TY - JOUR
T1 - IQ and Audit Quality
T2 - Do Smarter Auditors Deliver Better Audits?
AU - Kallunki, Jenni
AU - Kallunki, Juha Pekka
AU - Niemi, Lasse
AU - Nilsson, Henrik
AU - Aobdia, Daniel
N1 - Funding Information:
* Accepted by Clive Lennox. An earlier version of this paper was presented at the 2017 Contemporary Accounting Research Conference, generously supported by the Chartered Professional Accountants of Canada. We are grateful to two anonymous reviewers, Clive Lennox, and Michael Welker for insightful comments that have greatly improved this paper. We also thank Eli Amir, Daniel Aobdia (the discussant), Jere Francis, Mattias Hamberg, Kathleen Harris, Tomas Hjelström, Steven Kachelmeier, Patrick Kielty, S. M. Khalid Nainar, Per Olsson, Thomas Omer, Luke Phelps, Petri Sahlström, Hanna Setterberg, Heidi Vander Bauwhede, participants at the 2017 Contemporary Accounting Research Conference, the 2017 University of Florida International Conference on Assurance and Governance, and the 6th EIASM Workshop on Audit Quality, and seminar participants at Aalto University, the University of Bristol, the University of Exeter, WHU—Otto Beisheim School of Management, CPA Canada—Accounting and Governance Research Centre, the University of Ottawa, and the University of Maastricht for numerous comments and suggestions. We acknowledge Euro-clear Sweden, Finansinspektionen, the Swedish Tax Authorities, and the Swedish Armed Forces for providing the requisite data, as well as Handelsbanken Research Foundation, the Swedish Research Council (VR), Finnish Savings Banks Group Research Foundation, Marcus Wallenberg Research Foundation, OP Group Research Foundation, Tauno Tönning Founda-tion, Suomen Arvopaperimarkkinoiden Edistämissäätiö, Finnish Cultural Foundation, and Academy of Finland (Project #277055) for financial support. This study has been evaluated and approved by the Regional Ethical Review Board in Umeå, Sweden (DNR 08:074 Ö, DNR I3-0449/2009 and 2010-200-32 Ö). All remaining errors are our own. Data availabil-ity: Data sources are described in the article. Data requests should be directed to the administrator of each database. † Corresponding author.
Publisher Copyright:
© CAAA
PY - 2019/9/1
Y1 - 2019/9/1
N2 - This study examines the role of an individual auditor's cognitive ability in delivering high-quality audits. Our results from analyzing archival data from Sweden show that audit partners' IQ scores obtained from psychological tests are positively associated with going-concern audit reporting accuracy and audit fee premiums. We also find some, albeit weak, evidence that audit partners' IQ scores are negatively associated with the income-increasing abnormal accruals of the client. These results suggest that, although audit services are standardized through various control mechanisms and audits are conducted by teams rather than by individual auditors, the cognitive ability of audit partners responsible for an audit remains important in delivering high-quality audit services.
AB - This study examines the role of an individual auditor's cognitive ability in delivering high-quality audits. Our results from analyzing archival data from Sweden show that audit partners' IQ scores obtained from psychological tests are positively associated with going-concern audit reporting accuracy and audit fee premiums. We also find some, albeit weak, evidence that audit partners' IQ scores are negatively associated with the income-increasing abnormal accruals of the client. These results suggest that, although audit services are standardized through various control mechanisms and audits are conducted by teams rather than by individual auditors, the cognitive ability of audit partners responsible for an audit remains important in delivering high-quality audit services.
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U2 - 10.1111/1911-3846.12485
DO - 10.1111/1911-3846.12485
M3 - Article
AN - SCOPUS:85070102588
SN - 0823-9150
VL - 36
SP - 1373
EP - 1416
JO - Contemporary Accounting Research
JF - Contemporary Accounting Research
IS - 3
ER -