The Effects of Core Audit Teams' Review of Centralized Audit Teams' Work

The large accounting firms recently created U.S.-based audit support groups to advance efficiency and consistency by applying firm-wide methodologies and standard audit procedures in judgmental/routine accounting areas. These groups—hereafter called the centralized audit team (CAT)—service several engagements simultaneously and execute procedures independently without core teams' oversight. However, the core teams are required to review and finalize the CAT's completed assessments and audit conclusions. This authority can result in unintended consequences, such as the core team discounting the results of the CAT's testing, which can reduce consistency across engagements. I investigate this concern by conducting an experiment to examine if the core team's review of the procedures used by the CAT and the client's views about the CAT's evidence requests influence core team reviewers' evaluations of the CAT's work. I predict and find that dissimilarities between the nature and extent of audit procedures used by core teams in prior audits and those currently used by CATs create an association effect such that reviewers are more likely to disagree with the CAT's conclusions. Inconsistent with my prediction that core teams will feel the need to please their clients, I find marginal evidence that reviewers are more likely to agree with the CAT's conclusions when clients complain versus when clients do not complain about CATs' excessive evidence requests. I fail to find evidence of an interaction effect. This study contributes to existing research and practice by highlighting conditions that can affect firms' ability to obtain their anticipated consistency and efficiency goals because core teams may discount the CAT's audit approach.

Name thesis:degree_name

Doctor of Philosophy

Level thesis:degree_level

doctoral

Discipline thesis:degree_discipline

Business, Accounting and Information Systems

Department dc:contributor.department

Business, Accounting and Information Systems

Grantor dc:publisher

Virginia Tech

Year dc:date.issued

2023

Author dc:creator

• Wolfe, Karneisha Tiye

Chair dc:contributor.committeechair

• Stein, Sarah E.

Committee members dc:contributor.committeemember

• Walker, Kimberly
• Hillison, Sean Michael
• Davidson, Robert H.

• audit review process
• centralized audit team
• audit procedure
• client complaint
• audit consistency
• audit efficiency
• centers of excellence
• center for audit solutions

Statement dc:rights

• In Copyright

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Language dc:language.iso

en

Dc Identifier Other

vt_gsexam:38546

OAI identifier oai:identifier

oai:vtechworks.lib.vt.edu:10919/116503