Underreporting, or reporting fewer hours than actually worked, is a prevalent behavior among auditors at all levels. Underreporting can result in negative consequences, such as tight budgets and reductions in future audit quality. In this paper, I propose a low-cost budget formatting procedure that reduces underreporting. Using an experiment, I document that individuals with higher underreporting incentives underreport less when given an aggregated budget relative to a disaggregated budget. When individuals have lower underreporting incentives, aggregating the budget has a smaller effect on underreporting. I also provide evidence of the process by performing a mediation analysis. In a second experiment, I examine a budget formatting procedure that reduces underreporting while also mitigating the loss of data richness that results from aggregation. This study provides important insights to audit firms, partners, managers, and regulators who rely on audit hours for budgets, measures of staff efficiency, and measures of audit quality.

Auditing standards vary in their degree of prescriptive language—for example, stating that auditors “could” versus “should” do certain procedures. We posit that more prescriptive language primes an implemental mindset, thereby creating a feeling of regulatory fit with objective verification tasks and improving auditors' performance on these tasks. In an experiment with audit students, we find that participants who apply a more (versus less) prescriptive auditing standard perform better on a subsequent, unrelated ticking-and-tying task, and this effect is larger for participants who identify less with the audit profession. Theory-consistent evidence indicates that the interaction of regulatory fit and professional identity improves performance via increased motivation. Our study provides evidence that features of the audit environment prime mindsets, that these primed mindsets can affect performance on low-level tasks, and that the effect of regulatory fit for low-level tasks is particularly important for those who identify less with the audit profession.