Can auditors provide audit quality during busy season? The effects of turnover intention and professional identification on workload pressure and audit quality.

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Can auditors provide audit quality during busy season?

The effects of turnover intention and professional

identification on workload pressure and audit quality.

Survey research among Dutch auditors.

June 20, 2019 Durk van der Leest

S3527093 Stevinstraat 2 8265 BL Kampen m.d.van.der.leest@student.rug.nl Supervisor: Mr. D. B. Veltrop Word count: 9.106 Abstract

The goal of this study is to examine the influence of workload pressure on audit quality and expand existing literature about factors that influence the quality of an audit. An important extension of this research is the presence of two moderators, turnover intention and professional identification. The data within the research is collected through a survey amongst 131 auditors with at least two years of experience within the audit working at audit firms in the Netherlands. A significant relationship has been found between workload pressure and the quality threatening behaviors performed by the auditors. No evidence has been found in order to support the hypothesized moderating effects of turnover intention and professional identification. This study acknowledges the issue of workload pressure within Dutch accounting firms and its effect on the quality provided by the firms.

Key words: Audit Quality, Workload Pressure, Quality Threatening Behavior, Turnover Intention,

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1. Introduction

Over the past few years the poor quality of audits performed by accounting firms have been mentioned frequently in the news (“KPMG’s audit work,” 2018). Big 4 accounting firms have been fined for poor performance of audits and placed under more frequent inspections by ‘watchdogs’ (e.g. SEC, & AFM) (“Big Four Under Attack,” 2018). Because of audit scandals the (social) trust in the audit firms has dropped and the demand for change has increased (“Reform accounting rules,” 2018). Supervisory bodies demanded the increase of audit quality performed by Big 4 accounting firms and there has been an increase in legislation. Not only in practice but also in academic research scholars stress the importance of discovering misstatements (Knechel, 2016). In seeking an answer to what drives audit quality many studies have focused on auditors’ integrity, not carrying out their audit work and failing to identify and report material misstatements (Bazerman, Loewenstein & Moore, 2002; Chadegani & Mohamed, 2014). While insightful, these studies fail to acknowledge that low audit quality may not necessarily only be caused by auditors having low integrity and auditors not carrying out their work, but in fact, may be caused by hard working and well-intentioned auditors simply being overburdened by the sheer amount of work they have to carry out. Then, increasing rules and regulations (Ewert & Wagenhofer, 2019) aimed at increasing audit quality may, paradoxically, increase rather than reduce auditors’ engagement in audit quality threatening behaviours.

Particularly within the auditing profession workload pressure is a big issue. Especially during ‘busy season1_{’, the workload pressure can be high with long working days and working weeks up} to 60 hours (Sweeney & Summers, 2002). Practitioners themselves acknowledge the need for a change of the business model in order to decrease the workload pressure that the accountants experience, stating that the increased supervision and regulations by supervisory authorities and unreasonable planning of audits increases workload pressure (“Jonge accountant is werkdruk beu,” 2018). A recently published newspaper article explicitly states that young accountants experience such high workload that it influences their behaviour while performing an audit (“Inspectie onderzoek werkdruk,” 2019). This is an important issue since workload is generally considered as a central determinant of questionable work practices (Coit, Katz, & McMahon, 2011). Smith,

1 _{Busy season is the period from the beginning of January up to around May/June when there is a peak in the work}

that the accountants have to do in order to provide an auditor’s report which companies need before they can publish their Annual report.

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Emerson, & Boster (2018) also found that role overload is negatively related to audit quality because a higher role overload leads to questionable audit quality practices by auditors (i.e. they use questionable audit quality practices as a measure for audit quality). Experiencing workload pressure and having not enough time for an audit might jeopardize the overall quality of the audit. Prior research shows that when the time to complete a certain task is scarce, auditors will engage in unethical behaviour earlier since decisions will be made without thoroughly examining all relevant information or assessing all explanations given (Koh, Scully, & Woodliff, 2018). This results in reducing necessary work or accepting weak client explanations in order to provide an audit statement without delay (Herrbach, 2001; Smith et al., 2018). In this case the quality of the audit is influenced because auditors change their behaviour (e.g. lower professional skepticism, accepting weak client explanations). Workload pressure might increase auditors engagement in audit quality threatening behaviours.

