Haste makes waste:

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Haste makes waste:

How, why and when workload leads to audit quality threatening

behavior

Master Thesis, MSc Accountancy

University of Groningen, Faculty of Economics and Business

Lisanne Tamminga

3204502

Supervisor: Dennis Veltrop Word Count: 9964

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ABSTRACT

The audit profession is structurally confronted with high workloads. Prior literature claims that workload induces auditors to engage in audit quality threatening behavior (AQTB). However, some studies suggest that workload can also be perceived as challenging, thereby stimulating auditor motivation making AQTB less likely. In this study, I expect that workload may indirectly influence AQTB through intrinsic motivation. Bringing these aforementioned divergent view together I anticipate that auditors’ locus of control acts as a key personality trait that influences how auditors appraise workload. Specifically, I anticipate a moderating effect of auditors’ locus of control, such that the effect of workload on AQTB through intrinsic motivation is weaker (stronger) for auditors with an internal (external) locus of control. The regression analyses on survey data from 170 auditors partially support the expected relationships. The findings show that workload increases the extent of AQTB and decreases the intrinsic motivation of auditors. Besides, intrinsic motivation increases AQTB and an indirect effect of workload on AQTB through intrinsic motivation was found. Finally, the results show that an internal locus of control weakens the undermining effect of workload on intrinsic motivation and AQTB. However, no support was found for the prediction that an external locus of control strengthens the indirect effect of workload on AQTB through intrinsic motivation. Altogether, this study provides insight into how, why and when workload impacts AQTB.

Keywords: Auditors, Workload, Audit Quality Threatening Behaviors, Intrinsic motivation,

Locus of Control

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3. Methods ... 15 3.1 Data collection ... 15 3.2 Measures ... 15 3.2.1 Dependent variable ... 15 3.2.2 Independent variable ... 16 3.2.3 Moderating variable... 16 3.2.4 Mediating variable ... 17 3.2.5 Control variables ... 17 3.3 Data analysis... 17 4. Results ... 19 4.1 Descriptive statistics ... 19 4.2 Hypothesis testing ... 20 4.3 Robustness check ... 27

5. Discussion and conclusion ... 30

5.1 Limitations and future research ... 32

5.2 Practical implications ... 33

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1. INTRODUCTION

Enron and WorldCom are the most notorious examples of accounting scandals around the world. Those scandals were not without consequences for the accounting profession. The accounting profession suffered due to a reputation damage caused by the scandals (Rogers, Dillard & Yuthas, 2005). The scandals were perceived as failure of auditors to offer high audit quality and to prevent and discover fraud practices. The decreasing trust of the public in the accounting profession is problematic, since it is recognized that without high audit quality the cost of capital will be higher due to an inefficient capital market (Kilgore, Radich & Harrison, 2011). To recover trust, higher audit quality should be offered by auditors to prevent that big accounting scandals will happen again in the future (Broberg, Tagesson, Argento, Gyllengahm & Martensson, 2016). Several regulations, standards and policies are set to increase audit quality (Kilgore et al., 2011). However, the downside of these regulations is the increased workload in the accounting profession (Persellin, Schmidt, Vandervelde & Wilkins, 2019; Sterk, 2019).

Interestingly, high workload among auditors has dominated the auditing discussion. Both in scholarly research and in practice because many state that it harms audit quality (Sterk, 2019; Pierce & Sweeney, 2006). Situational variables like workload are related to behaviors that threaten the audit quality (Peytcheva & Gillet, 2012). This behaviour is indicated in literature with Audit Quality Threatening Behaviour (AQTB) which is defined as actions taken by the auditor during the audit that reduce the appropriate gathering of evidence (Peytcheva & Gillet, 2012; Pierce & Sweeney, 2006). AQTB is a suitable concept to measure audit quality since it undermines quality and performance (Pierce & Sweeney, 2006). Literature indicates that a high workload reduces the performance of auditors, because such job characteristics trigger the motivational process of auditors (Olafsen & Halvari, 2017). Especially intrinsic motivation, which is defined as performing a task because it is inherently interesting or enjoyable, has proved to be related to performance (Ryan & Deci, 2000; Orsini, Evans, Binnie, Ledezma & Fuentes, 2016). When faced with workload, auditors feel limited in making choices on their own (Ryan & Deci, 2000). This diminishes their intrinsic motivation. However, other studies claim and prove that workload positively challenge and motivate individuals to improve performance (Amiruddin, 2019). Those contradicting results of the effect of workload are caused by the differences in personal characteristics between auditors that influence the way individuals perceive workload (Donnelly, Quirin & O’Bryan, 1985). Auditors can perceive workload as challenging or hindering. Auditors that appraise the workload as challenging are

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less affected by the workload, because they show higher levels of motivation (Kim & Beehr, 2019). These auditors are less likely to engage in AQTB, because they are more motivated to do a good job. On the other hand, auditors who appraise the workload as hindering perceive this demand as blocking the achievement of tasks. Such auditors have less intention to invest effort to achieve their goals and deadlines and are therefore less motivated to increase audit quality (Kim & Beehr, 2019).

Surprisingly, it is left largely unexplored in the current literature how why and when workload increases or decreases AQTB. However, the current emphasis on audit quality and the simultaneous pressure of workload in the accounting profession, increase the importance of detailed explorations of the effect of workload. Therefore this study aims to answer the following research question:

How, why and when does workload impact audit quality threatening behavior (AQTB)?

As mentioned before, the limitations that workload causes, reduces the intrinsic motivation of auditors (Ryan & Deci, 2000). This decreased level of intrinsic motivation gives explanation for how and why workload impacts AQTB. For example, workload hinders auditors in elaborating on audit procedures (Chang, Luo & Zhou, 2017) which diminishes the sense of control that auditors have in their work environment (Ryan & Deci, 2000). This perceived hindrance will reduce their intrinsic motivation. Extended audit procedures are necessary to create audit quality (Chang et al., 2017). Less motivation causes less persistence in task fulfillment and an increased temptation to engage in AQTB to cope with the workload (Cerasoli & Ford, 2014). Therefore, intrinsic motivation could be the mediator that explains how and why workload results in AQTB.

To be able to explain when workload triggers motivation, the difference between auditors must be highlighted. Kim and Beehr (2018) state that there are personal characteristics that determine if auditors perceive circumstances as challenging and controllable or interpret them as hindering. Locus of control (LOC) is a such a personal trait and indicates the degree by which people think they can influence outcomes with their actions and has shown in research to result in different reactions in varying situations (Haybatollahi & Gyekye, 2014). This personal characteristic can give explanation for how workload is perceived and for the contradicting results in the field of workload and AQTB. Individuals with an internal locus of control are equipped with better coping strategies for challenging situations (Ahn, 2015), whereas individuals with an external locus of control on the other hand, are more passive when

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confronted with workload (Haybatollahi & Gyekye, 2014). The active attitude that individuals with an internal LOC possess results in higher levels of motivation to increase effort and to search more effective for information that helps to achieve tasks (Ahn, 2015; Sprung & Jex, 2012). It is likely that they will interpret workload as challenging instead of hindering. The challenging nature of the tasks makes it more interesting for those auditors and therefore increases the motivation to complete the tasks (Cerasoli, Nicklin & Ford, 2014). The external LOC, on the other hand, results in less motivation to extent effort or to show an active attitude since individuals with this trait believe that increasing effort would not change the current situation (Sprung & Jex, 2012). An external LOC may result in individuals appraising workload as hindering in achieving their tasks and deadlines. So, external and internal LOC may moderate the effect of workload on intrinsic motivation.

