A Modified Audit Production Framework: Evaluating the Relative Efficiency of Audit Engagements

• 成果类型: Article
• 署名作者: Knechel, W. Robert; Rouse, Paul; Schelleman, Caren
• 署名单位: Maastricht University; University of Auckland
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2009.84.5.1607
• 发表日期: 2009
• 页码: 1607-1638
• 关键词: modeling undesirable factors; fees; services

摘要

We develop a model of audit production based on Data Envelopment Analysis (DEA) using labor cost as input and hours spent on evidence-gathering activities that determine the level of assurance as output. Client characteristics are considered exogenous factors that affect audit production as a whole. We apply the model to a sample of U.S.-based engagements from an international accounting firm. Results indicate that a constrained DEA model using variable returns to scale is appropriate for modeling audit production. We find that audits are more efficient for clients that are larger, have a December year-end, and are highly automated. Audits are less efficient when the auditor relies on internal control, tax services are provided, and the client has subsidiaries. We also find that a well-specified regression-based production model can control for factors that influence auditor efficiency. Finally, we find that inefficiencies are impounded in fees for some industries and firm offices.