This phase requires the development of a comprehensive methodology ?and results section. The submission must integrate refined elements from ?Phases 1 and 2 while presen

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Audit Quality in Remote Work Environments

Understanding the Auditing Issue

The proposal explores remote work audit quality because the pandemic-induced change toward remote auditing has both opportunities and threats to audit quality. The competence of technology and digital readiness influence the results because better client and auditor competency can boost audit effectiveness in remote environments. On the contrary, evidence gathering and mentoring may be hampered by weak preparedness or ineffective communication. Consequently, the discipline requires transparent tests connecting remote work set-ups, technology preparedness, and firm support into measurable quality proxies. This is a timely subject that is indicative of trends towards remote and hybrid auditing models. Firms continue to institutionalize flexible arrangements, regulators still monitor quality risks, and junior staff development requires new models in distributed teams. However, literature shows mixed results; some studies find positive effects, while others report lower audit quality in judgment-intensive tasks. The divergence highlights notable gaps, particularly regarding how work-life balance, technology readiness, and firm-level support mediate outcomes. Understanding these dynamics can guide audit firms, regulators, and stakeholders in designing policies to sustain and improve audit quality in the evolving remote work landscape.

Research Objectives

This study investigates how remote work arrangements influence audit quality by examining the mediating roles of technology readiness, work-life balance, and firm-level support. Specifically, the study seeks to determine whether enhanced technology competence at both the auditor and client level improves audit outcomes under remote conditions, assess how remote auditing affects auditor well-being and professional judgment, and evaluate the extent to which organizational policies, training, and mentoring systems mitigate potential risks to audit quality. By integrating archival audit quality measures from WRDS with survey-based data, the research aims to provide a robust framework for understanding remote auditing dynamics. The findings will benefit audit firms, regulators, and professional associations by guiding investments in digital infrastructure, workforce support, and hybrid work policies that sustain audit quality in evolving practice contexts.

Research Questions & Hypotheses

1. How does work-life balance affect audit quality in remote audit environments?

Hypothesis 1: Higher levels of auditor work-life balance are positively associated with audit quality in remote settings.

Variables

The dependent variable is audit quality, whereas the independent variables are work-life balance score, remote work hours ratio, workload intensity, auditor experience, audit firm size, and availability of flexibility policies.

Rationale

Prior studies highlight that improved work-life balance reduces burnout and enhances professional judgment, strengthening audit quality (Brenninkmeijer et al., 2018). Further, remote auditing can increase job satisfaction, which is closely tied to auditors’ ability to sustain high-quality work.

2. Does technology readiness (auditor and client) moderate the relationship between remote auditing and audit quality?

Hypothesis 2: Remote auditing positively affects audit quality when both auditor and client exhibit high technology readiness; the effect is more potent when client readiness is higher.

Variables

The dependent variable is audit quality, whereas the independent variables are remote audit usage, auditor technology readiness score, client technology readiness score, prior in-person audit familiarity with the client, access to digital audit tools, and training on remote tools.

Rationale

Client-side technology readiness significantly enhances audit quality under remote auditing conditions, whereas auditor readiness alone has a limited impact. Jin et al. (2022) further emphasize that technology competence shapes the effectiveness of remote audit work, supporting the inclusion of both auditor and client readiness in this model.

3. How does firm support influence audit quality in remote audits?

Hypothesis 3: Adequate firm support, such as training and prior in-person audit experience, mitigates potential adverse effects of remote auditing on audit quality.

Variables

The dependent variable is audit quality, whereas the independent variables are training hours on remote audit tools, prior on-site audit exposure, access to mentorship/supervision remotely, team audit complexity, audit engagement length, and audit documentation standards.

Rationale

There are challenges in mentoring and supervision under remote auditing. Adequate firm-level support mechanisms, including structured training and hybrid experience, can mitigate these risks and sustain audit quality. Jin et al. (2022) also note that technology competency reinforced by training enhances audit performance. Readiness at both auditor and client levels interacts with organizational support to determine quality outcomes.

Preliminary Literature Review

The move to remote auditing has produced an increasingly diverse body of research, although the findings on the impact of remote auditing on audit quality are contradictory.

Field evidence of the COVID-19 lockdowns in China as described by Jin et al. (2022) indicates that remote auditing has brought about poor audit quality because of the heavy workload, poor communication, and the difficulty of the auditor in gathering evidence. Nevertheless, they also conclude that these negative effects, including capitalising on digital evidence, updating procedures, and using data analytics, can be alleviated through adaptive practices. This implies that the quality of audit under remote work is not dimensionless but may be impacted strongly on the approach by auditor and support of firms.

