계속감사기간과 표준감사시간 및 감사품질의 관계 : 실제감사시간과 계약감사시간의 차이를 중심으로

Abstract

The Act on External Audit of Stock Companies was fully amended in 2017 to improve audit quality. Standard audit hours are defined as audit hours that auditors must spend to comply with auditing standards and maintain high audit service quality, implemented as part of the New External Audit Law. Auditors are responsible for calculating standard audit hours and using them as a reference when agreeing on contractual audit hours with a client. However, actual audit hours may differ from the contractual audit hours due to the circumstances of a client and various internal and external audit issues. This study hypothesizes that the agency problem between the auditor and client affects the management of standard audit hours during the calculation and application process. Despite regulatory authorities’ expectations to strengthen auditor independence by implementing the standard audit hours system or the periodic auditor designation system, researchers have yet to draw a clear conclusion on the relationship between long auditor tenure and audit service quality. This ambiguity arises from conflicting theoretical and empirical evidence suggesting that long auditor tenure may impair auditor independence or improve auditor competence. Within this theoretical framework, this study empirically analyzes how the relationship between the standard audit hours system and audit service quality changes with auditor tenure, given the trade-off between auditor independence and auditor competence. Specifically, this study observes the regression coefficients of the difference between actual audit hours and standard audit hours in relation to discretionary accruals across different audit contract periods: 1 cycle (1-3 years), 2 cycles (4-6 years), 3 cycles (7-9 years), and more than 10 years. The results indicate that only during 2 cycles (4-6 years) do actual audit hours exceeding standard audit hours effectively restrain accrual-based earnings management. Additionally, this phenomenon is consistently observed when (1) sampling Big4 versus non-Big4 audit firms and (2) conducting analysis using dummy variables for auditor tenure. Previous studies have focused on identifying the relationship between the difference in actual audit hours and standard audit hours and audit service quality proxies. This study provides empirical evidence that the agency problem should be considered in the calculation and application of the standard audit hours system. The findings of this study suggest that frequent auditor rotation may negatively impact the effectiveness of the standard audit hours system, implying that policy makers and practitioners need to develop measures to prevent deterioration in the management of standard audit hours and audit service quality immediately following auditor rotation.