How Did the COVID-19 Pandemic Affect Audit Fees and Delays?

We investigate the association of location-specific severity of the 2019 Coronavirus pandemic (COVID) with changes in audit fees and delays following the pandemic’s onset. Employing data on lengths of stay-at-home (S@H) mandates to proxy for COVID’s disrupting effects on audits, we find that audit fees did not change in response to initial S@H mandates. However, S@H is positively associated with increases in audit delays and in the likelihood of late filings. We drill down to explore three underlying mechanisms that can directionally moderate the associations between lengths of S@H and changes in the audit outcomes: increased audit risk, auditors’ likely reliance on virtual auditing tools, and difficulties in audit team coordination, and find results consistent with our expectations. Our findings are important for understanding the pandemic’s effect on audits and have implications for future audits in regard to virtual auditing and audit team coordination