Bank Loan Officers’ Perceptions of Audit Quality and Audit Risk in Geographically Dispersed Audit Procedures

• In Event: Breakfast with Research Roundtable Forum Session
  In Paper Session: Roundtable 3: Financial Accounting II

Abstract

The last several years have seen rapid and significant changes in the auditing profession. Deregulation, technology and globalization have placed pressure in audit firms to stay competitive (Knechel, 2007). Auditing firms are using different measures to stay competitive. One of such actions is to have some of the audit procedures performed in other countries notably India. Reduction in cost and ability to have work completed around the clock are some of the reasons why audit firms send audit procedures to other countries(Daugherty and Dickins 2009). The big 4 firms are expected to continue to send certain audit procedures to other countries (Dickins & Daugherty, 2012; Downey, 2017; Lyubimov, Arnold, & Sutton, 2013).
This study examines bank loan officers' perceptions of audit risk and audit quality when audit tasks are performed in different location. A survey was administered by Qualtrics to bank loan officers in the United States. A summary that explains various geographically disperse situation was presented to the participant. After reading the summary, the participants answered eight questions. The first four of the questions are on their perceptions of audit risk when audit procedures are performed in different locations. While the second four are similar questions on their perceptions of audit quality. The questions are as follows: 1) How do you assess the average risk (quality) of an audit which involves work being outsourced to another firm located overseas? 2) How do you assess the average risk (quality) of an audit which involves work being outsourced to another firm in the United States? 3) How do you assess the average risk (quality) of an audit which involves work being insourced to another office of the same firm located overseas? 4) How do you assess the average risk (quality) of an audit which involves work being insourced to another office of the same firm located in the United States? The participants are asked to respond on a 7 point Likert scale with "1" for Extremely Low Risk and "7" for Extremely High Risk. These questions are adapted from Lyubimov et al. (2013).

Author

• Lydia N Didia, Penn State University - Harrisburg