Association between Detailed Disclosure on External Audit Execution and Audit Quality

New International Standards on Auditing adopts a top-down risk based approach. It emphasizes an appropriate audit planning and the involvement of key engagement team members in the planning phase. We examine how additional audit efforts to the planning are related to audit quality. In addition, we investigate whether the relation between abnormal audit planning ratio and audit quality varies with the extent of the involvement of engagement partner. We use a total of 1,479 listed companies with detailed disclosure on audit hour by audit team members in 2014. We employ discretionary accruals as a proxy for audit quality. Abnormal audit planning ratio is measured as the difference between actual audit planning ratio and expected audit planning ratio. We find that abnormal audit planning ratio is negatively related to discretionary accruals. It implies that the sufficient time commitment to the audit planning can enhance audit quality. However, the proportion of partner time (as a fraction of total audit hours) does not affect this relation significantly. These findings add to our understanding of how the assignment of audit resources can affect audit quality.