However, not all auditors respond to workload pressure in the same way (Svanberg & Öhman, 2013). In seeking an answer to the question of when workload pressure is most likely to lead to lower quality audit work, I anticipate that the answer may lie in individual auditors’ intention to leave the audit firm. Just as high workload pressure, high turnover intentions among auditors within public accounting firms is a serious issue for audit practice (Chong & Monroe, 2015). Audit firms are struggling with high turnover of auditors. According to Smith et al., (2018) many companies experience a turnover rate of 20 percent or higher in 2017, meaning that 1 of every 5 auditors left an audit firm in 2017. George and Wallio (2017) mention that in particular the turnover ratio of ‘millennials’ (i.e. recent graduates that do not yet see themselves first and foremost as professional auditors) results in a serious staffing problem. This is important for audit quality, not only because of retaining experienced auditors, but also because high turnover intention indicates a low commitment of an auditor to the audit firm and may therefore result in lower concern about engaging in questionable work practices (Chong & Monroe, 2015; Doll, 1983). The negative relationship between workload pressure and audit quality might be strengthened by the turnover intention of individual auditors.

As stated above, auditors respond in different ways when experiencing workload pressure. Specific individual characteristics might motivate auditors not to engage in questionable work practices despite experiencing a high workload pressure. Interestingly, prior work suggests that when being

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a professional auditor is an important part of the identity of an auditor, this might affect whether that person is involved in quality threatening behaviours (Bamber, & Venkataraman, 2002; Brouard, Bujaki, Durocher, & Neilson, 2017). In other words, when an individual auditor has a higher professional identification, his/her commitment to upholding professional standards will be higher (Broberg, Umans, Skog, & Theodorsson, 2018). Therefore, having a high professional identity might weaken the negative relationship between workload pressure and audit quality threatening behaviours.

All in all, my research answers the call of Knechel et al., (2013) for expanding the area of research within the input and process of the audit and how this relates to audit quality. In this paper the effect of workload pressure on quality threatening behaviours in the audit will be studied. Besides that, I will examine whether turnover intention has a moderating effect on the relationship between workload pressure and quality threatening behaviours. In addition, I will also study the moderating effect of professional identification with regard to the relation between workload pressure and quality threatening behaviour. My overall research question reads:

“How is workload pressure related to quality threatening behaviour and to what extent can turnover intention and profession identification be identified as moderators regarding this relationship?”

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2. Literature review and hypothesis development

2.1 Audit quality

Audit quality is a widely studied topic within the existing literature. However, prior research has proven that it is difficult to research audit quality since researchers might have limited access to audits due to confidentiality constraints (Francis, 2004; Knechel, Krishnan, Pevzner, Shefchick, & Velury, 2013). Besides the difficultness of studying audit quality, a lot of different groups and organizations are affected by the quality of an audit. Therefore, a lot of definitions and perceptions of audit quality are provided within the broad array of existing research.

According to DeAngelo (1981), audit quality can be defined as: “the market assessed joint

probability that a given auditor will both (a) discover a breach in the client’s accounting system and (b) report the breach” (DeAngelo, 1981). This definition focuses on the individual auditor,

namely whether an auditor has the capacities to discover a breach and the integrity to report this breach in an accounting system. When an auditor fails to report a breach within the financial statements, that auditor is conducting dysfunctional audit behaviour (Svantröm, 2016). Other studies focus on the perception of audit quality by regulators and other stakeholders (Knechel et al., 2013; Christensen, Glover, Omer, & Shelley, 2016). Specifically, these studies focus on whether the financial statements are prepared according to the applicable auditing standards rather than the influence of auditor behaviour. Also, multiple measurements of audit quality which are related to auditor behaviour have been studied within prior research (Nelson, 2009; Hurtt, 2010; Herrbach, 2001; Smith et al., 2018), which do not contribute to the clarification of audit quality. However, while there is little consensus about the definitions and measuring of audit quality, it is generally accepted that audit quality revolves around providing assurance on the authenticity of the financial statements of a firm (Wright, & Wu, 2018; Lambert, Jones, Brazel, & Showalter, 2017).

When auditors behave inappropriate during audits, this will affect their work and will have serious consequences for the audit firms (Sweeney, Pierce, & Arnold Sr, 2013). Broberg (2013) suggests that an important part of audit quality from the auditor’s perspective is adding value for the customers (e.g. the management of the entity being audited) rather than adding value for the client (e.g. the stakeholders of the entity being audited). This would indicate that auditors do not behave fully independent of the company and are involved in questionable audit practices (e.g. accepting

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weak client explanations). Stakeholders rely on the veracity of the financial statements and the auditors’ opinion on these audited financial statements. Performing questionable audit practices jeopardizes the validity of the financial statements which is a concern and is of interest for the stakeholders (Smith et al., 2018). Behaviours that reduce audit quality have been studied in prior research (Otley, & Pierce, 1996; McNair, 1991). These studies have been used by Herrbach (2001) in order to develop a measure of auditor behaviour that influences the quality of an audit. Herrbach (2001) mentions quality threatening behaviours (QTB) within his research as “poor execution of

an audit procedure that reduces the level of evidence gathered for the audit, so that the collected evidence is unreliable, false or inadequate quantitatively or qualitatively” (Herrbach, 2001).