This research is relevant and of practical value for two reasons. First, the study aims to theoretically contribute to existing auditing literature by providing knowledge in the field of the cognitive and decision-making process of auditors that causes lower audit quality and higher levels of AQTB. The results of workload and AQTB research are contradicting. There might be two causes for the contradicting results. First, in many research it is assumed that auditors are identical and react similar to environmental factors in the organisation (Paino, Ismail & Smith, 2014). Second, most of the studies measure the direct relationship between workload and AQTB without taking into account the cognitive process that drives or forces auditors to engage in AQTB (López & Peters, 2012; Chang et al., 2017; Jones, Norman & Wier, 2010). Therefore, this study aims to fill a gap by offering a detailed explanation for the effect of workload on AQTB.

Second, this research provides a practical contribution by offering the accounting profession more detailed knowledge in field of workload and AQTB. In 2018 the Business University Nyenrode researched the workload problem in the accounting profession. In this study 90 percent of participating auditors indicated that the high workload disables them to deliver the quality that is expected from the public and regulators (Sterk, 2019). Noteworthy in this study is that complaining about the workload and discussing it in engagement teams is not done according to the participants (Piersma & Knoop, 2018). This indicates that audit firms do not yet strive for improvement and solutions. The Nyenrode study encouraged the government to investigate the policies of audit firms to counteract workload (Sterk, 2018). Unfortunately, this investigation showed that many audit firms do not tackle the workload problem and still a lot of improvement has to be made (Pols, 2020). The fact that audit firms are not incorporating

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the workload issue in their policies might indicate that they simply do not know what an effective solutions is. Literature lacks detailed research in the workload and AQTB relationship and does not offer solutions for audit firms to effectively deal with the problem. Making audit firms aware of the consequences of the high workload and offering them insights in personal characteristics that may weaken or strengthen the consequences of workload, can serve as starting point for change in the audit firms.

This research will be structured as follows. First, a literature review of workload, intrinsic motivation, AQTB and LOC will be presented. The relationships among the variables are described and hypotheses will be developed. Next, the methodology will elaborate on the methods used to execute the research. Results from the statistical analysis will be presented and a discussion will conclude this research.

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2. THEORETICAL FRAMEWORK 2.1 Audit quality threatening behaviour

Auditors are required according to auditing standards to plan and perform audits to obtain reasonable assurance about the question if financial statements are free of material misstatements and give an opinion about the fair representation of these statements. The extent to which users of financial statements can rely on the work performed by the auditor and the auditor’s opinion depends on the quality with which the audit is performed (Christensen, Glover, Omer & Shelley, 2016). It is important that high quality is offered by auditors, since the capital markets rely on their opinion and efficiency of the market is determined by the auditors’ opinion (Kilgore et al., 2011).

However, auditors do not strive for the highest quality in all circumstances. The work environment can result in behavior that threatens the audit quality (Sweeney, Pierce & Arnold, 2013). This is labelled in literature as audit quality threatening behavior (AQTB) and defined as actions taken by the auditor during the audit that reduce the appropriate gathering of evidence (Peytcheva & Gillet, 2012; Pierce & Sweeney, 2006). Examples of AQTB include performing superficial reviews of audit evidence, biasing selection of samples, and ignoring questionable audit evidence (Pierce & Sweeney, 2006; Peytcheva & Gillet, 2012). Research demonstrated high levels of AQTB in many audit firms, nationally and internationally (Pierce & Sweeney, 2006). Although many auditors view this behaviour as wrong and know that the consequence can be lower audit quality, AQTB still appears in many audit firms (Peytcheva & Gillet, 2012). This indicates that AQTB is problematic and further research is necessary for audit firms to be able to legitimize their profession and used audit methodologies and outcomes (Herrbach, 2001).

2.2 Workload in the accounting profession

The accounting profession is characterized by high workloads. Not only in the busy season (the first quarter of the year) in which most year-end audits are performed (Sweeney & Summers. 2002), but also throughout the year, auditors face high levels of workload. This is due to the shortage of staff the profession is facing and the increased amount of regulations and standards that audit scandals have caused (Manurung, Hardika, Mulyati & Saudi, 2018; Persellin et al., 2019). It is believed that workload, defined as the amount of individual capacity that is needed to complete several activities in a certain time limit (Manurung et al., 2018; Persellin et al. 2019), results in acts that reduce audit quality (Chen, Dong, Han & Zhou, 2020). If the work environment consists of a high workload, the risk that auditors have insufficient

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time to extent on audit procedures and to perform the necessary audit procedures appropriately increases. Extending audit procedures contributes to creating higher audit quality (Chang et al., 2017). Instead, the workload may trigger auditors to engage in AQTB. Generally, workload is associated with increased strains like, for example, exhaustion. Workload threatens the availability of resources that auditors need to successfully complete their tasks and to effectively cope with the workload. Therefore, auditors will feel strain and exhaustion will be triggered (Janssen, de Jonge & Bakker, 1999). Exhaustion results in less effectiveness of auditors which may harm the level of due professional care (Chang et al., 2017). AQTB may evolve from less due professional care. According to the Public Company Accounting Oversight Board (PCAOB) workload is also a root cause for inspection findings which indicates lower audit quality (Persellin et al., 2019).

The arguments and research results provided by literature suggest a positive relationship between workload and AQTB. This leads to the following hypotheses:

Hypotheses 1: Auditor workload is positively associated with AQTB

2.2 Auditor workload and intrinsic motivation

Workload is a job characteristic that has the potential to harm the level of intrinsic motivation. Ryan and Deci (2000) define intrinsic motivation as performing a task, because it is inherently interesting or enjoyable. In literature the association between workload and intrinsic motivation is explained by the self-determination theory (SDT). The SDT gives explanation for how different job characteristics influence the way employees carry out their work (Olafsen & Halvari, 2017). The theory states that basic psychologically needs are necessary for individuals to function optimally (Gagné & Deci, 2005). Job characteristics have the potential to harm or meet those needs. Therefore, the organization can design the work environment in such a way that the needs of employees are fulfilled and the employees are able to flourish and thrive at work (Olafsen & Halvari, 2017). Satisfying those needs also creates integrity at the work floor and prevents behaviour that is not in line with integrity like, for example, AQTB (Gagné & Deci, 2005).

