Time pressure, task complexity, and audit effectiveness

Purpose – The purpose of this paper is to examine the relationships among time pressure (TP), task complexity (TC), and audit effectiveness (AE). It is motivated by the conflicting results reported in prior TP studies. Design/methodology/approach – The research hypotheses are developed using McGrath's interactional model of the Yerkes-Dodson Law. Data are collected using a two-treatment field experiment involving 63 public accountants. Findings – The results show a negative, interactional relationship among TP, TC, and AE. Research limitations/implications – The first limitation concerns the non-random procedure used to recruit public accounting firms and auditors. Second, there is the less than perfect operationalization of the TC construct. Practical implications – First, the findings suggest that public accounting firms may need to resist the urge to reduce the time allowed for performing compliance tests, and provide training to improve the detection rate for all type of compliance deviations. Second, the fact that the rate of change in AE, in response to changes in TP, is different for the two audit tasks studied, suggests that it may not be appropriate for audit planners to assume a uniform TP effect across the various tasks involved in an audit. This insight has implication for the trade-offs between the lower direct audit costs associated with tighter time budgets, and possible increases in audit risk associated with lower AE. Originality/value – Two unique aspects of this paper are the operationalization of TP as a continuous random variable and the use of z-scores to standardize the AE measure.