Using online job postings data, we explore whether auditors adjust their human capital in response to clients' cyber breach incidents. We find that audit offices increase their demand for cybersecurity specialists after their clients' cyber breaches, implying that cyber breaches change not only client risk but also their auditor's production function. Consistent with expectations, we document that this impact is larger when breaches involve their own clients (rather than those of peer offices within the same audit firm) and when breaches directly involve financial information. Our evidence holds for both cyber‐focused and non‐cyber‐focused offices, highlighting the broad impact of cybersecurity risks on audit practices. Additionally, we find that audit offices with relatively high investment in cybersecurity human capital are better able to preserve their market share among clients in high‐cyber‐risk industries after a client's cyber breach.

Building on economic theories of cultural transmission, we examine how audit partners’ cultural trust influences audit outcomes. Based on the “presumptive doubt” perspective of professional skepticism, we propose that audit partners from trusting cultures are more likely to rely on management’s assertions, while still exercising a high degree of caution and not naively trusting management. Consistent with our prediction, we find that audit partners from trusting cultures commit fewer Type I errors when issuing going concern opinions, without significantly increasing Type II errors. The reduction in Type I errors is primarily found when audit partners normally tend to be more conservative, and it is attenuated when management is less trustworthy. At the same time, audit partners from trusting cultures are also associated with more within-GAAP earnings management, suggesting that increased trust entails a cost. Collectively, our findings offer new insights into how cultural trust affects the assurance of accounting information.