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

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Abstract

Remote auditing has become a common work arrangement. Auditors and clients are concerned the “out-of-sight-out-of-mind” mentality of remote work diminishes audit quality and firms have instituted steps such as increased supervisors’ monitoring. We investigate how two remote audit factors, spatial distance between the auditor and client and frequency of supervisor status update request, influence auditors’ analytical procedures judgments. We theorize increased psychological distance from working remotely facilitates higher-level thinking and enhances creative hypothesis generation and evaluation when uncovering a 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 at the client site, auditors working remotely consider a wider range of potential causes for a seeded error, and exhibit higher decision quality, when monitored less frequently than more frequently. Thus, working remotely can enhance audit quality, conditional on the nature of the supervisor’s monitoring.

Authors

• Sudip Bhattacharjee, Virginia Polytechnic Institute and State University

• Sean Hillison, Virginia Tech

• Carissa L Malone, Virginia Tech