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    The Effect of Workload Compression on Audit Quality
    research summary posted September 10, 2013 by Jennifer M Mueller-Phillips, tagged 09.0 Auditor Judgment, 09.10 Prior Dispositions/Biases/Auditor state of mind 
    The Effect of Workload Compression on Audit Quality
    Practical Implications:

    Reputation is an important asset to accounting firms, and these results suggest an important area for improvement in audit quality. Workload compression appears to be the cause of the reduced audit quality. Practicing auditors would be well advised to limit workload compression to the greatest extent possible, and to implement extra rigor in reviewing audits that were performed under high levels of workload compression.




    Lopez, D.M. and G. F. Peters. 2012. The Effect of Workload Compression on Audit Quality. Auditing: A Journal of Practice and Theory. (31) 4: 139–165.

    Audit quality, workload compression, busy season, abnormal accruals, earnings benchmarks
    Purpose of the Study:

    Many experimental studies suggest that workload compression leads to reduced audit quality among individual auditors. This study uses archival data to demonstrate that the principle applies more broadly and finds evidence that busy season compression leads to decreased audit quality as evidenced by higher than normal accruals.

    Design/Method/ Approach:

    This study uses data from Compustat and Audit Analytics to get 8,384 observations comprised of 2,627 different companies across 262 local auditor offices.

    • Workload compression leads to reduced audit quality as evidenced by the following items in audits with higher compression:
    • Higher levels of absolute abnormal accruals
    • Larger magnitude of abnormal accruals
    • Higher probability of meeting earnings benchmarks
    Auditor Judgment
    Prior Dispositions/Biases/Auditor state of mind