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    Does Time Constraint Lead to Poorer Audit Performance?...
    research summary posted October 29, 2013 by Jennifer M Mueller-Phillips, last edited February 19, 2015, tagged 10.0 Engagement Management, 10.01 Budgeting and Audit Time Management 
    Does Time Constraint Lead to Poorer Audit Performance? Effects of Forewarning of Impending Time Constraints and Instructions
    Practical Implications:

    The results of this study suggest that public accounting firms that highlight the need for auditors to get creative and think outside the box, and presumably provide incentives for the auditors to do so may be enabling themselves with the potential to provide superior performance in the face of impending time constraints. Given the many forms of time constraints that exist in the auditing profession, thinking outside the box to create a strategic and efficient allocation of time could greatly improve the work of auditors today.

    For more information on this study, please contact Kin-Yew Low.


    Low, K., and Tan, H. 2011. Does time constraint lead to poorer audit performance? Effects of forewarning of impending time constraints and instructions. Auditing: A Journal of Practice and Theory 30 (4): 173-190.

    forewarning of impending time constraints; “think-out-of-the-box” instructions; time-constrained audit performance.
    Purpose of the Study:

    Time constraints are common to many professions. In the auditing profession, time constraints may present themselves in the form of time budgets, task deadlines, and constraints on available staff.  Auditors generally are forewarned of impending time constraints and therefore have an opportunity to revise their audit plans accordingly. This study investigates the effects of early versus late warning of impending time constraints. The timing of the warning potentially has an effect on the auditor’s preparation to address and cope with time constraints. Additionally, the authors study the effects of the presence of instructions to the auditor to consider modifying the prior year’s audit procedures or develop new audit procedures and hence not to be restricted by prior year’s audit work and what is specified in the firm’s audit manuals. The authors describe these instructions as “thinking out of the box” instructions. The study suggests that time constraints can have a positive impact on auditor performance depending on how the auditor responds to the warning of the constraint. The authors also studied whether warning and instructions changed the stress experienced by auditors as a result of imposed time constraints.

    Design/Method/ Approach:

    Audit seniors, assistants, and supervisors from the Singapore office of three Big 4 firms took part in a computerized experiment that required auditors to plan and conduct audit tests on a client’s inventory obsolescence allowance balance. Factors manipulated between subjects were whether auditors were warned at the beginning or end of the planning stage of the impending time constraints that will be imposed in the completion stage; also, whether, at the planning stage, auditors are provided with instructions to think out of the box. The participants had two and a half years of audit experience, on average. The information for this study was collected prior to November 2011.

    • Generally, auditors tend to perform poorly under time constraints on audit completion.
    • Early warning of impending time constraints, however, mitigates the negative impact on performance in terms of smaller absolute deviation in auditors’ estimate from actual errors.
    • The aforementioned benefit from early warning of time constraint is enhanced by the existence of explicit instructions for auditors to consider alternative audit procedures and to think outside the box.
    • The mere existence of instructions to think outside the box per se does not improve time-constrained performance, but these instructions incrementally improve an auditor’s performance in conjunction with early warning of time constraints. That is, these instructions will not be beneficial if the auditor has no time to modify the existing audit procedures.
    • An additional finding of this study was that auditors experienced greater stress during planning when given an early warning of impending time constraints.
    Engagement Management
    Budgeting & Audit Time Management