Auditors' Use of Experts: Implications for Audit Quality and Audit Fees

ABSTRACT The audit environment is increasingly complex, and stakeholders are demanding higher‐quality audits. As a result, auditors are increasingly relying on experts across various fields, especially in areas with high estimation uncertainty. While this approach aims to improve audit quality, it has cost implications. Recent studies that used PCAOB data from large US firms have offered valuable insights regarding the general use of experts. Using hand‐collected audit reports data from Norwegian listed companies from 2016 to 2019, we build on the prior insights by focusing on the specific use of experts in high‐risk areas of audit engagements. We find that the use of experts is positively associated with audit fees and negatively associated with absolute discretionary accruals, suggesting higher audit quality. This finding thus extends prior studies by emphasizing that the impact of experts on audit quality is significantly influenced by the specific areas of the audit engagement within which they are deployed. Therefore, our results suggest that to achieve the desired benefits and justify the associated incremental costs, experts should be strategically deployed in the most critical areas of the audit.