SUMMARY
In the aftermath of the COVID-19 pandemic, remote and hybrid audits have become institutionalized in the external audit profession. However, the impact of remote/hybrid audits on audit success (i.e., audit quality, audit efficiency, and auditor job satisfaction) is not clearly understood. Recruiting external auditors (including audit associates, audit seniors, audit managers, and audit partners) with an average of three to five years of auditing experience, Li, Goel, and Williams (2023) found that working remotely is associated with high audit efficiency. They also found that in comparison to on-site audits, remote audits show increases in technology reliance, professional skepticism, workload, fatigue and frustration, risk-seeking attitudes, and team monitoring rigidity and decreases in auditor–client communication and cooperation efficiency. Furthermore, Li et al. (2023) identified situational and dispositional factors that become critical in remote/hybrid audits. We summarize the key findings of their paper and provide actionable suggestions for audit practitioners.
Data Availability: Data are available upon request.
JEL Classifications: M42.
I. INTRODUCTION
The COVID-19 pandemic drove remote and hybrid work practices worldwide (Farcane et al. 2023), and audit firms have continued using them (Deloitte & Touche LLP 2021; McCabe 2021; PricewaterhouseCoopers 2021). Li, Goel, and Williams (2023) investigated the remote audit experiences and audit success factors that become critical in remote environments, the changes associated with the transition from on-site to remote/hybrid audits, and how these changes are associated with external audit success (i.e., audit quality, audit efficiency, and auditor job satisfaction).1 We summarize the key findings and provide takeaways for external auditors and audit firms to assist practitioners in enhancing audit quality, audit efficiency, and auditor job satisfaction as remote and hybrid audits continue.
II. STUDY BACKGROUND AND METHODS
An external audit is considered successful when audit quality and efficiency are high and when auditors are satisfied with the experience. In comparisons of on-site and remote audits, studies have reported variances in audit quality (Gong, Ho, Jin, and Kanagaretnam 2022; Handoko and Sardjono 2022; Jin, Tian, Wu, and Xin 2022), audit efficiency (Farcane et al. 2023; Handoko, Lindawati, and Muljo 2022), and auditor job satisfaction (Farcane et al. 2023; Handoko and Thomas 2022). In these studies, the impact of remote audits on audit quality, efficiency, and auditor satisfaction is inconclusive. Many studies were conducted during the pandemic, when remote audits were driven by infection risks and when auditors were not experienced in remote audits and the use of virtualization technologies (Gong et al. 2022; Handoko and Sardjono 2022; Jin et al. 2022). Even as remote audits have continued to gain popularity, research on how the frequency of remote audits is associated with audit success is lacking.2
Li et al. (2023) used semi-structured interviews conducted in October and November 2021 and a survey of 160 audit practitioners conducted between February and May 2022 to measure auditors’ perceived changes in moving to remote audits.3 They also identified situational (i.e., physical working environment and organizational support) and dispositional factors (i.e., individual virtual competency and flexibility management competency) that potentially contribute to remote audit success. Audit quality was measured as reduced audit quality practices (RAQPs) where RAQPs are intentional actions that compromise the quality or extent of evidence gathering (e.g., accepting weak client explanations), thereby increasing the risk of an inappropriate audit opinion (Smith, Emerson, and Boster 2018; Svanberg and Öhman 2013). RAQPs can lead to reduced negative engagement outcomes and compromised audit opinion validity (Coram, Glavovic, Ng, and Woodliff 2008; Herrbach 2001). Scales developed around RAQPs are frequently used as proxies for audit quality (e.g., Smith and Emerson 2017), and more than half of auditors admit to engaging in at least one RAQP (e.g., Coram et al. 2008). Li et al. (2023) used self-evaluated measures for auditors’ remote work efficiency and their satisfaction with public accounting careers in remote contexts. Their measures are listed in Appendix A.4Table 1 shows the demographics of the participants.