Audit workloads are one of the perennial concerns in the audit quality literature. According to Persellin et al. (2019), auditors work beyond hours when the quality declines, especially during the peak season. High workloads impair judgement and professional scepticism, as well as job satisfaction, particularly among the junior employees. The findings are consistent with the literature in general which indicates workload stress to be one of the root causes of audit deficiencies.

Digital auditing environments are becoming a setting where technology readiness is becoming a significant moderator. In their study, Sigle et al. (2024) demonstrate that auditors' experience improves the detection of traditional risks. In contrast, only the auditors with high technological readiness prove efficient in detecting IT-related risks. Their findings highlight how experience is not enough and that auditors should constantly refresh digital competencies to maintain quality of the audit.

To support this, studies on governance mechanisms highlight using oversight as risk mitigation. Asgari Alouj and Nia (2023) discovered that, through risk management practices, the value of firms and audit results improves because of the effective audit committees. Their research emphasizes the significance of committee expertise and independence in helping to uphold audit quality in the changing work arrangements.

These pieces of evidence suggest that remote auditing poses a considerable threat to the quality of audit; the results of this method depend on the workload management, technological preparedness, and institutional support. It leaves a loophole for further empirical studies on the interaction of these factors in a hybrid and remote audit environment.

References

Asgari Alouj, H., & Nia, N. M. (2023). Investigating the moderating role of internal audit performance quality in the relationship between risk management and performance of companies listed on the Tehran Stock Exchange.  Asgari Alouj, H. & Maleki Nia, (2023). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4636122

Brenninkmeijer, A., Moonen, G., Debets, R., & Hock, B. (2018). Auditing standards and the European Court of Auditors (ECA) accountability.  Utrecht Law Review,  14(1). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3128771

Jin, Y., Tian, G., Wu, D., & Xin, X. (2022). Remote auditing and audit quality: evidence from the field.  Available at SSRN 4076612. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4076612&download=yes

Persellin, J. S., Schmidt, J. J., Vandervelde, S. D., & Wilkins, M. S. (2019). Auditor perceptions of audit workloads, audit quality, and job satisfaction.  Accounting horizons,  33(4), 95–117. https://dx.doi.org/10.2139/ssrn.2534492

Sigle, M., Muehlbacher, S., JM van der Hel, L. E., & Kirchler, E. (2024). Tax Audit Quality: The Role of Experience and Technology Readiness in a Digitalized World.  WU International Taxation Research Paper Series, (2024-02). https://dx.doi.org/10.2139/ssrn.4796000

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Phase 2 Research Assignment

Audit Quality in Remote Work Environments

Student Name: Claudia Alfaro Ponce & Matt Lord Course Title: ACG 6655 Date: 09/20/2025

1. Research Introduction

1.1 Establishing the Research Context

The auditing profession is experiencing rapid transformation in the aftermath of the COVID-19 pandemic, with one of the most profound shifts being the normalization of remote and hybrid auditing practices. Once considered a temporary response to global lockdowns, remote audits have become a lasting feature of the profession. This structural shift has created both opportunities and challenges for auditors, clients, and regulators. On one hand, digital platforms, secure data exchanges, and cloud-based documentation systems have enabled firms to perform many audit procedures with increased efficiency and flexibility. On the other hand, concerns remain about the sufficiency of evidence gathering, the maintenance of audit quality, and the development of junior staff in distributed work environments. Audit quality has traditionally depended on close client interaction, access to physical documentation, and team-based collaboration. Remote auditing changes these dynamics, requiring auditors to rely more heavily on digital communication tools and technological infrastructures. While technology has the potential to enhance efficiency and expand analytical capabilities, it also introduces new risks. Auditors may face difficulties in evaluating non-verbal cues during client interviews, conducting walkthroughs of client facilities, or mentoring junior staff in real time. The result is an environment in which the determinants of audit quality may be shifting in significant ways. The relevance of studying audit quality in remote environments lies in the profession’s ongoing transition toward hybrid models of practice. Firms are increasingly institutionalizing flexible arrangements as a permanent component of their operations, and regulators continue to monitor the potential risks these arrangements pose to quality assurance. Moreover, junior auditors—who historically developed their skills through in-person engagement—require new mentoring structures that fit remote contexts. At the same time, work-life balance, technology readiness, and organizational support have emerged as mediating factors that may determine whether remote auditing strengthens or weakens audit quality. This study situates itself at the intersection of these pressing concerns. It seeks to provide empirical and theoretical insights into how remote work environments affect audit quality, considering both the risks and opportunities created by technology and evolving workplace practices. By examining the mediating roles of technology readiness, work-life balance, and firm-level support, the research aims to shed light on how auditing firms can sustain high-quality outcomes in a rapidly changing professional landscape.