Job characteristics influence work outcomes through triggering the motivational process (Olafsen & Halvari, 2017). This is also the core of the SDT: explaining and understanding employees’ intrinsic motivation (Sandrin, Gillet, Fernet, Leloup & Depin-Rouault, 2019). One basic psychological need of individuals that underlies intrinsic motivation is the feeling of being free to do what the individual has chosen to do (Guay, Vallerand & Blanchard, 2000). This need

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ensures that individuals are intrinsically motivated in performing their tasks at work and prevents that individuals refrain from behaving with integrity (Gagné & Deci, 2005). Hendijani, Bischak, Arvai and Dugar (2016) agree that the level of an individual’s motivation is influenced by external factors and internal psychological processes. If audit firms are able to ensure there are no pressures by offering auditors freedom in making choices about different actions, work will be carried out better because the auditors are intrinsically motivated. Thus, to promote integrity and work performance, fuelling intrinsic motivation by means of fulfilling the basic psychological need that SDT focuses on is necessary (Gagné & Deci, 2005).

Workload threatens the basic psychological needs of employees. First of all, deadlines and pressures that exist during circumstances of high workload are experienced by individuals as controllers of their behaviour (Ryan & Deci, 2000). This means that workload undermines the basic psychological need of making work-related decisions on your own (Shirom, Nirel & Vinokur, 2010). According to the SDT, failing to satisfy this need results in less intrinsic motivation (Gagné & Deci, 2005). Further, a high workload is also associated with strain (Brüggen, 2015). The strain is caused by the limited availability of resources due to the high workload (Janssen et al., 1999). Resources like, for example, more time or personnel are scarce in periods of high workload and therefore employees are emotional and physical exhausted (Janssen et al., 1999). The strain and exhaustion is, according to research, associated with negative feelings that diminish intrinsic motivation (Williams, Konrad, Scheckler, Pathman, Linzer, McMurray, Gerrity & Schwartz, 2001; Chaudhuri, 2020). In addition, Sandrin et al. (2019) claim that employees appraise workload as hindering instead of challenging. This signifies that workload is considered as uncontrollable barrier in restraining employees to progress in their work achievement (Kim & Beehr, 2019). The hindering characteristic of workload decreases the intrinsic motivation of employees (Kim & Beehr, 2019). Finally, a high workload results in demotivation, because it gives auditors the feeling that their abilities do not correspond with the demands of their work. This experienced misfit undermines the basic psychological needs of employees and results in less intrinsic motivation (Quratulain & Khan, 2015).

The arguments presented above result in the expectation that auditors’ intrinsic motivation is decreased by workload. This results in the following hypotheses:

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2.3 The moderating role of locus of control

Several research has stated that the effect of workload on intrinsic motivation depends on personal characteristic (e.g., Kim & Beehr, 2018). Personality determines the extent to which auditors perceive workload as a barrier and demotivation or as challenging and interesting (Kim & Beehr 2018). Locus of control (LOC) is a personality trait which indicates the degree people think they can influence outcomes with their actions (Haybatollahi & Gyekye, 2014). This personality trait explains the perceptions auditors carry about workload. There are two types of LOC: internal LOC and external LOC. Individuals with an internal LOC (referred to as ‘internals’) believe they have the ability to influence outcomes. An individual with an external LOC (referred to as ‘externals’) is characterized by the belief that external factors are beyond his control and determine outcomes (Haybatollahi & Gyekye, 2014). This distinction between internals and externals causes different perceptions in similar situations about how individuals view their actions’ influence on outcomes (Donnelly et al. 1985). Therefore, it is likely that internals will react differently to perceived workload than externals. In literature internal LOC and external LOC are measured separately and therefore auditors can score high or low on both types of LOC. The two types of LOC are not mutually exclusive.

There are several explanations for the moderating role of LOC in the workload and intrinsic motivation relationship. First of all, individuals with an internal LOC are better able to handle workload than externals, because they have more effective workload coping-strategies. Internals’ first reaction to workload is to change the situation and solve the problem (Boshoff & Zyl, 2011). Instead of being demotivated, they actively seek information that contributes to complete their tasks and view challenging circumstances as opportunities for personal development (Haybatollahi & Gyekye, 2014). Externals, on the other hand, are more insecure and passive in dealing with threatening circumstances. They do not view challenges as opportunity to learn, because they believe that they cannot influence outcomes. The reaction of externals in highly demanding situations is passive and they only rely on emotional support (Haybatollahi & Gyekye, 2014). Due to their better workload coping-strategies, individuals with an internal LOC control react less negative to workload than externals.

Furthermore, internals, compared to externals, are more likely to increase effort at their work when put under pressure (Ahn, 2015). As mentioned before, less freedom of choice is experienced when the workload is high and this declines the intrinsic motivation of auditors and increases the likelihood of AQTB (Ryan & Deci, 2000). However, internals tend to perceive more freedom and control in their work environment, since they believe outcomes are the result

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of their own behaviour. Therefore, internals are willing to extend effort to control the demanding circumstances and to achieve tasks and goals (Haybatollahi & Gyekye, 2014). Thus, their intrinsic motivation will be less affected by a high workload. For externals the feeling of decreased freedom during periods of high workload will be reinforced, because they feel more helpless in demanding circumstances and believe that the environment is in control (Sprung & Jex, 2012; Krause, 1986). According to their view investing in effort would make no sense (Krause, 1986). Van Yperen, Wörtler & de Jonge (2016) confirmed this in their research. Normally, job demands like workload decrease an employees’ intrinsic motivation. However, this effect is attenuated if the employee sees opportunities for coping and managing the workload (Van Yperen et al., 2016). If an auditors thinks he can master the demands in the work context, he will not be intrinsically demotivated in his work (Parker & Sprigg, 1999). Internals are more likely to experience this feeling of mastery and are likely to see coping and managing opportunities for high workload. Therefore, the relationship between workload and intrinsic motivation will be impaired for auditors that are characterized with an internal LOC.

As mentioned before, Quratulain and Khan (2015) argue that workload causes a misfit between the auditor’s capabilities and the demands. Though, this effect is diminished by an internal LOC. Internals enjoy challenges and perceive them as opportunities to develop and learn, and therefore it can be expected that internals are less demotivated when faced with situations that do not correspond with their abilities (Haybatollahi & Gyekye, 2014). Externals, however, negatively judge the opportunities to learn and grow that highly demanding circumstances provide (Haybatollahi & Gyekye, 2014). An external LOC reinforces the effect of workload on intrinsic motivation.

Finally, research points out that LOC is also tied to the willingness to use manipulative behaviour (Gable & Dangello, 1994). Persons with an external LOC show greater willingness to use manipulation and deception (O’Bryan, Quirin & Donnelly, 2005). It is argued that manipulation is viewed by externals as necessary when obtaining the resources to survive is unable. When a high workload is present, the auditor is not able to obtain more time or more personnel in order to perform all his tasks. An auditor with an external LOC would be inclined to use manipulation and deception to exercise some influence in high demanding environments (O’Bryan et al., 2005). Instead of being motivated to increase effort, externals are demotivated and perceive manipulation and AQTB as the only option to deal with the workload (Sprung & Jex, 2012). The first reaction of internals to workload is coping with it and therefore they are

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less demotivated and it is less necessary for them to use manipulation and to engage in AQTB (Haybatollahi & Gyekye, 2014).

