Audit Quality Under Remote Working Arrangement: The Role of Technology Competency

ABSTRACT Using comprehensive labor market data to measure client firms’ workforce technology competency, this study investigates how companies’ workforce technology competency may mitigate the deterioration of audit quality under the remote working arrangement following COVID-19. Our results suggest that after the COVID-19 outbreak, companies’ accrual quality has decreased, indicating a deterioration of audit quality. The negative impact of remote audits during COVID-19 on audit quality is less pronounced in companies with greater workforce technology competency. Our results are robust to various alternative measures, local versus nonlocal client analysis, and nonhigh-technology industry analysis. Our study provides important implications for regulatory bodies and industry professionals to understand the importance of technological human capital in improving audit quality in remote auditing contexts. Data Availability: Data are obtained from the sources specified in the paper. JEL Classifications: M15; M42.