Breaking Barriers to Change: The COVID-19 Pandemic's Impact on Attitudes toward and Willingness to Pay for Audit Innovation

• In Event: Audit Firms and Innovation

Abstract

Audit firms have begun infusing their engagements with technology that enables innovation. While audit firms and clients report that the COVID-19 pandemic has hastened the adoption of audit innovation, it is unclear whether clients’ historical lack of willingness to pay (WTP) higher audit fees for such innovation has similarly shifted. We conduct a survey of 141 auditors and client managers examining pre- and mid-COVID-19 attitudes toward managers’ WTP for audit innovation. We develop our predictions based on interdisciplinary crisis response and WTP research. We hypothesize and find that client managers demonstrate a greater willingness to pay for audit innovation, and that auditor participants similarly expect their clients will be willing to pay more for audit innovation, in the mid-COVID period. Our study introduces the concept of WTP to the U.S. audit literature and provides insights into factors that influence audit innovation adoption. Further, we offer insight into why and how the pandemic is helping audit firms break through historical barriers related to audit innovation.

Authors

• Dereck D Barr-Pulliam, University of Louisville

• Amanda Gates Carlson, University of Wisconsin-Madison