Aforementioned suggests that internals are more intrinsically motivated by workload than externals. Therefore, it is expected that a higher (internal) LOC moderates the relationship between workload and intrinsic motivation. This results in the following hypotheses:

Hypotheses 3a: The negative relationship between auditors’ workload and intrinsic

motivation is moderated by internal LOC, such that this relationship is less negative for individuals with a high internal LOC.

Hypotheses 3b: The negative relationship between auditor workload and intrinsic motivation

is moderated by external LOC, such that this relationship is more negative for individuals with a high external LOC.

2.4 Intrinsic motivation and audit quality threatening behaviour

Intrinsic motivation can be linked to AQTB for several reasons. First, intrinsically motivated employees show more persistence in achieving tasks and pursue behaviour that is desired by firms (Cerasoli & Ford, 2014). When work is perceived as interesting, it is more likely that an employee will fully engage in the task and also for longer periods of time (Cerasoli et al., 2014). Higher levels of task persistence and desired behaviour could contribute to audit quality, because it may prevent auditors from engaging in AQTB. It is more likely that an intrinsically motivated auditor will keep trying to achieve goals and tasks and is less tempted to engage in behaviours that are unwanted and reduce audit quality. Intrinsic motivation is also related to higher levels of work engagement. More work engagement results in higher levels of (quality) performance, because employees are more focused, vigilant and put in more effort when their work engagement is higher (Cerasoli et al., 2014). Further, motivation increases the morale of individuals to achieve tasks and meet standards (Furiady & Kurnia, 2015). Intrinsic motivation keeps auditors away from AQTB, because behaviours such as false sign-offs or superficial reviews (Herrbach, 2001) are perceived as unethical and in conflict with auditing standards. Finally, intrinsic motivation encourages individuals to invest effort. They are willing to work longer and harder and are often more productive (Menges, Tussing, Wihler & Grant, 2017). This contradicts AQTB and therefore it is less likely that an intrinsic motivated auditor will show AQTB.

I expect that higher levels of intrinsic motivation diminish the likelihood that auditors engage in AQTB. The following hypothesis is developed:

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Hypotheses 4a: Auditors’ intrinsic motivation is negatively associated with AQTB.

Given that I anticipate that auditors’ workload is negatively associated with auditors’ intrinsic motivation (H2) and that I also expect that intrinsic motivation is negatively associated with AQTB (H4a), I arrive at the following hypothesis:

Hypotheses 4b: Intrinsic motivation mediates the relationship between auditor workload and

AQTB

However, I also anticipated that the relationship between workload and intrinsic motivation was conditional on the LOC of the auditor. Specifically, auditors’ intrinsic motivation is expected to be less affected by workload when the auditor possesses and internal LOC (H3a). Externals, on the other hand, react more negatively to workload (H3b). Thus, by extension I arrive at the following moderated mediation hypotheses, in which I combine the aforementioned mediation with the aforementioned moderation hypotheses.

Hypotheses 5a: The impact of auditors’ workload on AQTB, through the impact on auditors’

intrinsic motivation, is less stronger for auditors with a higher internal LOC

Hypotheses 5b: The impact of auditors’ workload on AQTB, through the impact on auditors’

intrinsic motivation, is stronger for auditors with a higher external LOC All in all, the developed hypotheses result in the conceptual framework that is illustrated in figure 1.

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FIGURE 1

Conceptual framework Audit Quality Threatening Behaviour

Audit Quality Threatening Behaviour (AQTB) Intrinsic motivation Workload Internal locus of control (LOC) + - - External locus of control (LOC) -

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3. METHODS 3.1 Data collection

To execute this research, data is collected by taking a survey among 201 auditors from various audit firms in the Netherlands. A survey is chosen, because it enables this study to measure the behavior of auditors. Together with five student colleagues, 201 auditors were approached and personally asked to engage in this study. To make sure that all participants were able to answer all the questions, participants were required to have at least two years of work experience. The data collection took place in the Netherlands and therefore questions were translated from English to Dutch with means of the back and forward translation technique to preserve validity. Respondents are informed in the survey that answering the questionnaire is fully anonymous and confidential. Besides, it is pointed out that the storage of data from the questionnaire is in accordance with the policies of the university and government. The survey was sent out in April 2020, followed by two rounds of reminders. From the 201 auditors that agreed to participate beforehand, 177 (88%) auditors completed the questionnaire. Seven respondents were excluded from the analyses, because these auditors were not engaged in audit work, but rather in compilation work (i.e. ‘samenstel praktijk’). This resulted in a sample of 170 auditors that could be used for further data analysis.

3.2 Measures

3.2.1 Dependent variable

Audit quality threatening behavior (AQTB) was measured by using the questions of Herrbach (2001), Otley and Pierce (1995) and Pierce and Sweeney (2004). It is important to note that measuring AQTB involves a social desirability bias. However, this type of bias cannot be completely ruled out when this type of data, that appears to be sensitive, is collected. By taking measures such as guaranteeing confidentiality, anonymity and mailing responses to direct to the research supervisor, the likelihood that this bias occurs is minimized (Otley & Pierce, 1995). The questions will start with the following introduction: Listed below are behaviors some auditors claim to have experienced in their jobs. Could you indicate how often you have acted in the following manner in carrying out an audit. Thereafter, eight questions are presented: (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; (8) personally engaged in underreporting of time (i.e., deliberately failing to record the full amount

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of time spent on a task). Item 5 derived only from Herrbach (2001) and item 6 only showed up in Pierce and Sweeney (2004). Responses were given on a seven-point scale with 1 (never) and 7 (very often). Together, the items yielded a Cronbach’s alpha of 0.80.

3.2.2 Independent variable

In order to measure workload, the Quantitative Workload Inventory (QWI) of Spector and Jex (1998) was used. The QWI is used to measure perceived work amount in terms of speed and volume. The QWI exists of the following five items: (1) how often does your job require you to work very fast; (2) how often does your job 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; (5) how often do you have to do more work than you can do well. Auditors needed to indicate on a five-point scale how often they encountered such circumstances. Responses were given on a seven-point scale with 1 (never) and 7 (very often). A higher score on the scale means a higher workload (Spector & Jex, 1998). The workload scale has a Cronbach’s alpha of 0.78.

