This study aims to analyze the effect of time pressure and the ethical culture of audit firms on audit quality expressed through professional skepticism and reduced audit quality practices (RAQP). Furthermore, the study explores the moderating role of ethical culture in the relationship between the remaining variables.
This study uses a sample of 96 auditors, whose data were collected through an electronic questionnaire. The results were derived from the partial least squares–structural equation modeling method and necessity condition analysis.
The results show that the propensity to incur RAQP increases when auditors are subject to a context of greater time pressure and weak ethical culture. Moreover, ethical culture is positively associated with the auditors’ skepticism trait. The study shows that ethical culture is a necessary condition for professional skepticism, and that time pressure is also a factor that must be present for RAQP to occur. We found no evidence that the skeptical trait is influenced by time pressure and that ethical culture moderates the relationship between time pressure and audit quality.
This study reinforces the empirical evidence that the characteristics of audit firms are relevant in improving audit quality. By combining the logics of sufficiency and necessity, it is possible to better understand the causal relationship between audit quality, time pressure and ethical culture, advancing the theorization of the phenomena observed in auditing firms. The findings of this work are equally valuable for regulators and auditing firms to take initiatives to improve their performance in order to reinforce their social function.