Therefor the evidence which is gathered might not provide a true and fair view of the financial statements which will result in lower audit quality. Behaviour which can be qualified as QTB are: e.g. accepting weak client explanations, failure to research an accounting principle, reduction of work below what would normally be considered reasonable and failure to pursue a questionable item (Herrbach, 2001; Smith et al., 2018).

2.2 Workload pressure

Workload pressure is a widely studied phenomena within the accounting profession since it is generally known that auditors have long working days (Agoglia, Brazel, Hatfield, & Jackson, 2010; Lopez, & Peters, 2012; Persellin, Schmidt, & Wilkins, 2014). Experiencing a high amount of workload, in general, has a detrimental impact on the decision making of an individual (Edland & Svenson, 1987). An individual can experience emotional exhaustion, depersonalization and reduced personal accomplishment due to a high workload (Sweeney and Summers, 2002: Persellin et al., 2014) which leads an individual to making a decision in order to meet a deadline without thoroughly performing all required activities (Christensen et al., 2015; Lambert et al., 2017). Another result of experiencing high workload and stressors on the job is that it might eventually lead to a burnout (Cordes & Dougherty, 1993).

During busy season, there is a peak in the amount of work that auditors need to perform in order to critically assess the financial statements of clients. Auditors always have to find a balance between the amount of time spend on an audit and the costs of performing the audit (Otley, & Pierce, 1996; Pierce, & Sweeney, 2004). Meeting deadlines brings time pressure for auditors since, not meeting deadlines might result in excessive costs and complex situations with other audit

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engagements. Christensen et al. (2015) state that auditors that the changes in mandatory audit delay increases time pressures on audits since auditors have less time to do the same amount of audits. Furthermore, Lopez & Peters (2012) state that workload pressures in busy season results from tension between limited audit resources and the high number of audit engagements which has to be conducted within a limited amount of time. Experiencing pressures (e.g. meeting a deadline) during audits can result in impaired professional judgment, acceptance of weak client explanations, and other inappropriate responses (DeZoort & Lord, 1997). When the pressure of meeting a deadline results in QTB than this will result in a decline of audit quality which is detrimental for audit firms.

Within this research workload pressure will be used to describe the pressure that auditors feel in order to complete all audit engagements in an appropriate and thorough manner. A factor that will increase the workload pressure is the time that auditors have to perform an audit engagement. Experimental and survey research has shown that audit time pressure may limit the extent to which auditors employ a questioning mind and critically evaluate evidence (Lambert, Jones, Brazel, & Showalter, 2017). Furthermore, archival evidence illustrates that fewer audit hours, in general, are associated with lower quality earnings (Caramanis & Lennox, 2008). The extent to which auditors experience time pressure is an indicator of the workload pressure of auditors. Time pressure can be defined as “the extent to which employees feel that they need to work at a pace faster than usual

or have insufficient time to finish their work tasks (Baer, & Oldham, 2006; Kinicki, & Vecchio,

1994; Prem, Ohly, Kubicek, & Korunka, 2017). Prior research found evidence that time pressure is positively related to behaviour that reduces the quality of audits such as failing to research an accounting principle (Otley, & Pierce, 1996; Pierce, & Sweeney, 2004). Since, often auditors have a deadline before which an engagement needs to be completed. An auditor might fail to research an accounting principle or might reduce the work below what normally would be considered reasonable in order to meet the deadline to complete an audit (Christensen et al., 2015). Lambert et al., (2017) stated that accounting firms faced mandatory reduce in audit delay, as a result time pressure to complete audits increased and auditors experience more pressure to meet a deadline. Also experiencing high role overload (i.e. as measure of workload pressure) can indirectly impact the audit quality of the firm through dysfunctional stress syndromes (Sweeney & Summers, 2002). Therefore, auditors which experience time pressure are more likely to be involved in QTB. I hypothesize:

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H1: Auditor workload pressure is positively related with quality threatening behaviours.

2.3 Turnover intention

The term employee turnover is used to describe the act of an employee physically separating from the employer and relinquishing job responsibilities (Ciftcioglu, 2011; George & Wallio, 2017). Within this research the term turnover intention will be researched which can be described as an individual’s behavioural intention to leave the organization (Mobley et al., 1979; Azanza et al., 2015). High employee turnover rates can be a threat to the accounting profession. If too many auditors leave the firm, this will eventually lead to a decrease in expertise and a decline in quality provided by audit firms (Gertsson, Sylvander, Broberg, & Friberg, 2017). Cohen, Dalton and Harp (2017) state: “Examining auditor turnover intentions (…) is critical for fraud detection, audit

quality, and the overall sustainability of the audit profession” (Cohen, Dalton, & Harp, 2017).

