The effect of management budgetary controls on audit planning



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In the audit planning process, the auditor considers analytical evidence and the client's history and makes a judgement decision about the preliminary plan of audit intensity. There has been extensive research on this audit planning process. Various factors affecting the auditor's decisions concerning the audit have been investigated. However, there have not been investigations of how management controls may impact the audit planning process. This research investigated one aspect of the audit planning process. Rather than examining management controls in general, this project considered a specific management control, the budget and its use in performance reporting. The model had one dependent variable, planned audit intensity, and three independent variables. The independent variable, budget, had three levels: (1) no budget; (2) planning budget; and (3) control budget. The independent variable, position within the firm, had three levels: (1) partner; (2) manager; and (3) senior. There were four different firms participating in the study so the independent variable firm affiliation had four levels. Years of audit experience was included in the model as a covariate. [...]