3.2.3 Moderating variable

Locus of control (LOC) was measured with the Work Locus of Control (WLOC) scale developed by Spector (1988). This scale is used since it focuses on the beliefs about control in the work context (Kauppila, 2014). In accordance with de Hoogh and den Hartog (2009) the following four items were used to measure internal LOC: (1) if you know what you want out of a job, you can find a job that gives it to you; (2) a job is what you make of it; (3) on most jobs, people can pretty much accomplish whatever they set out to accomplish; (4) most people are capable of doing their jobs well if they make the effort. Auditors were asked to response on a seven-point scale ranging from (1) strongly disagree to (7) strongly agree. A higher score on the scale implies a higher internal LOC (Hoogh & den Hartog, 2009). The Cronbach’s alpha for this scale was 0.65.1

In line with Sprung & Jex (2012), for external LOC four items from the WLOC scale are chosen too to measure this variable. The items are: (1) when it comes to landing a really good job, who you know is more important than what you know; (2) getting the job you want is mostly a matter of luck; (3) it takes a lot of luck to be an outstanding employee on most jobs; (4) promotions are usually a matter of good fortune. Again, a higher score means that the auditor

1_{Generally, as a rule of thumb a Cronbach alpha of .70 is considered acceptable. Given the marginal difference}

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has a higher external LOC. Again, responses were given on a seven-point scale ranging from (1) strongly disagree to (7) strongly agree. A Cronbach’s alpha of 0.67 was generated.2

3.2.4 Mediating variable

Intrinsic motivation was measured with the items that Grant (2008) used in his study. Grant adopted his items from the self-regulation scales of Ryan and Connell (1989) which resulted in four items to measure intrinsic motivation. Auditors were first asked to indicate why they were motivated to do their work. Auditors had to indicate on four items to what extent those items motivate them to work: (1) because I enjoy the work itself; (2) because it’s fun; (3) because I find the work engaging; (4) because I enjoy it. Responses were given on a seven-point scale with 1 (strongly disagree) and 7 (strongly agree). The intrinsic motivation scale yielded a Cronbach’s alpha of 0.90.

3.2.5 Control variables

In this study, three control variables are taken into account. First I controlled for gender, because Ittonen, Vähämaa and Vähämaa (2013) showed that this characteristic can influence the degree to which auditors engage in AQTB. Extensive literature has proved behavioral differences between men and women. Woman show, for example, a higher propensity to behave in line with rules and regulations. Besides, woman are more risk-averse and conservative compared by men (Ittonen et al., 2013). For those reasons, a dummy variable was used to indicate whether an auditor is male or female. Males were denoted with 0 and females with 1. Second, work experience was controlled for. According to several studies experience determines the ethical decision making of auditors and AQTB (Abdolmohammadi & Wright, 2013; Sweeney, Arnold & Pierce, 2010). Auditors’ experience was measured by the amount of years the auditors are employed at their current employer.

Finally, I controlled for Big 4 or non-Big 4 audit firms. According to Sundgren and Svanström (2014) Big 4 audit firms offer higher audit quality than non-big 4 firms. Therefore, a Big 4 dummy variable is used, where 0 indicated that the auditor is employed at a non-Big 4 audit firm and 1 indicates the auditor is employed at a Big 4 audit firm.

3.3 Data analysis

By means of data analysis, the relationships and direction of the relationships were determined between the variables of interest in this study. First, an overview of the sample characteristics

2_{Generally, as a rule of thumb a Cronbach alpha of .70 is considered acceptable. Given the marginal difference}

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is provided. For further analysis, multiple regression analysis was used. Hypotheses 1, 2, 3a, 3b and 4a were examined through an ordinary least squares (OLS) regression. The PROCESS macro from Hayes (2018) was used to examine hypotheses 4b, 5a and 5b. This application helped to measure the conditional indirect effect by examining the moderating, mediating, independent, dependent and control variables in one model. It simultaneously avoids power problems that may arise from non-sampling distributions. During the analysis I controlled for several characteristics (gender, work experience and Big 4/non-Big 4).

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4. RESULTS 4.1 Descriptive statistics

The percentages of frequencies of the eight AQTB types are provided in table 1. The mean value of AQTB is not very high (M = 2.49) which indicates that AQTB does not appear among most auditors. However, table 1 shows that all AQTB types do occur among the participating auditors. The most prevalent AQTB type is underreporting of time followed by superficial review of client documentation, signed off on an audit program step without completing the work and greater than appropriate reliance on client work.

TABLE 1

Percentages of frequencies, mean and standard deviation of each Audit Quality Threatening Behavior (N=170)

AQTB 1 AQTB 2 AQTB 3 AQTB 4 AQTB 5 AQTB 6 AQTB 7 AQTB 8

1 “never” 22.4 11.2 15.9 17.1 42.4 37.1 11.8 18.2 2 43.5 44.1 41.2 38.2 40.6 32.4 40.0 25.9 3 20.0 25.9 29.4 30.6 11.2 13.5 22.4 16.5 4 7.6 10.0 7.6 9.4 4.1 5.3 12.4 13.5 5 4.7 8.2 5.3 3.5 1.8 9.4 8.8 14.1 6 1.2 0.6 0.6 1.2 0 2.4 4.7 11.2 7 “very often” 0.6 0 0 0 0 0 0 0.6 Mean 2.35 2.62 2.47 2.48 1.82 2.25 2.81 3.15 S.D. 1.17 1.11 1.06 1.07 0.91 1.38 1.32 1.67 Notes:

QTB 1: Reduction of work below what is considered reasonable QTB 2: Superficial review of client documentation

QTB 3: Acceptance of weak client explanation QTB 4: Failure to research an accounting principle QTB 5: Failure to pursue a questionable item

QTB 6: Signed off on an audit program step without completing the work QTB 7: Greater than appropriate reliance on client work

QTB 8: Personally engaged in underreporting of time

Table 2 provides the descriptive statistics and correlations of all variables of interest. To limit the influence of outliers, the winsorizing method was used. Outliers were replaced by the mean plus three times the standard deviation or the mean minus three times the standard deviation. Besides, due to normality issues the log transformation was applied to work experience. The

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log of work experience is used to receive the correlations of table 2 and for further analysis. From the descriptive statistics it can be concluded that 28% of the participating auditors is female and most auditors are employed at a Big 4 (83%). The average work experience of the participants is 7.69 years. From the correlations in table 2 it can be derived that the control variable work experience is significantly correlated with intrinsic motivation which affirms controlling for this variable. However, no significant correlations are found between the control variables gender and Big 4. The correlations between the variables of interest show the expected direction. However, the correlation between workload and AQTB is not significant. Correlations with the independent variables or, according to table 2, below the absolute value of 0.6. This gives a first indication that multicollinearity should be of no concern. The analyses carried out below show that the mean variance inflation factors (VIF) stayed below the cutoff of 10 and confirms that multicollinearity is of no concern (O’Brien, 2007).