Besides the loss of knowledge and the decrease in audit quality, turnover intention can be very costly for an audit firm. Economic costs of turnover represent between 150 and 250 percent of the employee’s annual salary (Azanza et al., 2015; Mello, 2011). Other costs which are related to voluntary turnover are ‘reductions in staff morale, the loss of institutional memory, and an

increased workload on the employees who remain within the company’ (Smith, Emerson, &

Boster, 2018). Where employee turnover can lead to the decrease in staff morale and the increased workload, turnover intention among auditors can lead to a higher level of acceptance of

Figure 1: Hypothesized model of factors that might be related to whether auditors are involved in QTB.

Workload Pressure Professional Identification Turnover Intention QTB H1 H2 H3

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dysfunctional behaviour which threatens the quality of the audit (Donnely, Quirin, & O'Bryan, 2003).

Work related attitudes such as, job satisfaction an organizational commitment, are known as strong predictors of turnover intention (Michaels, & Spector, 1982; Mowday, Steers, & Porter, 1979; Ramoo, Abdullah, & Piaw, 2013; Park & Jung, 2015). In order to keep employee turnover low, companies should try to keep employees satisfied and feeling strongly committed to the company. Before making a turnover decision, an employee weighs the rewards and costs associated with the current job in order to evaluate if leaving the firm is a substantive decision (Azanza et al., 2015). Other factors which might influence the decision to leave an audit firm, are an auditors’ material and psychological investments, and the quality of available alternatives (Rusbult, & Farrel, 1983; Reed, Kratchman, & Strawser, 1994). Satisfaction is a factor that invariably has been reported to be negatively associated with turnover intention (Tett & Meyer, 1993). Whether an employee stays at a company or leaves the company is based on how they feel about their job (Tett & Meyer, 1993). When employees are satisfied with their job it is less likely they will leave their current job and therefore turnover intention will be low for these employees.

When turnover intention is high among employees, these employees care less about the work they are doing and these employees could be more willing to engage in dysfunctional behaviours due to the lower fear of possible termination if their behaviour is detected (Malone & Roberts, 1996). Furthermore, the possible adverse impact of dysfunctional behaviours on performance appraisal is of less importance for individuals who have a high turnover intention (Donnely et al., 2003; Paino, Smith, & Ismail, 2012). As stated before, auditors face demanding deadlines which brings time pressure during their work. When these deadlines are not met by auditors, it might result in negative reflection during performance appraisals which might result in the delay of promotion within the firm (Paino et al., 2012). But since auditors who have the intention to leave the audit firm are less likely to care about missing a possible promotion (Paino et al., 2012; Donnely et al., 2003), it is likely that these auditors are more likely to engage in questionable audit practices in order to complete an audit when under pressure. High workload in this case is more likely to have a negative impact on audit quality, since auditors with high turnover intention care less about more long-term consequences – they intend to leave anyway. Therefore, turnover intention might be a moderator for the relationship between workload pressure and QTB. My hypothesis reads:

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H2. The relationship between workload pressure and QTB will be strengthened when auditors have a high turnover intention.

2.4 Professional identification

Professional identification can be seen as ´the extent to which a professional employee experiences

a sense of oneness with the profession’ (Broberg, Umans, Skog, & Theodorsson, 2018) or as: “the extent to which an individual defines himself according to the work he performs and according to the characteristics generally attributed to the people who perform that type of work”

(Garcia-Falières & Herrbach, 2015). Being an auditor can be an important part of the life of certain individuals, these individuals identify themselves with the accounting profession and being an auditor is an important part of their identity. Whether an individual strongly identifies itself with an occupation is related to the knowledge which is required for the job and the long and intense academic training which had to be completed before becoming an auditor (Abernethy & Stoelwinder, 1995).

Prior studies researched the relation between professional identification and organizational identification (Russo, 1998), or the correlation between professional identification and the emotions at work of auditors (Garcia-Falières & Herrbach, 2015). Furthermore, Herda and Martin (2016) studied and found evidence to state that professional commitment is negatively associated with dysfunctional audit behaviour. Stating that auditors who have high commitment to the audit profession are less likely to behave in dysfunctional audit behaviour (Herda & Martin, 2016). Andreas (2016) in his research mentioned that auditors with strong professional commitment (i.e. high professional identification) will strive to complete their work within the target time set according to the professional standards. When this is not possible, a time extension will be asked in order to be able to complete the work properly. But when an auditor has low professional commitment, pressure (e.g., workload pressure) will force him or her to manipulate the time spend on a job in order to not exceed the available amount of time set for the job (Andreas, 2016). In this case the auditor with low professional commitment is more likely to be involved in QTB when under pressure, such as underreporting of time spent or not carrying out an audit step.

