Remote Auditing and Audit Quality: Evidence from the Field

SUMMARY

We investigate the impact of remote auditing on audit quality and identify the good practices auditors adopt to improve audit quality in remote auditing. The outbreak of the COVID-19 pandemic in China provides an opportune testing ground for analyzing this issue. Using both survey and archival data, we document that audit quality, on average, declines when auditors switch to remote auditing following the outbreak of the pandemic. More importantly, this decline is not an inherent consequence of remote work: audit quality is largely maintained when auditors enhance risk evaluation and data analysis, make timely adjustments to audit procedures, emphasize the sufficiency and reliability of digital evidence, and leverage information and communication technology. Our findings can help financial statement users better understand the quality of audits conducted virtually and offer implications for practitioners to improve audit quality in remote settings.

Data Availability: The archival data used in this study were obtained from the China Stock Market & Accounting Research (CSMAR) database and are available from the data provider. The survey data are not publicly available because they contain confidential information about respondents and their audit engagements.

JEL Classifications: M41; M42; O33.