TABLE 2

Descriptive statistics and correlations

Mean SD 1 2 3 4 5 6 7 8 1 Workload 4.98 0.86 - 2 Female 0.28 0.45 0.05 - 3 Work experience3 7.69 6.66 -0.13 -0.15 - 4 Big-4 0.83 0.38 0.13 0.15 -0.07 - 5 Internal LOC4 5.21 0.82 -0.21** -0.20** 0.22** 0.06 - 6 External LOC 2.87 0.91 0.16* 0.01 -0.13 0.10 -0.16* - 7 Intrinsic Motivation 5.57 0.94 -0.35** -0.05 0.33** 0.04 0.53** -0.18* - 8 AQTB 2.49 0.80 0.13 -0.10 -0.14 -0.14 -0.21** 0.15* -0.17* - N = 170 auditors, * p ≤ 0.05 ** p ≤ 0.01

The log of variable 3 is used to calculate correlations

4.2 Hypothesis testing

Below the results of the regressions and PROCESS macro are presented in different tables. Table 3 provides the results from the regression that is run on AQTB. In this table the associations of the control variables, workload and intrinsic motivation with AQTB are presented. Table 4 provides the results from the regression that is performed for intrinsic

3_{The log transformation is applied to receive the correlations}

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motivation. The associations of the control variables, workload and moderating role of internal LOC and external LOC are demonstrated in this table. The results of the indirect effect of workload on AQTB can be found in table 5. The conditional indirect effects of both internal LOC and external LOC are shown in table 6 and 7.

Noteworthy in model 1 of table 4 is the significant positive association between work experience and intrinsic motivation (b = 0.41, p <0.01). This association implies that auditors with more years of work experience show higher levels of intrinsic motivation.

Hypothesis 1 predicted that auditor workload is positively associated with AQTB. The findings of model 2 in table 3 show a significant positive association between workload and AQTB (b = 0.14, p < 0.05). This implies that a higher workload among auditors increases the likelihood that they will engage in AQTB. Hence, hypotheses 1 is accepted.

Hypothesis 2 stated that a high workload decreases the intrinsic motivation of auditors. In support of hypothesis 2, model 2 in table 4 indicates that workload has a significant negative effect on auditors’ intrinsic motivation (b = -0.35, p < 0.01). This implies that an increase in the workload decreases the intrinsic motivation of auditors.

In hypothesis 3a it is assumed that the relationship between workload and intrinsic motivation is conditional on the level of the auditor’s internal LOC. To test hypotheses 3a, both workload and internal LOC were standardized and the interaction term Workload*Internal LOC was created. Model 3 of table 4 shows that the coefficient of the interaction-term is positive and significant (b = 0.25, p < 0.01). This is in line with hypothesis 3a. Hence, the negative relationship between workload and intrinsic motivation is less negative for auditors with an internal LOC.

Figure 2 gives insight in the interaction effect of the accepted hypothesis 3a. From this graph it can be derived that auditors with a high internal LOC suffer less from a high workload. As the workload increases, the intrinsic motivation of auditors with a high internal LOC slightly increases. Auditors that possess a low internal LOC are more affected by a high workload, since their intrinsic motivation decreases as workload increases.

For external LOC it is predicted in hypothesis 3b that the negative relationship between workload and intrinsic motivation is more negative for auditors with an external LOC. To test hypotheses 3b, the interaction term Workload*External LOC was created with the standardized

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workload and external LOC. Model 4 show that the coefficient of the interaction term is negative but not significant (b = -0.06, p > 0.1). The results do not confirm hypothesis 3b. Hypothesis 4a assumed that auditors’ intrinsic motivation is negatively associated with AQTB. The third model of table 3 shows that there is a significant negative association between intrinsic motivation and AQTB (b = -0.13, p < 0.05). Thus, hypotheses 4a is supported which means that a lower level of an auditor’s intrinsic motivation results in a greater likelihood that the auditor will engage in AQTB.

TABLE 3

Regression analysis on Audit Quality Threatening Behavior

Model 1 Model 2 Model 3

Intercept 2.92*** (0.20) 2.24*** (0.41) 3.55*** (0.38) Controls Female -0.17 (0.14) -0.17 (0.14) -0.17 (0.14) Work experience -0.11 (0.08) -0.09 (0.08) -0.06 (0.09) Big 4 -0.23 (0.17) -0.27 (0.17) -0.23 (0.17) Main effects Workload 0.14** (0.07) Intrinsic motivation -0.13** (0.7) R2 0.03 0.02 0.06 Adjusted R2 0.06 0.03 0.03 N = 170 auditors, *≤ 0.1 ** p ≤ 0.05 *** p ≤ 0.01

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5_{Locus of control (LOC)}

TABLE 4

Regression analysis on Intrinsic Motivation

Variables Model 1 Model 2 Model 3 Model 4

Constant 4.83*** (0.20) 6.58*** (0.43) 5.11*** (0.19) 4.83*** (0.19) Controls Female -0.00 (0.16) 0.00 (0.15) 0.17 (0.13) -0.00 (0.15) Work experience 0.41*** (0.09) 0.35*** (0.01) 0.29*** (0.08) 0.34*** (0.09) Big 4 0.05 (0.19) 0.15 (0.18) -0.04 (0.15) 0.20 (0.18) Main effects Workload -0.35*** (0.08) -0.19*** (0.06) -0.30*** Internal LOC5 0.32*** (0.06) External LOC -0.09* (0.07)

Two way interaction

Workload x Internal LOC 0.25***

(0.06)

Workload x External LOC -0.06

(0.07)

R2 0.11 0.21 0.42 0.22

Adjusted R2 0.09 0.19 0.72 0.19

N = 170 auditors, *≤ 0.1 ** p ≤ 0.05 *** p ≤ 0.01

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FIGURE 2

The relationship between workload and intrinsic motivation at different levels of internal locus of control (LOC)

Hypothesis 4b assumed that intrinsic motivation mediates the relationship between auditor workload and AQTB. To test this hypothesis, the PROCESS macro of Hayes (2018) is used with the 5000 bootstrapping technique, because this technique generates bias corrected confidence intervals and is more powerful than stepwise techniques (Veltrop, Hermes, Postma & Haan, 2015). The use of a 90% confidence interval is justified, because in this study directional hypotheses are used and this implies that it is possible to test one-sided. Hence, a 90% one-tailed confidence interval corresponds with a two-sided 95% confidence interval. From table 5 it can be seen that the bootstrapped 90% confidence interval does not include zero [0.01, 0.10]. This implies that there is an indirect effect of intrinsic motivation and therefore hypotheses 4b is accepted. 1 2 3 4 5 6 7 8

Low Workload High Workload

In tr insic m ot ivation _Low internal LOC High internal LOC

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TABLE 5

Indirect effect of workload on Audit Quality Threatening Behaviour through intrinsic motivation

Boot indirect effect

Bootstrap SE

Bootstrap 90% confidence interval

Lower bound Upper bound

Intrinsic motivation 0.05 0.03 0.016 0.10

N = 170 auditors. Bootstrap sample size is 5,000.

