Underreporting and the agency problem
H1. There will be a disordinal interaction between staff
reporting accuracy and client desirability such that managers’
evaluations of staff will be highest for underreporters
on a more desirable client, and then decrease in the
following order: accurate reporters on a less desirable
client, underreporters on a less desirable client, and
accurate reporters on a more desirable client.
H2. Audit managers will be more likely to request a senior
for a different engagement when the senior underreports
than when the senior accurately reports exceeding the
budget.
H3. Audit partners will evaluate a senior who accurately
reports exceeding the budget higher than one who underreports.
H4. Audit partners will be more likely to request a senior
for a different engagement when the senior accurately
reports exceeding the budget than when the senior
underreports.