Thus, within this research the focus is on whether professional identification weakens the relationship between workload pressure and the involvement of auditors in QTB. Auditors who strongly identify themselves with their profession, are less likely to perform in a way that has the

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potential to harm the accounting profession (Lord & DeZoort, 2001). Meyer (1993) states that individuals with high professional commitment will act based on the values and goals of the profession and they have a desire to facilitate the profession to achieve goals. For that reason, when under pressure, auditors with high professional commitment are likely to uphold their professional standards in order to warrant the quality of their work when aggravating circumstances occur. Therefore, auditors with high professional identification are less likely to let workload pressure influence their involvement in QTB since they are highly motivated to uphold professional standards (Andreas, 2016). As stated before, these auditors will try to find a solution (e.g. time extension) in order to guarantee the quality of the audit in dealing with high workload pressures. Based on this reasoning I hypothesize:

H3. Having a high professional identification will weaken the effect of workload pressure on QTB.

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3. Methodology

3.1 Sample and Data Collection

In order to collect data, this research makes use of a survey amongst auditors with at least two years of experience in the audit. All the auditors were approached personally in order to participate in the survey. The survey has been sent out to 135 auditors of whom 114 completed the survey, which equals a response rate of 84%. The majority of the participants were selected from Big4 accounting firms, but also respondents from smaller accounting firms within the Netherlands have been selected in the sample. The sample selection has been performed by five master students of the University of Groningen. The participants of the survey have been selected based on the professional network of the master students.

Prior to the survey the students gathered information such as e-mail, gender, position in the firm and the accountancy firm which the participant is working at. The survey has been sent out at the beginning of April 2019. Two rounds of reminders have been sent out and respondents had to answer all the questions within the questionnaire in order to complete the survey. It was possible to quit during the survey and to complete the survey at another time. As stated, from the original sample of 135, 114 auditors completed the survey. Auditors who completed the survey had the opportunity to invite colleagues to participate in the survey. Another 17 auditors completed the survey which resulted in a sample of 131 responses which are useful for this research.

A risk with conducting a survey is that participants are biased or that they think their answers have consequences when the survey is not anonymous (i.e. social desirability bias). In order to constrain bias and obtain honest answers of the participants, a number of procedures has been stated by Cohen et al., (2017). (1) Assure participants that their responses would be kept strictly

confidential. The participants’ answers were anonymized and not able to link to a participant.

Anonymity has been communicated with the respondents. (2) Inform participants that there are

no right or wrong answers. Participants were instructed not to think too long about an answer but

answer what comes to mind first, since no wrong answers can be given. (3) (to the extent possible)

use existing scales that have been validated in prior studies. Within this research, all variables

have been measured with previously validated measures. Therefore, all procedures which have been stated in Cohen et al., (2017) have been met which increases the validity of this research.

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3.2 Measures

The variables measured within this study have been measured based on existing scales which contributes to the validity of this research. Answers to the questions were generally given based on a 7 point Likert scale.

Quality Threatening Behaviors (QTB): To asses this variable we used the QTB scale as used in

Herrbach (2001), which was also used in Otley, & Pierce (1995). Eight behaviors were stated which should be answered by the participants whether they are involved in such behavior (from ‘never’ =1, to ‘very often’ =7): (1) ‘Reduction of work below what is considered reasonable’, (2) ‘Superficial review of client document’, (3) ‘Acceptance of weak client explanation’, (4) Failure to research an accounting principle’, (5) ‘Failure to pursue a questionable item’, (6) ‘Signed off on an audit program step without completing the work’, (7) ‘Greater than appropriate reliance on client work’, and (8) ‘Personally engaged in underreporting of time (i.e. deliberately failing to record the full amount of time spent on a task). The scale is highly reliable since Cronbach’s alfa is high (α = .796)

Workload pressure (Workload): To asses workload pressure, the scale of Spector, & Jax, (1998)

has been used. Five questions were asked about whether the participants experience workload pressure during their daily job. The questions are asked based on a 7 point Likert scale (from ‘never’=1, to ‘very often’ =7). (1) ‘How often does your job require you to work very fast?’, (2) ‘How often does your work require you to work very hard?’, (3) ‘How often does your job leave you with little time to get things done?’, (4) ‘How often is there a great deal to be done?’, and (5) ‘How often do you have to do more work than you can do well?’. The scale is highly reliable since Cronbach’s alfa is high (α = .81)

Turnover intention (Turnover): This variable has been measured according to the scale used by

Dalton, Davis, & Viator (2015). Also other studies used this scale to measure turnover intention (e.g. Cohen et al., 2017). Participants should answers three statements with relation to turnover intention (from ‘strongly disagree’ =1, to ‘strongly agree’ =7). (1) ‘I often think about leaving the firm I work for’, (2) ‘I will probably look for a job outside of the firm I work for within the next 3 years’, and (3) ‘I am tempted to investigate other job openings’. The scale is highly reliable since Cronbach’s alfa is high (α = .867).