Survey Participant Demographics
Variable . | Mean . |
---|---|
Percentage female | 34.4% |
Average age | 30.7 |
Percentage bachelor’s graduate | 41.9% |
Percentage master’s graduate | 47.5% |
Average years of auditing experiences | 2–5 years |
Percentage audit associate | 45.4% |
Percentage audit senior | 20.8% |
Percentage audit manager | 30.0% |
Percentage audit partner | 3.8% |
Percentage Big 4 | 48.0% |
Variable . | Mean . |
---|---|
Percentage female | 34.4% |
Average age | 30.7 |
Percentage bachelor’s graduate | 41.9% |
Percentage master’s graduate | 47.5% |
Average years of auditing experiences | 2–5 years |
Percentage audit associate | 45.4% |
Percentage audit senior | 20.8% |
Percentage audit manager | 30.0% |
Percentage audit partner | 3.8% |
Percentage Big 4 | 48.0% |
Source: Adapted from Li et al. (2023).
Li et al. (2023) used a six-point Likert question to measure participants’ auditing job experiences (1 = less than one year; 2 = one to two years; 3 = two to five years; 4 = five to ten years; 5 = ten to 20 years; 6 = 20 years and above); the mean value of their participants’ auditing experience is 3.19.
Variable Definitions:
Percentage female = the percentage of survey respondents who identified as female;
Average age = the average age of survey respondents;
Percentage bachelor’s graduate = the percentage of survey respondents whose highest education level was a bachelor’s degree;
Percentage master’s graduate = the percentage of survey respondents whose highest education level was a master’s degree;
Average years of auditing experiences = the average auditing experiences of survey respondents;
Percentage audit associate = the percentage of survey respondents whose position level was audit associate;
Percentage audit senior = the percentage of survey respondents whose position level was audit senior;
Percentage audit manager = the percentage of survey respondents whose position level was audit manager;
Percentage audit partner = the percentage of survey respondents whose position level was audit partner; and
Percentage Big 4 = the percentage of survey respondents who worked at one of the Big 4 accounting firms.
Correlations among Remote Audit Frequency, Remote Audit Changes, and Audit Success
. | . | Correlation with . | ||
---|---|---|---|---|
Changes of . | Changes from On-Site to Remote . | Audit Quality . | Audit Efficiency . | Auditors’ Job Satisfaction . |
Technology reliance | Increased | Positive | Positive | Positive |
Professional skepticism | Increased | n.s. | n.s. | n.s. |
Workload | Increased | n.s. | n.s. | n.s. |
Audit effort | Increased | n.s. | n.s. | n.s. |
Fatigue | Increased | n.s. | Negative | n.s. |
Frustration | Increased | n.s. | Negative | Negative |
Risk attitudes | More risk seeking | Negative | n.s. | n.s. |
Team communication frequency | Increased | n.s. | n.s. | n.s. |
Team overall interaction | No change | n.s. | Positive | Positive |
Monitoring environment rigidity | Increased | n.s. | n.s. | Positive |
Leadership style | More micromanaging | n.s. | n.s. | n.s. |
Leader reachability | No change | n.s. | n.s. | n.s. |
Clients’ cooperation level | Decreased | n.s. | Positive | Positive |
Clients’ communication efficiency | Decreased | n.s. | Positive | n.s. |
. | . | Correlation with . | ||
---|---|---|---|---|
Changes of . | Changes from On-Site to Remote . | Audit Quality . | Audit Efficiency . | Auditors’ Job Satisfaction . |
Technology reliance | Increased | Positive | Positive | Positive |
Professional skepticism | Increased | n.s. | n.s. | n.s. |
Workload | Increased | n.s. | n.s. | n.s. |
Audit effort | Increased | n.s. | n.s. | n.s. |
Fatigue | Increased | n.s. | Negative | n.s. |
Frustration | Increased | n.s. | Negative | Negative |
Risk attitudes | More risk seeking | Negative | n.s. | n.s. |
Team communication frequency | Increased | n.s. | n.s. | n.s. |
Team overall interaction | No change | n.s. | Positive | Positive |
Monitoring environment rigidity | Increased | n.s. | n.s. | Positive |
Leadership style | More micromanaging | n.s. | n.s. | n.s. |
Leader reachability | No change | n.s. | n.s. | n.s. |
Clients’ cooperation level | Decreased | n.s. | Positive | Positive |
Clients’ communication efficiency | Decreased | n.s. | Positive | n.s. |
Source: Adapted from Li et al. (2023).
n = 160.
