Abstract Auditors must frequently multitask in order to complete their work efficiently. However, the potential impact of multitasking on auditors’ judgment quality is poorly understood. Using Ego Depletion Theory and a laboratory experiment, we predict and find that auditors become less able to identify seeded errors after multitasking, and that this effect is most prominent in the identification of conceptual, rather than mechanical, errors. These negative consequences of multitasking are mitigated when auditors are exposed to an intervention based on a theoretical countermeasure of replenishing depleted self‐control resources, in that multitasking auditors identify more seeded errors with the intervention than without. Given that multitasking is a pervasive feature of the current audit environment, these findings have direct implications for audit practice. Beyond identifying multitasking as a cause of impaired performance in auditing, this study's results provide initial evidence that such negative effects can be mitigated, resulting in improved audit quality and, by extension, improved financial statement quality.

ABSTRACT In a quasi-experiment with external (EA), in-house internal (IIA), and outsourced internal auditors (OIA) as participants in their natural roles, we compare auditors’ internal control evaluations in the presence of differing management reporting motives. Grounded in Organizational Identity (OID) Theory, we find EAs’ evaluations are more (less) lenient when management’s motive is less (more) self-serving. We provide evidence that management’s motives affect EAs’ evaluations because management is a conduit for EAs’ OID and because EAs adopt an affiliative protective orientation. In contrast, we find no evidence management’s motives affect IIAs’ evaluations or that management is an OID conduit for IIAs. Finally, we find that although OIAs and IIAs exhibit similar OID levels, on average, OIAs’ evaluations are more lenient than IIAs’. Our results clarify how auditors form OID, how it manifests into protective behaviors, and suggest EAs’ preference to rely on OIAs’ work over IIAs’ may inadvertently diminish audit quality.

ABSTRACT In this study, we consider how the accumulating nature and income direction of audit differences influence negotiated audit adjustments. We test our expectations by constructing dyads consisting of experienced auditors and financial officers, allowing them to interact via a web-based instrument. As predicted, based on expectancy violation theory and consideration of negotiation leverage, these audit difference characteristics alter the behaviors and negotiated outcomes of our participants. Specifically, dyads determine smaller adjustments when audit differences accumulate over time. Analysis of auditor-client expectations and dialog suggests the leverage of the negotiators impacts the arguments used and the persuasiveness of those arguments. Dyads also produce smaller adjustments when an accumulating audit difference increases, rather than decreases, income, due in part to clients successfully using conservatism as a persuasive argument to convince auditors to concede. Our method provides insight into how these effects occur and how the social process can alter auditors' pre-negotiation expectations.

ABSTRACT In this study, we examine how information foraging by auditors affects audit evidence collection in two distinct contexts, and show how a small change to audit methodology mitigates the potentially harmful effects of foraging. Information Foraging Theory explains how, while navigating an information environment, individuals learn to acquire information through personally experiencing the costs incurred and the values obtained from information. Consistent with the theory, we find that auditors react to the immediately felt costs of information collection (e.g., time and effort) at the expense of a more global consideration of information value (i.e., auditors collect lower-quality audit evidence). However, foraging behavior is moderated by removing the personal cost to the individual auditor (identifying audit evidence for another member of the audit team to collect), further demonstrating that these personally felt costs influence auditor choices in a way that reduces the quality of information collected. We contribute to the literature by demonstrating how information foraging can influence evidence quality and, thus, audit quality, and how a slight alteration of audit methodology can mitigate this behavior.