Effect of Audit Plan by Position of Auditor on Audit Hour and Audit Fee
Asian Tax Journal Vol. 23 No. 5 (2022), pp. 267-291
Abstract
This study verifies the effect of the auditor’s audit plan on the audit time and audit fee and whether the effect is differentiated according to the audit plan for each position of the auditor. Audits are carried out through a series of processes such as planning, interim audit and year－end audit. Adequate audit planning identifies important audit areas and issues, selects and assigns audit team members appropriately to respond to anticipated risks, directs and supervises their work, and ensures efficient and effective audit. Although audit planning is an important process in auditing, external observation is difficult and research on its effectiveness has been limited due to limitations in data acquisition. In order to analyze the effect of the audit plan, which was difficult to directly observe from the outside, this study examines the effect of audit plan time on audit time and audit fee by using actual audit data of 195 listed companies in 2019 and 2020 of Accounting Firm A. As a result of the study, firstly, we find that the proportion of audit planning time increased, audit time and audit fee decreased. Secondly, the higher the proportion of audit engagement partners participating in the audit planning time, the lower the audit time and audit fee. On the other hand, when the manager’s proportion of audit planning time was high, we could not find any evidence for the relevancy with audit time and audit fee. Moreover, when staff’s audit planning time increased, audit time and audit fee decreased. However, the intensity of the decrease in audit time and audit fee was weaker than case where partners participating in the audit planning time. It indicates that audit engagement partner’s active participation for audit planning and audit process can decrease audit time and audit fee. When staff participates development of the audit procedures in audit planning, it led to decrease in audit time. This study has contributed that it presented empirical evidence for the efficiency of audit planning through actual audit time data by position and audit stage of the accounting firm.
Keywords
- Audit Plan
- Audit Hour
- Audit Fee
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