Auditing from a Distance: The Impact of Remote Auditing and Supervisor Monitoring on Analytical Procedures Judgments

• In Event: Accounting and the New Normal: Remote Auditing, Prepopulated Tax Returns, and Algorithms

Abstract

Remote auditing has increasingly become a common work arrangement. Audit firms are concerned that the “out-of-sight-out-of-mind” mentality of remote work diminishes audit quality and have instituted steps such as increased supervisors’ monitoring. We investigate how two remote audit factors, spatial distance between the auditor and client and the frequency of supervisor monitoring, can influence auditors’ analytical procedures judgments. We theorize that increased psychological distance from working remotely facilitates higher level thinking and enhances creative hypothesis generation and evaluation when uncovering a complex financial statement error. However, more frequent supervisor monitoring causes auditors to feel constrained, which diminishes the benefits of working remotely. In an experiment, relative to working on the client site, auditors working remotely considered a wider range of potential causes for a seeded error, and exhibited higher decision quality, when monitored less frequently than more frequently. Our results highlight conditions under which remote auditing can impact audit quality.

Authors

• Sudip Bhattacharjee, Virginia Tech

• Sean Hillison, Virginia Tech

• Carissa L Malone, Virginia Tech