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Professional identification (ProfID): Professional identification has been measured using the scale

of Bamber, & Iyer (2002). Five statements were answered by the participants in relation to whether they feel that being an auditor is a central part of their life (from ‘strongly disagree’ =1, to ‘strongly agree’ =7). (1) ‘When someone criticizes the audit profession, it feels like a personal insult’, (2) ‘I am very interested about what others think about the audit profession’, (3) ‘When I talk about the audit profession I usually say ‘we’ rather than ‘they’’, (4) When someone praises the audit profession, it feels like a personal compliment’, and (5) ‘If a story in the media criticized the audit profession, I would feel embarrassed’. The scale is highly reliable since Cronbach’s alfa is high (α = .819).

Control variables: control variables in prior research are often demographic factors such as age,

gender, tenure and seniority (job level) (Smith et al., 2018; George & Wallio, 2017; Broberg et al., 2018). Azanza et al. (2015) uses seniority and age as control variables for the relation between organizational identification and turnover intention. The seniority or age of an auditor might influence the identification of an auditor with the audit profession. Whether you work longer in a profession or whether you have more responsibility in your job might whether an auditor wants to leave the profession or the organization it works for. In order to be qualified as a control variable, a variable should be available in the dataset and has to be of influence on the other variables. A variable that has not shown to affect the relationship between the variables (e.g. amount of working hours on a weekly base) has not been qualified as a control variable and is therefore not included within the research.

3.3 Data-analysis

In order to test the hypotheses, a multiple regression analysis has been conducted using ‘IBM SPSS Statistics 25’ software. The multiple regression analysis is used to assess the diverse relationships simultaneously. Before conducting the multiple regression analysis a reliability analysis has been conducted (i.e. Cronbach’s alpha has been conducted in order to guarantee internal consistency between the items). Furthermore, the correlation analysis for the different variables have been conducted and show in the “Analyses and Results’ section. The analyses were conducted using the dataset retrieved from the respondents to the survey. In order to assure internal consistency between the different items within the survey, Cronbach’s alpha has been calculated. For an item to be reliable its Cronbach’s alpha should be above 0.7, which is the case for all the variables used

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within the research. No additional factor analyses has been executed since internal consistency between the items has been proven by earlier research (i.e. the use of existing scales) and by the high Cronbach’s alpha.

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4. Analyses and Results

4.1 Descriptive Statistics

In table 1 the means, standard deviations, and correlations between the variables within the research are presented. The average age of the respondents of the survey is approximately 31 and the average years of experience within the auditing profession is 7,5 years. Furthermore, there were less female respondents than there were male respondents, the mean is 0,274 which indicated the amount of female respondents is 27.4%. According to table 1, workload and QTB are highly correlated, indicating that a higher workload might lead to higher involvement in QTB among auditors. Furthermore, turnover intention and QTB and turnover intention and workload are also highly correlated. This indicates that turnover intention might influence QTB and that turnover intention might affect the amount of workload experienced among auditors. Also, a correlation between professional identification and turnover intention has been found, this indicates that auditors with higher professional identification might have a lower intention to leave the firm. There is a significant negative relationship between QTB and age, indicating that younger auditors are more often involved in QTB. Furthermore, table 1 shows significant negative relationships between workload and age and between workload and tenure. This indicates that being older and having more years of working experience decreases the amount of workload experienced by the auditors. On the other hand, a positive significant relationship is shown in table 1 between ProfID and age and between ProfID and tenure. Indicating that being older and having more experience in the auditing profession makes an individual stronger identify itself with the profession.

Also a positive significant relation between age and tenure is shown within table 4 which indicates that auditors with more experience in the auditing profession are older (which might be a very logic correlation). Lastly, a negative correlation has been found between seniority and being a female auditor. This indicates that less females hold a position in the firm with high seniority.

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Table 1: Descriptive Statistics and Correlations

** Correlation is significant at the 0,01 level (2-tailed). * Correlation is significant at the 0,05 level (2-tailed).

4.2 Testing Hypotheses

Table 2 presents the results of the linear regression analyses. Model 1 includes the result for the control variables. Model 2 presents the results for workload and Model 3 presents the results for the hypothesized moderators turnover intention and professional identification. Since already existing scales are used within this research, no standardization had to be done.

The first hypothesis predicted a positive relationship between workload pressure and the involvement of auditors in QTB. As shown in Table 2 (Model 2), the coefficient of Workload is positive and significant (β = 0.139, p < 0.05), which provides evidence that an auditor will be more involved in QTB when workload pressure is high.

