Bagley, Dalton &

Ortegren, 2012). Third, reputation concerns are unlikely

to hinder dysfunctional behaviours as audit clients of

small audit firms are small privately held companies that

do not typically attractattention from investors or media.

Next, the interest is on how participation in training

activities is associated with dysfunctional auditor

behaviour. Frequent regulatory changes in financial

reporting and auditing suggest the need to regularly

take part in training activities to keep updated. Lack of

competence and knowledge may cause dysfunctional

auditor behaviour such as accepting weak client

explanations. Small audit firms have limited

opportunities to arrange training activities such as

seminars and workshops with invited experts, and

auditors cannot easily compensate for inadequate

competence by contacting in-house expertise. However,

auditors at these firms can decide to take part in

different types of training activities arranged by the

Professional Institute of Public Accountants in Sweden,

or to join other relevant courses, workshops and

seminars. From existing literature, little is known,

however, about whether participating in different types

of training activities is associated with (dysfunctional)

auditor behaviour and audit quality.

The data used in this study consist of survey responses

from 235 certified auditors working in small audit firms

in Sweden. Accordingly, respondents in this study are

qualified and signing auditors and they have significant

experience of audit conduct and auditorreporting, which

is different from most prior research where respondents

were audit juniors and audit seniors with relatively

Correspondence to: Umeå School of Business and Economics,

Department of Business Administration, SE-901 87 Umeå, Sweden.

Email: tobias.svanstrom@usbe.umu.se

International Journal of Auditing doi:10.1111/ijau.12054

Int. J. Audit.

© 2015 John Wiley & Sons Ltd ISSN 1090-6738

20: 42 51 (2016)

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