Managing Economic Policy Uncertainty in Auditor Local Offices

In this paper, we examine the association between economic policy uncertainty (EPU) and both audit fees and audit delay and whether certain characteristics of auditor local offices moderate these relationships. We find that auditors charge lower audit fees and have shorter audit delays during periods of high EPU than during periods of low EPU. Larger auditor offices and industry market leaders decrease audit fees and audit delay more than their counterparts when EPU is high. Auditors do not reduce audit fees for significant clients of a local office but increase audit effort as these clients experience longer audit delays when EPU is high.