AAA Spark Meeting of the Regions

Engagement Order Consistency: Antecedents and Consequences

• In Event: Analyzing the Audit Process

Abstract

We examine the antecedents and consequences of engagement order consistency (EOC), defined as year-to-year stability in the order in which an audit office completes the audits of its portfolio of public clients. We find that EOC is strongly associated with audit-office characteristics that may affect, or reflect, how well an office manages the audit process for its entire portfolio of clients, and only marginally associated with audit-market, institutional and client characteristics. We further document that EOC is decreasing in the number of major client events, such as CEO/CFO turnover, which could disrupt the audit process. Lastly, we show that EOC is associated with common proxies for audit quality, and that the EOC-audit quality relation is incrementally stronger for complex engagements. We conclude that EOC may be useful as an alternative proxy for audit quality in future research.

Authors

• Jamie Hoelscher, Southern Illinois University Edwardsville

• Michael J. Imhof, Wichita State University

• Christine Porter, Wichita State University

• Scott E. Seavey, Florida Atlantic University