Can Distributed Teams Reduce Staff Reliance on a Supervisor's Client-Favorable Preferences?

• In Event: Audit Office Resources and Control Issues in Audit

Abstract

Advances in communication technology have made it easier for audit firms to assemble
engagement teams that utilize members from different locations. These geographically distributed teams
are increasingly being used to staff audit engagements. Recently, however, concerns have been raised
about the audit quality of distributed teams (PCAOB 2016; IAASB 2015). To help inform regulators,
practitioners, and researchers, we conduct an experiment to examine how team member proximity
(distributed versus co-located) and assignment length (temporary versus continuing) jointly affect auditor
judgment when staff auditors are given client-favorable guidance from their supervisor. Relying on the
impression management literature, we predict and find that distributed auditors are less influenced by
client-favorable preferences than co-located auditors when they are on temporary assignments, but
distributed auditors tend to react more like co-located auditors on continuing assignments. Consistent
with our predicted pattern, we also find that team member proximity moderates the effect of assignment
length on auditors. Specifically, while co-located auditors on temporary assignment are more influenced
by their supervisor’s client-favorable preferences than co-located auditors on continuing assignment,
distributed auditors on temporary assignment are less influenced by client-favorable preferences than
distributed auditors on continuing assignment. For distributed auditors, such an effect is driven by the
importance placed on developing a relationship with their supervisor.

Authors

• Stephen Kuselias, Providence College

• Christopher P Agoglia, University of Massachusetts-Amherst

• Ying Wang, University of Massachusetts-Amherst