1.2 Research Problem

Despite its growing prominence, remote auditing remains insufficiently understood in terms of its impact on audit quality. Some studies report that remote auditing reduces audit quality, particularly in judgment-intensive tasks where in-person communication and physical verification are critical (Jin et al., 2022). These studies highlight risks related to heavy workloads, diminished supervision, and challenges in evidence gathering. Other research, however, suggests that digital tools and data analytics can enhance efficiency and mitigate some of these risks when auditors and clients exhibit strong technological readiness (Sigle et al., 2024). This divergence in the literature reveals a fundamental lack of clarity regarding the conditions under which remote auditing supports or undermines audit quality. The specific problem this study addresses is the absence of a comprehensive understanding of how mediating factors—particularly technology readiness, auditor work-life balance, and firm-level support—affect the quality of audits conducted in remote environments. Current regulatory frameworks and professional guidelines offer limited direction on best practices for sustaining quality in distributed audits. Moreover, the generalizability of existing findings is uncertain, as cultural and regional differences in firm policies and technological infrastructure may influence outcomes. This problem requires investigation because the profession is moving toward permanent hybrid models of auditing. Without a robust framework for understanding the risks and opportunities of remote auditing, audit firms may underinvest in critical areas such as digital training, workload management, and mentoring systems. Likewise, regulators and standard setters face difficulties in designing policies that ensure audit quality in evolving practice contexts. Failure to address these challenges could compromise audit effectiveness, erode stakeholder trust, and weaken the profession’s ability to adapt to technological and organizational changes. Accordingly, this study seeks to clarify the conditions under which remote auditing can sustain or enhance audit quality, and to provide practical insights for firms and regulators navigating this transition.

1.3 Research Questions and Objectives

Based on the research problem, the following questions and objectives guide this study: Research Question 1: How does work-life balance affect audit quality in remote audit environments? Objective: To assess the relationship between auditor well-being, professional judgment, and audit outcomes under remote conditions. Research Question 2: Does technology readiness (auditor and client) moderate the relationship between remote auditing and audit quality? Objective: To evaluate how the technological competence of both auditors and clients influences audit effectiveness in remote settings. Research Question 3: How does firm-level support influence audit quality in remote audits? Objective: To determine whether organizational mechanisms—such as training, mentoring, and supervision—mitigate risks to audit quality in remote environments. Together, these questions aim to disentangle the complex interplay between personal, technological, and organizational factors in shaping audit outcomes during remote engagements.

1.4 Research Significance

This research is significant for several reasons. First, it contributes to theoretical development by extending the audit quality literature to incorporate remote work dynamics. While prior studies have examined workload, professional skepticism, and audit methodologies, relatively few have integrated digital readiness, work-life balance, and organizational support as mediating factors in distributed audit contexts. By doing so, the study advances understanding of how non-traditional determinants influence audit outcomes. Second, the research offers practical contributions to audit firms. The findings will help firms design policies and systems that sustain quality in hybrid work environments. For example, evidence-based insights into the role of training, mentoring, and workload management can guide firms in building resilient models that balance flexibility with quality assurance. Likewise, understanding how client technology readiness interacts with auditor competence can inform investment decisions in digital infrastructure and collaborative platforms. Finally, the study has policy and regulatory implications. As standard setters and regulators grapple with the implications of remote and hybrid auditing, empirical evidence is needed to shape guidance and oversight mechanisms. This research will provide regulators with insights into the risks and safeguards relevant to distributed audits, enabling the development of policies that protect audit quality while accommodating evolving work practices. By addressing these gaps, the study not only informs scholarly discourse but also supports practitioners and regulators in adapting to the new realities of the auditing profession.