Positive = the change from on-site to remote audits is positively and significantly correlated with the audit success variable (e.g., an increase in clients’ communication efficiency is positively and significantly correlated with audit efficiency); Negative = the change from on-site to remote audits is negatively and significantly correlated with the audit success variable; n.s. = the change from on-site to remote audits is not significantly correlated with the audit success variable.
Li et al. (2023) provided descriptive statistics to describe the changes in switching from on-site to remote audits and correlations between remote work frequency and changes associated with remote audits, audit quality, audit efficiency, and job satisfaction. Finally, moderated regression analyses examined how remote work frequency, situational factors, and dispositional factors are associated with remote audit quality, audit efficiency, and auditor job satisfaction as well as how situational and dispositional factors may alter the relationships.
III. KEY FINDINGS
Interview Findings
Interviewing three experienced audit managers from large accounting firms, Li et al. (2023) found that compared to on-site audits, auditors who conduct remote audits have greater reliance on technologies, a more rigid monitoring environment, increased mental workload and audit effort, and decreased communication efficiency with the audit team and their clients. Additionally, managers become more reachable and tend to micromanage more. Although interviewees agreed that auditors generally became more risk-averse during remote audits, findings on auditors’ practice of professional skepticism in remote audits were inconclusive.5 Next, we discuss Li et al. (2023) survey findings.
From On-Site to Remote Audits
Through surveys, Li et al. (2023) found that external auditors worked remotely three to four days per week and Big 4 auditors had higher remote work frequency than non-Big 4 auditors. Audit quality as measured by RAQPs saw a small decrease, whereas both audit efficiency and auditor job satisfaction increased.6 The transition also introduced changes regarding auditor communication and perceptions. For instance, although auditors perceived that their leaders remained reachable, their leadership style involved more micromanagement, and the monitoring environment became more rigid. A greater reliance on technologies was observed, as expected, and Big 4 auditors exhibited a larger increase in technology reliance. Remote communication led to more frequent team communications but fewer overall interactions. This increase in communication frequency may be a result of the micromanagement associated with remote work, whereas the decrease in overall team interactions may be due to a decrease in informal conversations and nonverbal cues during remote audits. Remote communication was associated with decreased auditor–client communication efficiency and cooperation, which may result from a lack of nonverbal communication and feedback, complexity in sharing documents, and difficulty in explaining audit procedures to clients remotely.
According to Li et al. (2023) survey, auditors perceived a larger workload and increased effort in their audit engagements; they also felt slightly more tired mentally and physically during remote than on-site work. Some reported that the increased workload was due to unexpected intervening inquiries from colleagues, difficulty in instructing clients on audit procedures, inefficient mentoring provided to junior auditors, and staff shortages. Although auditors perceived themselves to be more risk-seeking (instead of being risk-averse) when working remotely, the average perception of professional skepticism was slightly higher (by 10 percent) in remote compared to on-site audits. Auditors’ increased reliance on digital tools during remote audits can create a false sense of security, leading them to believe they are exercising greater professional skepticism (Brown-Liburd, Issa, and Lombardi 2015). However, this reliance can also make them more risk-seeking, as they may trust the outputs of these tools without fully considering their limitations.
