Planned audit hours: Do auditors use a same as last year strategy?

Audit efficiency is a key to audit firm success in the competitive marketplace for audit services (Mock & Wright, 1993). Reducing planned audit hours is one strategy auditors can use to be more efficient (Bierstaker & Wright, 1998). Yet, anecdotal evidence from practicing auditors suggests they often use a “same as last year” approach and some prior research indicates that auditors tend to “anchor” on the prior year plan (Kinney & Uecher, 1982, Wright, 1988; Bedard, 1989; Mock & Wright, 1999). This research provides evidence on auditors' willingness to depart from the prior year actual hours when developing a current year audit plan. An initial case presents auditors with a simple request to be efficient, a second case requests auditors to be efficient when presented with a prior year material error highlighted on the trial balance, and a third case requests auditors to be efficient when presented with a prior year material error in one audit area but no errors in other areas. The results for all three cases indicate that auditors did not use a “same as last year” strategy. Instead they planned the current year audit hours significantly below the prior year actual hours and provided a variety of techniques that could be used to improve audit efficiency.