| Senior level auditors face contrasting pressures when performing a financial statement audit. The contrasting pressures stem from the desire to perform an audit in accordance with Generally Accepted Auditing Standards (GARS) and to perform an audit that is profitable. Performing an audit in accordance with GAAS generally promotes an increase in the amount of testing; whereas, performing a profitable audit generally promotes a decrease in the amount of testing. This research experimentally tests how the seriousness of interim evidence findings, profit pressure, and the relatedness of accounts affect the amount of testing a senior auditor plans to perform for a year-end audit. Results indicate the following primary findings: (1) auditors increase planned audit hours for more serious interim evidence findings, (2) auditors increase planned audit hours more for interim evidence findings pertaining to accounts that are more closely related to each other, and (3) when two accounts are highly related, auditors increase planned audit hours less as the seriousness of interim evidence increases when profit pressure is high rather than low. These results indicate that auditors may reduce audit quality for highly related accounts, in the presence of profit pressure, when interim evidence findings reflect a serious problem. |