Remote Audit Changes and Audit Quality, Audit Efficiency, and Auditor Job Satisfaction
Li et al. (2023) revealed that the frequency of remote work was not directly correlated with audit quality (see Table 2). However, they observed that increased reliance on technology during remote audits correlates with high audit quality. This may be because technology can improve audit effectiveness and decrease error rates (Christ, Eulerich, Krane, and Wood 2021). Li et al. (2023) also found that increased risk-seeking correlates with low audit quality. This supports previous findings that risk-seeking may lead to insufficient audit scope (Clarke 1987) and low audit quality (Baldauf, Pummerer, and Steller 2012).
Remote work frequency was positively correlated with audit efficiency.7Li et al. (2023) found that increased technology reliance during remote audits correlates with high audit efficiency. As remote audits continue with rapid technology adoption and digitalization (Deloitte & Touche LLP 2021), the soft skills training provided to audit employees (PricewaterhouseCoopers 2023) and the remote or flexible approach adopted in the profession (Ernst & Young 2021) promote efficiency in remote audits. Li et al. (2023) also found that increased fatigue and frustration resulting from shifting to remote audits were negatively correlated with audit efficiency. With excessive stress in remote audits, auditor dysfunction can be exacerbated, which affects auditors’ efficiency (Chen, Dong, Han, and Zhou 2020). Audit efficiency can be further impaired by low communication and cooperation efficiency with clients. Explaining audit procedures and requesting client cooperation demand additional efforts in remote work, which may explain the correlation between decreased audit–client communication and cooperation efficiency and low audit efficiency Li et al. (2023) observed. This concurs with Carlisle and Hamilton (2021) findings that staff auditors prefer to communicate with clients face-to-face, which produces positive and productive auditor–client interactions.
Although Li et al. (2023) found that remote work frequency was not correlated with auditors’ job satisfaction, increased frustration associated with remote audits was correlated with decreased job satisfaction. This frustration, partially resulting from ineffective audit–client interactions, explains the correlation between decreased client cooperation and communication efficiency and decreased auditor job satisfaction. Furthermore, audit managers may become frustrated by mentoring junior auditors online, as knowledge-sharing activities are more effective through observations and face-to-face communications (Vera‐Muñoz, Ho, and Chow 2006). Junior auditors may be frustrated in their training experiences due to a lack of an audit room, which serves as a physical classroom and social hub that promotes learning as well as a boundary between work and life (Sian 2022; Tighe 2022). Although prior research suggests that rigid team monitoring reduces auditors’ satisfaction (Bhattacharjee, Hillison, and Malone 2024), Li et al. (2023) found that auditors who experienced a more rigid environment during remote work reported greater job satisfaction. This may indicate that rigid monitoring in remote audits allows auditors to receive mentorship effectively, leading to professional growth and job satisfaction.
Situational and Dispositional Factors in Remote Audits
Li et al. (2023) concluded that auditors’ flexibility management competency8 was positively associated with audit quality and efficiency. Additionally, if the location where auditors conducted remote audits (e.g., public libraries, homes, etc.) allowed auditors to concentrate on their work, their audit efficiency and job satisfaction tended to be high. Participants agreed overall that they received sufficient support (i.e., firm-level guidance, resources, and training for conducting remote audits) from the firm. Although remote work frequency was not directly associated with audit quality, if the audit firm provided auditors with sufficient organizational support, remote work was associated with enhanced audit quality. Indeed, having the necessary remote audit guidelines, training, and financial resources may reduce auditors’ confusion and anxiety (Nyberg, Shaw, and Zhu 2021), eventually reducing their intention to compromise audit practices in remote audits. Furthermore, when auditors are provided sufficient organizational support, the positive association between remote work frequency and audit efficiency strengthens.
