The Effectiveness and Efficiency of Auditors’ Remote Work during COVID-19

Author:

Morris Landi1ORCID,Hoitash Rani2,Hoitash Udi3ORCID

Affiliation:

1. Northern Arizona University

2. Bentley University

3. Northeastern University

Abstract

SUMMARY The COVID-19 pandemic introduced unprecedented challenges to the audits of public companies. Audit firms, in response, dedicated significant resources to maintain high-quality audit procedures. We leverage a difference-in-differences design to examine the effects of the pandemic on audit outcomes. Despite audit firm efforts, we find evidence of a decline in audit quality in the initial months of the COVID-19 pandemic. Further, in the early days of the pandemic, the SEC made available a unique one-time, 45-day extension to file the audited annual report. In this time period, we observe a significant increase in the likelihood of delayed filings, including those attributed to the auditors’ work. Our study informs regulators and audit firms about the broad impact of an unprecedented stressor on the audit process and on the efficacy of remote work. JEL Classifications: M4; M41; M42.

Publisher

American Accounting Association

Subject

Economics and Econometrics,Finance,Accounting

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