This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: Audit firms rely on partners to oversee audits and client relationships; managers to supervise teams and projects; and staff to perform much of the day-to-day work. The more audit partners and managers are involved in supervising and reviewing audit engagements, the better the audits tend to be, according to new research from the University at Buffalo School of Management.
Published in Contemporary Accounting Research, the study examines whether staffing leverage (the mix of experienced supervisors and less experienced staff when working together) is connected to audit quality. "While audit staff are typically considered the 'troops on the ground' who do most of the audit work, partners and managers play a critical role in reviewing the team's work and ensuring audit standards are followed," says study co-author Brandon Szerwo, Ph.D., associate professor of accounting and law in the UB School of Management. "The Public Company Accounting Oversight Board has proposed requiring audit firms to disclose partner and manager involvement in reviewing and supporting the audit work—information that could help investors and others better evaluate audit quality." To determine whether firms produce higher-quality audits when they have more partners and managers available to supervise audit staff, the researchers analyzed more than 41,000 audits of more than 5,700 companies at 20 large U.S. accounting firms from 2008–2022.
The accounting employment data were obtained from Revelio Labs, which converts data from more than 500 million LinkedIn profiles into structured proprietary data sets. Then, they grouped employees into partners, managers and other audit staff to calculate managerial supervision across offices. The researchers found that an office's ratio of partners and nonpartner managers to audit employees is a useful indicator of audit quality.
Offices with higher proportions of partners and managers had fewer financial misstatements and fewer problems identified during regulatory inspections. The relationship was stronger for more complex audits and in offices where employees reported higher satisfaction with senior management. "Effective oversight is not limited to the most senior people in an organization.
Even nonpartner managers provide context, judgment and feedback that can help employees recognize problems earlier and make better decisions, especially when the work is complex," says study co-author Joshua Khavis, Ph.D., assistant professor of accounting and law in the UB School of Management. "Managers should consider whether teams have enough experienced leaders available to coach employees and review important work." Szerwo and Khavis collaborated on the study with Mengtian Li, Ph.D., assistant professor of accounting and finance at UNC Greensboro Bryan School of Business and Economics. Khavis et al., Staffing Leverage at the Audit Office and Audit Quality, Contemporary Accounting Research (2026).
DOI: 10.1111/1911-3846.70081 BA art history, MA material culture. Former museum editor, paramedic, and transplant coordinator. Editing for Science X since 2021.
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