The impact of management practices on audit quality

Abstract

This study investigates the impact of time-budget pressure imposed on auditors by management in accounting firms within the context of a developing country, specifically, Saudi Arabia, and its effect on audit quality. The study’s primary objective was to elucidate the relationship between time-budget pressure and auditors' engagement in dysfunctional behaviours that diminish audit quality, precisely, premature sign-offs and underreporting time. Hypotheses were formulated and tested using a questionnaire and were examined using the Spearman correlation. The findings indicate that time-budget pressure prompts auditors to engage in dysfunctional behaviours, thereby reducing the quality of audits conducted by Saudi auditors. Nonetheless, this is not the sole factor influencing audit quality; other variables, such as the age of the auditors, also play a significant role. The study suggests that audit firms should prioritise quality over financial gains and offers several recommendations for audit firms to mitigate the likelihood of auditors engaging in behaviours that compromise audit quality. The proposed model provides a useful framework for future research on audit quality.