Hypotheses 5a predicted that the impact of workload on AQTB, through intrinsic motivation, is less strong for auditors with a higher internal LOC. Again the PROCESS macro with 5000 bootstrapping technique and a 90% confidence interval was used for the same reason as mentioned before. Table 6 shows that the bootstrapped 90% confidence interval includes zero for both the mean [0.00, 0.06] and a high internal LOC [-0.03, 0.02]. A low internal LOC does not include zero [0.01, 0.12]. The results imply that for a lower internal LOC the negative indirect relationship between workload and AQTB is stronger and this strength decreases when the internal LOC increases. Hence, hypothesis 5a can be accepted.

Finally, hypothesis 5b assumed that the impact of auditors’ workload on AQTB, through intrinsic motivation, is stronger for auditors with a higher external LOC. According to the PROCESS macro test, there is no significant indirect relationship (through intrinsic motivation) between workload and AQTB when an auditor possesses a high external LOC. The bootstrapped 90% confidence interval includes zero for a low external LOC [-0.01, 0.10], the mean [-0.00, 0.10] and a high external LOC [-0.00, 0.12]. Therefore, hypothesis 5b is rejected.

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TABLE 6

Intrinsic motivation at different values of internal locus of control (LOC)

Conditional indirect effect at Internal LOC = Mean ± 1 SD

Intrinsic motivation Boot indirect effect

Bootstrap SE

-1 SD (4.50) 0.06 0.04 0.017 0.12

Mean (5.25) 0.03 0.02 0.00 0.06

+1 SD (6.00) -0.00 0.01 -0.03 0.02

N = 170 auditors. Bootstrap sample size is 5,000.

7_{Rounded up}

TABLE 7

Intrinsic motivation at different values of external locus of control (LOC)

Conditional indirect effect at External LOC = Mean ± 1 SD

Bootstrap SE

-1 SD (2.00) 0.04 0.03 -0.01 0.10

Mean (2.75) 0.04 0.03 -0.00 0.10

+1 SD (3.75) 0.05 0.03 -0.00 0.12

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4.3 Robustness check

A robustness check was applied to the variables internal LOC and external LOC. The two variables are combined into one variable in which a high score indicates an internal LOC and a low score indicates an external LOC. To be able to conduct this check, the scales of the external LOC items were reversed and the variable LOC was created with the four items that measure internal LOC and the four reversed items that measure external LOC. It should be noticed that the eight items together yield a Cronbach’s alpha of 0.64. The new variable is used to test the hypotheses 3a, 3b, 5a and 5b again.

Table 8 presents the results of the robustness check that applies to hypotheses 3a and 3b. The coefficient of the interaction-term is positive and significant (b = 0.23, p < 0.01). This result indicates that the relationship between workload and intrinsic motivation is less negative for high levels of LOC and more negative for low levels of LOC. Therefore, hypothesis 3a can be accepted, because the negative relationship between workload and intrinsic motivation is less negative for auditors with an internal LOC (high level of LOC). This is in line with the results of the regression analysis of table 4. Hypothesis 3b can be accepted too from this check, because the negative relationship between workload and intrinsic motivation becomes stronger when an auditors features an external LOC (low level of LOC). This is not in line with the regression analysis. However, combining the items of internal LOC and external LOC into one construct automatically results in the acceptance of hypothesis 5b when hypothesis 5a is accepted. Therefore, it still can be stated from table 8 that the results in this study are robust. Table 9 shows the outcomes from the robustness check applied to hypotheses 5a and 5b. The PROCESS macro results show that zero is included for a high level of LOC (i.e. internal LOC) [-0.02, 0.03]. For low levels of LOC (i.e. external LOC) [0.01, 0.13] and the mean [0.01, 0.07] zero is not included. Hence, the negative indirect relationship between workload an AQTB is stronger for auditors with an external LOC and becomes weaker when an auditor possesses an internal LOC. Both hypothesis 5a and 5b should be accepted based on this robustness check. Again, acceptance of hypothesis 5b is not in accordance with the results from the PROCESS macro in table 7. As mentioned before, hypothesis 5b is automatically accepted when hypothesis 5a is confirmed, due to the merge of the internal and external LOC items. Therefore, table 9 gives evidence for the robustness of the results in this study.

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8_{Locus of control (LOC)}

TABLE 8

Regression analysis of intrinsic motivation

Variables Model 1 Model 2

Constant 4.83*** (0.20) 4.96*** (0.20) Controls Female -0.00 (0.16) -0.07 (0.14) Work experience 0.41*** (0.09) 0.29*** (0.08) Big 4 0.05 (0.19) 0.16 (0.16) Main effects Workload -0.24*** (0.06) LOC8 _0.26*** (0.07)

Two way interaction

Workload x LOC -0.23***

(0.07)

R2 0.11 0.36

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TABLE 9

Intrinsic motivation at different values of LOC

Conditional indirect effect at LOC = Mean ± 1 SD

Bootstrap SE

-1 SD (4.63) 0.06 0.04 0.019 0.14

Mean (5.31) 0.03 0.02 0.0110 0.07

+1 SD (5.88) 0.00 0.02 -0.02 0.03

N = 170 auditors. Bootstrap sample size is 5,000.

9_{Rounded up}

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5. DISCUSSION AND CONCLUSION

Workload is a major problem in the accounting profession, because its impact on audit quality according to several auditors and research (Sterk, 2019; Pierce & Sweeney, 2006). However, some authors state and show that workload challenges auditors and increases their performance and the audit quality they deliver (Amiruddin, 2019). In this study I tried to account for those contradicting results by examining how, why and when workload impacts audit quality threatening behaviour (AQTB). Intrinsic motivation was used as mediator in the relationship between workload and AQTB to answer why auditors would engage in AQTB. To take into account the personal differences among auditors, internal and external locus of control (LOC) were incorporated to give insight in when auditors are more inclined to engage in AQTB. First, I found a significant positive effect of workload on AQTB. The presence of workload among auditors increases the likelihood that they will engage in AQTB. Since AQTB lowers the audit quality, it can be stated that workload is an important obstacle for auditors in delivering quality. This result is in accordance with other studies in the field of workload and AQTB (López & Peters, 2012; Manurung et al., 2018). For example, López and Peters (2012) found that the audit quality (measured by abnormal accruals) is lower during the busy season when the workload is high. Adding to their research, I found that intrinsic motivation has a significant negative direct effect on AQTB and that workload indirectly influences AQTB by means of intrinsic motivation. Thus, auditors engage in AQTB, because their intrinsic motivation decreases by the presence of workload. Intrinsic motivation is the important cognitive driver for auditors to engage or not engage in AQTB when experiencing workload. This is an important implication and to the best of my knowledge a new finding in the research field.