Variable Mean SD 1 2 3 4 5 6 7 1 QTB 2,520 0,822 2 Workload 5,046 0,849 ,0279** 3 Turnover 3,695 1,494 0,313** 0,340** 4 ProfID 4,302 1,139 -0,164 -0,070 -0,223* 5 Females 0,274 0,448 -0,036 0,056 0,122 0,005 6 Age 30,725 6,519 -0,173* -0,276** -0,127 0,180* -0,153 7 Tenure 7,538 6,450 -0,132 -0,193* -0,179 0,210* -0,125 0,755** 8 Seniority 1,870 0,337 -0,060 0,005 -0,110 -0,069 -0,271** -0,006 -0,038

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Note: N = 131 *p < 0.05 **p< 0.01 ***p < 0.001

The second hypothesis is related to the moderator turnover intention. It predicts that turnover intention moderates the effect of workload pressure on QTB. The results in Table 2 (Model 3) show no evidence for a significant relationship that proves that turnover intention is a moderator (𝛽 = 0,031, p > 0.10). However, a direct significant relationship has been found regarding turnover intention and the magnitude of QTB an auditor is performing. This indicates that when an auditor has a high turnover intention, that auditor is more likely to be engaged in QTB and therefore influence the quality of the audit.

Variables QTB

Model 1 Model 2 Model 3

Intercept 3,179*** 2,924*** 2,951*** Control Variables Gender -0,114 -0,158 -0,154 Age -0,010 0,001 -0,001 Tenure 0,001 0,009 0,010 Seniority -0,087 -0,125 -0,120 Main Effects Workload 0,139* 0,144* Turnover 0,206** 0,198** ProfID -0,072 -0,068 Workload x Turnover 0,031 Workload x ProfID -0,022 R² 0,040 0,167 0,170 ΔR² 0,040 0,127 0,003

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The results of the regression analysis on the effect of professional identification, β = -0.022 , p > 0.10, show a negative non-significant result on the relationship between workload pressure and QTB. The third hypothesis predicted that Professional Identification will weaken the effect of workload pressure on QTB, however no significant result has been found. Subsequently, the findings do not support the hypothesis and hence, professional identification does not moderate the relationship between workload pressure and QTB.

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5. Discussion and conclusion

The purpose of this research has been to answer the research question: “How is workload pressure

related to quality threatening behaviour and to what extent can turnover intention and profession identification be identified as moderators regarding this relationship?” This question contains

some very interesting and relevant topics regarding the accounting profession.

Within the audit profession a very relevant topic is the quality of an audit. Everybody has heard of accounting scandals within big firms and regulatory boards are introducing strict regulations aimed at improving the quality of the audit (Ewert & Wagenhofer, 2019). Also the amount of workload experienced among auditors is an interesting and highly relevant topic within the accounting profession. It is commonly known that during busy season accountants work a lot of hours per week in order to meet deadlines (Sweeney & Summers, 2002). This research explored the relationship between workload pressure and audit quality amongst other factors that might influence that relationship.

Note: *p < 0.05 **p < 0.01

As indicated in the previous paragraph and in figure 2, hypothesis 1 can be accepted. The results provide a significant relationship between workload pressure and quality threatening behavior (i.e. QTB as a determinant of audit quality). Auditors who experience a high workload pressure are more often involved in QTB. Therefore the conclusion can be drawn that experiencing workload

Figure 2: Results of research model.

Workload Pressure Professional Identification Turnover Intention QTB 0,139* 0,031 -0,022 0,206** -0,072

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influences the quality of an audit. The finding that workload is related to audit quality is consistent with earlier research (Otley & Pierce, 1996; Knechel et al., 2013). Furthermore, this research responds to the call of Knechel et al., (2013) on providing answers regarding factors that influence audit quality. While audit quality is a comprehensive studied topic (Herrbach, 2001; Lopez & Peters, 2012; Christensen et al., 2016), Knechel et al. (2013) call for extending research on determinants of audit quality. My research provides evidence of the relationship between the amount of workload pressure that auditors experience and that this is a factor that influences the amount of questionable work practices performed by auditors.

As has been argued in the theory section, it is possible to hypothesize that turnover intention is a moderator for the relationship between workload pressure and QTB (Paino et al., 2012; Donnely et al., 2003). However, as indicated in figure 2, there is no evidence to conclude that turnover intention moderates the relationship between workload pressure and audit quality. No significant relation has been found regarding turnover intention of auditors, therefore it is not possible to state that turnover intention strengthens the relation between workload pressure and QTB based on this research. However, this research finds a direct positive relation between turnover intention and QTB. Indicating that a higher turnover intention is directly related to an auditors involvement in behavior that threatens the quality of an audit. Anugerah, Anita, Sari, Abdillah, & Iskandar (2016) and Donnely et al., (2003) found a similar relation stating that turnover intention has a positive influence on reducing audit quality behavior which indicates that turnover intention is detrimental for the quality of an audit. On the other hand, Paino, Ismail & Smith (2014) state that voluntary departure to another profession (i.e. high turnover intention) potentially improves audit quality, since turnover is negatively related to the acceptance of dysfunctional behaviour. However, they also state that turnover was a significant variable for acceptance of underreporting of time and acceptance of altering or replacing audit procedures (Paino et al., 2014). Therefore, my research contradicts partially with Paino et al., (2014) that turnover intention might increase audit quality and is in line with Anugerah et al., (2012) and Donnely et al., (2003) that turnover intention decreases audit quality.