2. Literature Review

Overview of Remote Auditing The transition to remote auditing emerged as a necessity during the COVID-19 pandemic, when lockdowns and travel restrictions prevented in-person engagements. This disruption forced auditors and clients to adopt digital communication platforms, cloud-based data exchanges, and virtual walkthroughs. What began as an emergency response has since evolved into a structural shift, with many audit firms institutionalizing hybrid work models (Jin, Tian, Wu, & Xin, 2022). While remote auditing offers flexibility and cost savings, it also challenges traditional approaches to evidence collection, supervision, and team collaboration. The literature to date reflects this duality: some studies highlight efficiency gains from digital tools, while others raise concerns about diminished audit quality in judgment-intensive areas. Jin et al. (2022), for example, document evidence from the COVID-19 lockdowns in China and conclude that remote auditing can undermine audit quality due to heavy workloads, poor communication, and difficulty gathering sufficient audit evidence. Yet, their findings also suggest that adaptive practices—such as reliance on digital evidence and data analytics—can mitigate these risks. These insights illustrate that remote auditing’s impact on quality is not uniform but context-dependent, shaped by the readiness of both auditors and clients to navigate digital environments. Work-Life Balance and Audit Quality Work-life balance is a recurring theme in the audit quality literature, with particular salience in remote work contexts. Auditors often face intense workloads during peak seasons, which impair judgment, professional skepticism, and job satisfaction (Persellin, Schmidt, Vandervelde, & Wilkins, 2019). Remote auditing adds complexity to this issue. On one hand, flexible work arrangements can improve job satisfaction and reduce commuting stress. On the other, blurred boundaries between work and personal life may heighten stress and fatigue, undermining professional judgment. Brenninkmeijer, Moonen, Debets, and Hock (2018) emphasize that sustained work-life balance reduces burnout and enhances professional judgment, thereby supporting audit quality. In remote settings, however, maintaining this balance is challenging, as digital connectivity often extends working hours and reduces opportunities for in-person mentorship. These dynamics suggest that work-life balance acts as a mediator, with the potential to either reinforce or erode audit quality depending on how firms manage workloads and support staff in distributed environments. Technology Readiness and Audit Effectiveness A critical factor distinguishing successful remote audits from problematic ones is technology readiness. Sigle, Muehlbacher, van der Hel, and Kirchler (2024) show that auditors with high technological competence are more effective at detecting IT-related risks, whereas traditional experience alone is insufficient in digital contexts. Their findings highlight the need for auditors to continually update digital competencies to ensure audit quality in increasingly technology-driven environments. Client technology readiness is equally important. When clients lack the infrastructure or digital literacy to provide timely and secure access to audit evidence, auditors may struggle to complete procedures effectively. Conversely, high client readiness can enhance efficiency and transparency, reinforcing audit quality under remote conditions. Jin et al. (2022) also stress that technology competence at both auditor and client levels shapes outcomes, underscoring the interdependence of these factors in remote auditing environments. Firm-Level Support and Mentorship Firm-level support plays a pivotal role in sustaining audit quality during remote engagements. Remote settings reduce opportunities for face-to-face mentoring and on-the-job learning, which are critical for junior auditors’ development. Without adequate support, auditors may feel isolated, leading to reduced engagement and lower-quality outcomes. To address this, firms have begun investing in structured training programs, digital collaboration platforms, and hybrid engagement models that blend remote and on-site experiences. Asgari Alouj and Nia (2023) highlight the role of governance mechanisms, showing that effective audit committees and risk management practices enhance audit quality in changing work arrangements. Their findings suggest that institutional support—whether through formal governance structures or firm-level training programs—can mitigate the risks of remote auditing. Similarly, Jin et al. (2022) emphasize that structured firm support, including training on remote tools and mentoring systems, enhances technology competence and helps sustain audit performance. Synthesis and Gaps in the Literature Taken together, the literature suggests that the quality of audits conducted in remote environments depends on a complex interplay of individual, technological, and organizational factors. Work-life balance influences professional judgment and job satisfaction, while technology readiness determines the effectiveness of audit procedures. Firm-level support, through training, mentoring, and governance structures, provides a safeguard against the risks posed by remote work. However, the evidence remains fragmented and sometimes contradictory. For instance, while some studies emphasize the risks of diminished supervision and communication (Jin et al., 2022), others point to the potential for improved efficiency and enhanced analytical capabilities (Sigle et al., 2024). A notable gap lies in the integration of these factors into a unified framework. Most studies examine individual elements in isolation, such as workload or technology, but few explore how work-life balance, technology readiness, and firm support interact to shape audit outcomes in distributed contexts. Furthermore, regional and cultural differences in firm policies and digital infrastructures limit the generalizability of current findings (Brenninkmeijer et al., 2018). As audit firms move toward permanent hybrid models, there is a critical need for empirical research that disentangles these interactions and provides actionable guidance for practitioners and regulators. This study addresses these gaps by investigating how remote work arrangements influence audit quality through the mediating roles of technology readiness, work-life balance, and firm-level support. By integrating survey-based data with archival audit quality measures, the research aims to provide a comprehensive framework for understanding remote auditing dynamics and sustaining audit quality in evolving practice contexts.

