감사시간과 내부심리시간이 감사품질(재량적 발생액)에 미치는 영향

This paper investigates whether audit hours and internal review hours, measures for audit efforts, are associated with audit quality. Prior studies examine how auditor’s efforts affect audit quality but no prior studies examine the role of rank-specific audit hours and internal review hours in the quality of audit even though they consist of the integral part of audit procedures. Using the private dataset from one of big 4 auditors in Korea for the period from the year 2004-2008, we find the following results. First, we find the negative association between absolute discretionary accruals and audit hours. In particular, the result shows that audit hours enhance the quality of audit by inhibiting the negative discretionary accruals as well as the positive discretionary accruals. Second, we find that audit hours of auditors in different ranks have a different influence on the audit quality. More specifically, we find that associate-level audit hours are negatively associated with the absolute discretionary accruals while Sr. Associate-level and manager-level audit hours decrease income increasing accruals. For the partner level, we find that abnormal audit hours attenuate the income decreasing accruals. Third, the internal audit review hours are negatively associated with negative discretionary accruals and abnormal internal audit review hours increase the quality of audit after controlling for audit hours. This result suggests that the enhanced internal reviews could be an effective procedure in determining the quality of audits. The contribution of this study is as follows. First of all, since big audit firms have different levels of independence and industry expertise as well as different internal procedures and time-recording systems, we try to control the effect of the heterogeneity of systems among audit firms on the quality of audits. Second, unlike prior studies that use total audit hours, we use more detailed audit hour data. We provide the evidence that auditors in different ranks play unique roles in determining the quality of audits using the audit hour time report data of auditors in associate-level, manager-level, senior manager-level, director-level, and partner. Third, no prior study examines the role of internal review hours in determining audit quality. By examining audit hours and review hours together, we provide more comprehensive evidence on the effect of audit effort on audit quality.