Furthermore, professional identification has been hypothesized as a moderator for the relationship between workload pressure and audit quality. Whether an auditor strongly identifies himself with the audit profession might influence the relationship between workload pressure and audit quality.

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However, this research does not provide evidence to support the hypothesized function of professional identification as a moderator. Therefore, based on this research, it is not possible to state that having a higher professional identification weakens the relationship between workload pressure and QTB. Furthermore, no direct relation between professional identification and QTB has been found within this research. Earlier research found different outcomes regarding the relationship between professional identification and QTB. The research of Herda & Martin (2016) supported the relation while the study of Paino, Thani & Iskandar (2012) does not support the abovementioned relationship. My research corresponds to Paino et al., (2012) and might indicate that professional identification does not have a major role in determining whether auditors are involved in QTB during audits. This implies that in order to improve the quality of the audit, scholars should focus on other factors than professional identification. But since there is disparity in the findings of prior research regarding the direct relationship of professional identification and QTB, further research should be conducted in order to ensure clarity about the value of professional identification in relation to the involvement of auditors in QTB.

Practical implications

This research provides initial theoretical contribution on the possible moderating effects of turnover intention and professional identification on the relationship between workload pressure and quality threatening behavior. However, no significant relationships between the hypothesized moderators and the relationship between workload pressure and QTB has been found. Furthermore, the direct relationships between workload pressure and QTB and turnover intention and QTB have been supported with evidence, which indicates that workload pressure and turnover intention are positively associated with QTB of auditors. This research underlines the importance of workload pressure and turnover intention to the quality of an audit. Thereby, this research is consistent with earlier research performed by de Vries & Herrijgers (2018) who state that workload pressure and turnover intention are factors which are directly related to the quality of the audit and therefore are important factors for audit firms to constrain.

Furthermore, this research find no evidence to state that professional identification moderates or has a direct relation to QTB. Therefore, professional identification might have a less important role in performing a high quality audit in comparison to workload and turnover intention. Based on this research you can conclude that audit firms should focus on limiting the amount of workload

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pressure experienced by auditors and limiting the turnover intention of auditors in order to limit the amount of QTB.

Limitations and future research

The survey has been conducted during busy season (in the month of April). Busy season is known as the busiest and most stressful period of the year for most accountants. Therefore, the respondents to the survey might experience more workload compared to other months of the year. If the survey would be conducted in another month, outside of busy season, the results might be quite different from the findings within this research. On the other hand, because all surveys have been conducted within busy season (i.e. every respondent completed the survey having similar conditions), this reduces the amount of variation within the answers of the respondents and therefore the results might be more reliable than when the survey has been conducted partly within busy season and partly outside of busy season. For further research it might be interesting to conduct a survey outside busy season to get an indication whether the results differ significantly from the findings as illustrated within this research.

Within this research, the population consists of 73 % males which might influence the validity. Furthermore, the respondents to the survey mainly exist of auditors from Big4 accounting firms from the Netherlands. A relatively small amount of respondents from non-Big 4 accounting firms also completed the survey and are included within the sample. There might be big differences between auditors from Big4 accounting firms and non-Big4 accounting firms according to DeAngelo (1981). In this situation a more equally divided population would increase the validity. Furthermore, this research has been conducted within the Netherlands with only Dutch respondents. Therefore its findings can only be reflected to Dutch accountancy firms and the outcomes do not provide information about other countries.

A survey has been conducted in order to collect data which could be analyzed. Research based on surveys always suffer from possible bias with the respondents. Respondents could be biased when the answers of the survey could be traced back to the individual respondents and therefore respondents could give socially desirable answers. In order to constrain possible bias from respondents, the procedures as outlined in the method section (Cohen et al., 2017) have been performed. Nevertheless, the validity of the results might be questioned when the respondents provided answers while being subject to the social desirability bias.

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The outcomes of this study contribute to the accounting literature about factors that are likely to influence audit quality. Similar research within the literature that used turnover intention and/or professional identification as moderators for the relationship between workload pressure and audit quality has (to the best of my knowledge) not been carried out. Therefore, this research expands the literature and might inspire other researchers to carry out new research regarding the possible effects of turnover intention and professional identification on audit quality. Lastly, when future research will be conducted using a different sample of respondents, other evidence than the evidence presented in this research might be found.

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