2.1 Key Search Terms

The following search terms were developed based on the research questions and objectives: – Remote auditing – Virtual audits – Hybrid audit models – Audit quality and remote work – Technology readiness in auditing – Client digital competence and audits – Work-life balance and audit quality – Auditor workload stress – Firm support and audit mentoring – Digital transformation in auditing These terms were used individually and in combination with Boolean operators (e.g., 'remote auditing AND audit quality', 'technology readiness OR digital competence AND auditing') to refine results.

2.2 Databases and Search Strategy

To ensure a comprehensive literature review, searches were conducted across multiple academic databases, including: – Google Scholar – for broad access to peer-reviewed and working papers. – SSRN (Social Science Research Network) – to capture emerging and working papers in accounting and auditing. – JSTOR – for historical and theoretical perspectives on auditing practices. – EBSCOhost (Business Source Complete) – for peer-reviewed accounting and auditing articles. – University Library Databases – particularly access to The Accounting Review and Journal of Accounting Research. Search Strategy: – Filters were applied to include only articles from 2015–2024 to capture recent developments in remote and digital auditing. – Peer-reviewed journals were prioritized, though selected working papers (e.g., from SSRN) were included due to their relevance and timeliness. – Keywords were refined iteratively. For instance, 'remote auditing' initially returned a broad set of pandemic-related articles, which was then narrowed by combining with 'audit quality' and 'technology readiness'. – Reference lists of highly relevant articles (e.g., Jin et al., 2022; Persellin et al., 2019) were also mined for additional sources.

2.3 Review of Top Auditing Journals

As part of the strategy, articles from leading auditing journals were reviewed, including: – The Accounting Review – which frequently publishes studies on audit quality, auditor judgment, and the effects of digitalization. – Journal of Accounting Research (JAR) – providing theoretical and empirical insights into auditor behavior and audit processes. – Accounting Horizons – relevant for applied studies on auditor workload and job satisfaction (e.g., Persellin et al., 2019). These journals provided high-quality, peer-reviewed sources that complemented working papers and conference proceedings accessed through SSRN and other databases.

3. Identify Gaps in Literature

3.1 – Unexplored Areas

Though research on remote auditing has grown since the COVID-19 pandemic, there are still significant gaps in research. The majority of studies have focused on workload and time constraint pressures or technological adaptations in remote audit work (Persellin, Schmidt, Vandervelde, & Wilkins, 2019). There are few studies that have integrated work-life balance, technological readiness, and firm-level support into a framework for explaining audit quality in remote environments. Integration of these aspects is important because these dimensions frequently interact; for example, insufficient mentoring (firm support) may be a stressor for employees balancing work-life.

Another unexplored area is how sustainable remote auditing is over a longer period of time. The studies done on remote audit quality are largely reactive to the pandemic (Tian, Wu, & Xin, 2022), but do not explore the institutional changes that will need to be made by firms in order to commit to a full switch to remote audit. In short, there are no studies that analyze how remote auditing will evolve over time, specifically as firms adapt their training practices, supervision, and technological policies.

There is also a gap in research regarding cultural and regional differences. There is limited evidence on how North American firms (with distinct regulatory environments and digital infrastructures) experience remote auditing. For larger firms who conduct international audits, adapting to remote audits across different government regulatory bodies is a challenge that has not been researched.

3.2 – Methodological Limitations

Much of the existing research on this topic is met with methodological shortcomings, such as lack of quantitative evidence. Most of the studies conducted rely on surveys/interviews. While these do provide valuable perceptions of remote audit work, they do not always link directly to quantitative audit results. For example, Persellin (2019) captured the auditor perceptions of workload and overall satisfaction with the outcome of the audit, but their research does not directly measure audit quality metrics (restatements, risk assessment, etc.).

Another limitation is the scalability of current studies. Many studies have been completed on small, region specific samples which may not reflect broader industry conditions. Any studies completed in a single country or on a singular firm may only capture the localized practices and will not establish whether what is observed in these regions can be extrapolated to an entire population. Also, most prior research has been done over a time period of under a year, limited to peak pandemic time periods. This leaves to question how remote auditing will be operate as a standard practice.

This study will seek to address the limitations presented above by combining survey responses of auditor perceptions with data on audit quality outcomes, enabling the ability to triangulate findings to present more complete research.

4. Theoretical Framework

4.1 – Relevant Theories

Three theoretical perspectives provide the foundation for this research: Agency Theory, Job Demands-Resources (JD-R), and the Technology Acceptance Model (TAM).

Agency Theory is the concept that explains the relationship between agents (management) and principals (shareholders). Audit quality is important because

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