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http://dx.doi.org/10.22156/CS4SMB.2022.12.04.111

The Effect of Correction of Unaudited Financial Statements on Audit Hours  

Park, Hong-Kyu (Department of Accounting, Soongsil University)
Park, Kyungho (Department of Accounting, Soongsil University)
Lee, Yu-sun (Department of Accounting, Soongsil University)
Publication Information
Journal of Convergence for Information Technology / v.12, no.4, 2022 , pp. 111-118 More about this Journal
Abstract
This study is an analysis of auditor's response to audit risk. Specifically, audit risk is measured by the amount of correction of the current financial statements, and auditor's response is measured by the rate of change of audit hour in next auditing. The amount of correction can be viewed as audit risk recognized by auditor because the degree of auditor's correction will increase as the company's financial statement preparation ability is lower or the profit management amount is larger. Auditor's response is measured as the rate of change of audit hour because audit risk would be incorporated in audit plan. Although auditing is performed by a team, auditor's response would differ depending on their roles. It is expected the leaders who establish the audit plan and manage the audit quality would respond more sensitively to audit risk than the other auditors. The results show that when the amount of correction is greater than a certain level, auditors recognize it as audit risk and increase total(and leaders') audit hour in next year audit.
Keywords
Unaudited Financial Statements; Audit Hours; Rank-Specific Audit Hours; Audit Risk; Audit Quality;
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