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| Tekijä: | Dikolli, S.S. McCracken, S.A. Walawski, J.B. |
| Otsikko: | Audit-planning judgments and client-employee compensation contracts |
| Lehti: | Behavioral Research in Accounting
2004 : VOL. 16, p. 45-61 |
| Asiasana: | Accounting Finance Auditing Planning Pay incentives |
| Kieli: | eng |
| Tiivistelmä: | This paper investigates, in a laboratory setting, the impact of different types of client-employee compensation (hereafter as: c-e-comp.) contracts on auditors' audit-planning judgments. Self-interested client-executive actions (motivated by executive incentive pay) have been claimed to be at the core of a recent large public company failure and the associated demise of the company's global auditors (Byrne (et.al), 2002). However, relatively little is known about how c-e-comp. contracts affect the planning choices of auditors. This study's main result is that audit-planning judgments are greater if the bonuses are based on financial performance measures rather than non-financial performance measures. It is also found that audit-planning judgments are greater if c-e-comp. comprises a fixed salary plus bonuses, based on either financial or non-financial performance measures. However, only partial support is found for the finding with respect to non-financial measures. An important implication of these findings is that audit firms may need to pay careful attention to how auditors are trained in strategic systems auditing approaches. |
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