Second, the results showed that workload has a significant negative effect on intrinsic motivation. This implies that higher levels of workload decrease the intrinsic motivation of auditors. This result is in accordance with the self-determination theory (SDT) (Gagné & Deci, 2005). According to this theory some basic psychological needs are necessary to fuel intrinsic motivation. One of this need is the feeling of an individual of being free to do what he/she has chosen to do (Guay et al., 2000). Workload constraints this feeling and therefore decreases the intrinsic motivation of auditors (Ryan & Deci, 2000). This finding is important for existing literature, because it might explain the contradicting results in the research field. Although it is known that constraints in the work environment diminish the intrinsic motivation, no research is executed to examine the relationship between the common workload in the audit profession

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and intrinsic motivation (Olafsen & Halvari, 2017). Hence, this study adds to the research field by showing that workload decreases the auditors’ intrinsic motivation. This relationship is, however, dependent on the personal characteristics of auditors. I found that the intrinsic motivation of auditors is less influenced by workload when the auditors are featured by a high internal LOC. Although it was hypothesized that the relationship between workload and intrinsic motivation is stronger when an auditor possesses an external LOC, no support for this hypothesis was found. Explanation for the results might be that individuals with an external LOC tend to not engage in coping or adaptive strategies in comparison to internals (Sprung & Jex, 2012). Since internals tend to react to workload and try to cope with it, it is logic that a significant effect is found. Externals on the other hand do not adapt to the high workload and therefore the relationship between workload and intrinsic motivation will not change for auditors with an external LOC. The results of the robustness check, however, found support for both the moderating effect of internal LOC and external LOC. In the robustness check the variable LOC was generated and a high score implied an internal LOC and a low score on the variable implied an external LOC. The robustness check strengthens the methodology of this research, because it shows that separating the internal LOC items from the external LOC items prevents that hypothesis 3b was wrongly accepted.

Finally, I tested the mediating and moderating effect in one model. It appeared from the results that the indirect effect of workload on AQTB through intrinsic motivation, is less strong for auditors with an internal LOC. Thus, auditors with an internal LOC are less demotivated by high levels of workload and are therefore less tempted to engage in AQTB. However, the results do not confirm that the indirect effect of workload on AQTB through intrinsic motivation is stronger for auditors with an external LOC. As mentioned before, the results can be attributed to the fact that internals, in contrast to externals, tend to adapt to the high workload (Sprung & Jex, 2012). Again, the results from the robustness check would have resulted in acceptance of both hypothesis. As mentioned before, the robustness check strengthens the used method in this research. By separately examining internal LOC from external LOC, I avoided that hypothesis 5b was accepted unjustified. Although several academics indicate that personal characteristics influence the way workload is perceived (Kim & Beehr, 2018), existing literature lacks studies that examine how auditors’ character influence the effect of workload on AQTB and audit quality. By examining the influence of internal and external LOC on the indirect effect of workload on AQTB this study is renewing in the research field.

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5.1 Limitations and future research

It is important to recognize that this study is not without limitations. First of all, the measurement of AQTB in the survey is subject to a social desirability bias. In the survey several measures are taken like, for example, guaranteeing confidentiality and anonymity to minimize this type of bias. During the analysis of the results, the social desirability bias is also taken into account. One-tailed tests in the regression analyses and 90% confidence intervals in the PROCESS macro analyses are used for the hypotheses. Nevertheless, the social desirability bias cannot be completely ruled out. Future research could reinforce the results by replacing AQTB by variables that are less subject to the social desirability bias like, for example, accrual quality (Chen et al., 2020). López and Peters (2012) demonstrated the existence of an association between workload and accrual quality. Adding intrinsic motivation and LOC to this relationship in future research could decrease the possibility of the social desirability bias and strengthen the results of this study. Another suggestion for future research is to replace the survey method by an experiment. In an experimental environment, auditors could be asked to complete a specific task linked to their work activities in a specific time limit and under certain pressures. Also, the sample in this study only consists of Dutch auditors. Country and cultural differences make it more difficult to generalize the results to other countries. However, at the same time the topics workload, LOC and AQTB are rather fundamental and have external validity outside the Netherlands. Workload and AQTB is a global concern. Several studies mention the increased attention that workload is receiving from international boards like the Public Company Accounting Oversight Board (PCAOB) and the International Auditing and Assurance Standards Board (IAASB), because of the negative impact on AQTB (e.g., Persellin et al., 2019). Future research could increase external validity by replicating this study across different countries. Furthermore, future studies could include both auditors with two years of work experience and auditors with less than two years of experience to enable the comparison of those two groups.

Finally, a limitation of this study is the time period in which the auditors participated in the study. The survey was only sent out in April during the busy season. During the busy season the workload is structurally higher than other seasons of the year. Besides, the auditors might have less time available to respond to the questionnaire accurately. To reinforce the results of this study, future research could sent out surveys in different periods of the year and differences between the time periods could be examined. Longitudinal research, in which repeated measures are collected of the same group of participants, could also be an appropriate method

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to address the limitation of this study (Ployhart & Vandenberg, 2010). This type of research could give more insight in the changing environments of auditors during the year or during several years.

5.2 Practical implications

Despite the limitations, this study makes several practical contributions. First, this study shows that workload results in AQTB through intrinsic motivation. Apparently, workload decreases the auditor’ intrinsic motivation and this causes the auditor to engage in AQTB. This finding is, to the best of my knowledge, new in the existing accounting literature. Currently, according to an investigation of the Dutch government, audit firms are not incorporating the workload issue in their policies and are struggling with the high demanding circumstances (Pols, 2020). The finding that intrinsic motivation is important in circumstances of high workload, may help audit firms to cope with the high workload in, for example, the busy season. Stimulating the intrinsic motivation in periods with high workload can diminish the negative effect of workload on audit quality.

Second, the findings proved that auditors with an internal LOC are less affected by workload. Most auditors are intrinsically demotivated by the pressure from workload, but internals tend to be intrinsically motivated by workload. Auditors with an internal LOC are better able to cope with the workload than other auditors in the firm. For audit firms this is relevant, because it shows that the firms should especially focus on auditors without an internal LOC. Time and resources are scarce in audit firms during high workload periods and therefore it is valuable to know what type of employees need encouragement and more motivation in their work. Notwithstanding the stable nature of LOC, prior research showed that cognitive training can enhance internal LOC (Wolinsky, van der Weg, Martin, Unverzagt, Willis, Marsiske, Rebok, Morris, Ball & Tennstedt, 2009). Therefore, another practical implication is that audit firms could incorporate cognitive training in their policies.

Finally, the ‘Monitoring Commissie Accountancy’ (MCA, commission that monitors the accounting profession), reported in 2020 that the audit quality is still not at the desired level. Among all causes and potential improvements, workload is one of the factors in the work environment that is receiving insufficient attention of audit firms. In the investigation of the MCA several board members of audit firms are unable to give specific examples of resources that auditors need to handle or diminish the workload (Monitoring Commissie Accountancy, 2020). Thus, audit firms are structurally confronted with workload and assumed to integrate policies for workload management, but they do not know how to effectively manage workload.

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This study gives audit firms insight in the necessities that should be provided to auditors to enable them to with workload during engagements. Besides, the MCA itself could use the outcomes of the study to develop guidelines for workload management for the accounting profession. This also simplifies the analysis and review of the current state and development of the audit quality in the profession.

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Haste makes waste: