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    Auditor Workload Compression and Busy Season Auditor...
    research summary posted October 20, 2014 by Jennifer M Mueller-Phillips, tagged 02.0 Client Acceptance and Continuance, 02.06 Resignation Decisions, 10.0 Engagement Management, 10.01 Budgeting and Audit Time Management 
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    Title:
    Auditor Workload Compression and Busy Season Auditor Switching
    Practical Implications:

    The distribution of fiscal year-end companies in an auditor’s client portfolio can place significant strains on the resources of a CPA firm. Auditors are cautioned about the damaging effects of workload compression on the auditor-client relationship. Policymakers should consider auditors’ workloads when enacting new rules and regulations.  

    Citation:

    López, D. M., and G. F. Peters. 2011. Auditor Workload Compression and Busy Season Auditor Switching. Accounting Horizons 25 (2):357-380

    Keywords:
    auditor switching, busy season, December year-end, workload compression
    Purpose of the Study:

    This study investigates the impact of the busy season and auditors’ workload compression on audit resources and the likelihood of auditor switching.

    Design/Method/ Approach:

    This study uses data from Compustat and Audit Analytics to get 10,238 observations comprised of 3,525 different companies across 163 different local auditor offices. 

    Findings:
    • December year-end companies have a lower likelihood of auditor switching than that of non-December year-end companies. This result is consistent with economic predictions of high switching transaction costs for busy season companies and their auditors.
    • The study also finds that the likelihood of switching increases with the level of auditor workload compression, providing evidence that workload compression has a damaging effect on the auditor-client relationship.
    • The likelihood of auditor changes is greater when there are more competing auditors within geographical proximity.
    Category:
    Client Acceptance and Continuance, Engagement Management
    Sub-category:
    Budgeting & Audit Time Management, Resignation Decisions