IV. CONCLUSION AND RECOMMENDATIONS
Li et al. (2023) addresses audit quality, audit efficiency, and auditor job satisfaction in remote and hybrid audits. The study explores the level of remote frequency that maximizes audit quality, audit efficiency, and auditor job satisfaction and identifies emerging audit success drivers for remote audits. The results reflect a post-COVID-19 reality in the audit profession and have broad generalizability, as their sample contains external auditors at varying levels and from the Big 4 and other firms. The Public Company Accounting Oversight Board (PCAOB) found that audit quality was poor during the pandemic, partly because remote-only auditors lacked technical knowledge and proper training (PCAOB 2023). Li et al. (2023) findings differ, noting only a marginal disparity in RAQPs between remote and on-site audits. We believe that audit projects inspected by the PCAOB likely involved junior auditors who may have joined during the pandemic and had no on-site audit experience. Li et al. (2023) sample consisted primarily of auditors who had experience with both on-site and remote audits, thus omitting early-career auditors who have solely conducted remote audits and may lack technical knowledge and adequate training. Li et al. (2023) also used RAQPs, which are self-evaluated measures, to measure audit quality. Auditors may not have reported true declines in audit quality when transitioning from on-site to remote work, possibly because of people’s desire to maintain a positive image in interviews and surveys (Bertrand and Mullainathan 2001). Although RAQPs have been frequently used as composite measures, different RAQPs in the aggregated measure may not be homogeneous behaviors (Coram et al. 2008; Herrbach 2001). Li et al. (2023) did not examine each RAQP separately. Finally, Li et al. (2023) did not consider whether clients were remote as well. Clients’ remote work is associated with high degrees of automation and digitalization, good information security practices, static and siloed employee collaboration, and asynchronous communication (Farcane et al. 2023; Yang et al. 2022); these factors may affect the audit process.
Based on Li et al. (2023) key findings, the following recommendations are made to external auditors and audit firms to improve audit quality and efficiency and auditor satisfaction. To maintain audit quality during remote audits, audit firms should ensure auditors remain risk-averse. They should also promote knowledge-sharing activities, particularly to enhance mentoring. To facilitate knowledge sharing and team interactions, remote work frequency and meeting schedules should be agreed upon collectively. Establishing remote audit playbooks and providing both technical and nontechnical training are essential. Auditors should develop flexibility management skills, and managers should assess these skills before recommending remote work. Additionally, to improve audit-client interactions, firms should accommodate clients’ remote work frequency preferences while balancing audit efficiency and auditor satisfaction. Finally, audit firms should continue adopting advanced technologies to promote digitalization and collaboration, as well as providing information technology support to audit employees.
REFERENCES
APPENDIX A
Variable . | Definition . |
---|---|
Audit Quality | Intention to conduct RAQPs measured with five Likert questions: During the time when you conducted remote audits, how often you acted in the following manner (1 = Never, 5 = Nearly Always):
|
Audit Efficiency | Auditors’ work efficiency is a self-scored measure from 1 to 10 to indicate how efficient the audit participants perceived themselves to be regarding remote working. |
Auditors’ Job Satisfaction | Self-evaluated measure (on a scale from 1 to 10) to indicate how satisfied auditor participants are with the public accounting career in remote contexts. |
Flexibility Management Competency | Flexibility management competency means how well auditors manage the flexibility when they work remotely to provide quality and timely audits. Flexibility management competency is self-evaluated based on five abilities using five-point Likert questions (1 = Not well at all to 5 = Extremely well):
|
Individual Virtual Competency | Individual virtual competency is measured using four aspects (i.e., communication tools, collaboration tools, privacy- and security-related issues, and virtual meeting etiquette) with five-point Likert questions (1 = Not at all understand to 5 = Understand very well). |
Organizational Support | Organizational support is measured using three aspects (i.e., resources, strategy and guidelines, and training). Auditor participants indicated whether they agree or disagree with each of the three statements related to organizational support (1 = Strongly agree to 5 = Strongly disagree). |
