이익조정 변동성과 이익유연화 수준이 감사시간 및 감사보수에 미치는 영향

초록

Auditors implement a preliminary evaluation on an overall audit risk of audit tasks together with understanding of client firms before they carry out audit tasks and based on this establish audit plans and determine nature, timing and extent of audit procedures. In this process, the accounting practice custom of client firms which have formed over a long period of time is highly likely to be used as an indicator to estimate in advance the possibility for financial statements to contain frauds or misstatements. For instance, if client firms have the accounting custom to carry out earnings management on reported income, auditors will evaluate highly the possibility that financial statements contain frauds or misstatements, and make an additional audit effort. This study has two purposes like the following. The first purpose of this study is to look into whether an evaluation of auditors on the accounting practice custom of client firms is related with auditor's effort on audit tasks. In the position of auditors, as client firms have the accounting practice custom to carry out earnings management, namely, the bigger the volatility of earnings management, the more highly they evaluate audit risks. Also, auditors will make an additional audit effort to decrease the audit risk. In order to test this, we analyze the effect of the volatility of discretionary accruals and performance matched discretionary accruals which were used as proxies of earnings management in many preceding studies on audit hours and audit fees. The volatility of earnings management can be increased largely for two reasons. First, when managers carry out earnings management to gain a private profit of himself, the volatility of earnings management can be increased. Second, the volatility of earnings management can be increased for firms which implement income smoothing. According to preceding studies on income smoothing, managers use discretionary accruals as means to implement income smoothing. Therefore, depending on the degree of implementing income smoothing, the volatility of earnings management are determined. The second purpose of this study is to analyze an evaluation of auditors on the volatility of earnings management and to look into whether such an evaluation could be changed depending on the level of income smoothing. If auditors consider income smoothing positively, it is highly likely that they would evaluate an audit risk as being low about the volatility of earnings management of firms having high level of income smoothing. As a result, it reveals that audit hours are positively related to the volatility of earnings management of client firms. Also, results show that as volatility of earnings management of client firms increases, auditors charge additional audit fees. These result implies that the more client firms have propensity of earnings management, the higher auditors evaluate audit risk and they make additional effort for audit. It revealed that the higher the level of income smoothing, the weaker the relation between the volatility of earnings management of client firms and the audit hours(audit fees) become. This result implies that auditors evaluate the audit risk of earnings management for income smoothing as being low. This study provides empirical evidences on audit quality in the aspect of audit implement stage by looking into the response of auditors to factors of the audit risk in the process in which auditors plan audit procedures and implement audit tasks. Therefore, the results are expected to contribute to development of an evaluation model for audit risk in the future. Compared to investors, auditors generally have more professional knowledge on accounting information and occupies information superiority about client firms. Accordingly, the evaluation of auditors on income smoothing can have differentiation from the evaluation of investors. This study is thought to suggest additional implications in that it analyzes the evaluation of auditors on income smoothing in the situation where clear definition on income smoothing does not exist.

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