Physical Working Environment | Auditor participants indicated whether the physical working environment (office, public library, home, coffee shop etc.) in which they conducted remote working enables them to concentrate on their work (1 = Not well at all to 5 = Extremely well). |
Remote work frequency | Remote work frequency is a self-reported number of days that auditors work remotely per week at the time of the survey. |
Variable . | Definition . |
---|---|
Audit Quality | Intention to conduct RAQPs measured with five Likert questions: During the time when you conducted remote audits, how often you acted in the following manner (1 = Never, 5 = Nearly Always):
|
Audit Efficiency | Auditors’ work efficiency is a self-scored measure from 1 to 10 to indicate how efficient the audit participants perceived themselves to be regarding remote working. |
Auditors’ Job Satisfaction | Self-evaluated measure (on a scale from 1 to 10) to indicate how satisfied auditor participants are with the public accounting career in remote contexts. |
Flexibility Management Competency | Flexibility management competency means how well auditors manage the flexibility when they work remotely to provide quality and timely audits. Flexibility management competency is self-evaluated based on five abilities using five-point Likert questions (1 = Not well at all to 5 = Extremely well):
|
Individual Virtual Competency | Individual virtual competency is measured using four aspects (i.e., communication tools, collaboration tools, privacy- and security-related issues, and virtual meeting etiquette) with five-point Likert questions (1 = Not at all understand to 5 = Understand very well). |
Organizational Support | Organizational support is measured using three aspects (i.e., resources, strategy and guidelines, and training). Auditor participants indicated whether they agree or disagree with each of the three statements related to organizational support (1 = Strongly agree to 5 = Strongly disagree). |
Physical Working Environment | Auditor participants indicated whether the physical working environment (office, public library, home, coffee shop etc.) in which they conducted remote working enables them to concentrate on their work (1 = Not well at all to 5 = Extremely well). |
Remote work frequency | Remote work frequency is a self-reported number of days that auditors work remotely per week at the time of the survey. |
Source: Adapted from Li et al. (2023).
The Li et al. (2023) study was approved by the Institutional Review Board at University at Albany, SUNY.
Li et al. (2023) define remote audit frequency as the number of days auditors work remotely from clients and the audit team per week.
The survey measured perceived changes in the following areas in relation to moving to remote audits: technology reliance, professional skepticism, workload, audit efforts, fatigue, frustration, risk attitudes (i.e., risk-seeking versus risk-averse), team communication frequency, overall team interaction, monitoring rigidity, leadership style (macromanaging versus micromanaging), leader reachability, client cooperation, and client communication efficiency. If the participant was a manager or partner level, they were asked to assess changes in their own monitoring rigidity, leadership style, and leader reachability when switching from on-site to remote audits.
Participants were asked to answer interview and survey questions based on their most recent experiences (in the few months prior to the survey) during on-site and remote audits.
Risk aversion is the tendency to avoid risk. When auditors are risk-averse, they are sensitive to the risk of compensation and reputational damage and, hence, tend to exert excessive caution; risk-seeking, by contrast, means that auditors are less sensitive to compensation and reputational loss, thus exerting insufficient caution (Bigus 2015).
The mean value of the change in RAQPs from on-site to remote audits was 3.06 (1 = decreased, 2 = slightly decreased, 3 = no change, 4 = slightly increased, and 5 = increased), indicating a very small decrease.
In Li et al. (2023), audit efficiency, in comparison to audit quality, is a more objective and effort-sensitive measure that is concerned with audit timeliness (Duh, Knechel, and Lin 2020). Li et al. (2023) observed that both audit quality and auditors’ job satisfaction were positively significantly correlated with audit efficiency. Hence, increases in audit efficiency may not compromise audit quality.
Flexibility management competency refers to how well auditors manage the flexibility in remote work to provide quality and timely audits. It is the ability to adapt audit practices, methodologies, and interpersonal communication effectively to the challenges and opportunities presented by remote work environments. Some examples would be effectively utilizing remote communication tools and mastering audit-related software, conducting remote communications and managing relationships in remote environments effectively, managing flexible working hours to work efficiently, and creatively solving problems emerging in remote audits.