Reducing Underreporting by Aggregating Budgeted Time

Research output: Working paper


Underreporting, or reporting fewer hours than actually worked, is a prevalent behavior among auditors at all levels. Underreporting can result in negative consequences such as tight budgets and reductions in future audit quality. In this paper, I propose a low-cost reporting procedure that reduces underreporting. Using an experiment, I document that individuals with incentives to underreport report more accurately when reporting aggregated time alongside an aggregated budget relative to disaggregated time alongside a disaggregated budget. In contrast, when individuals do not face underreporting incentives aggregation does not influence misreporting. In a second experiment, I demonstrate a reporting procedure that achieves reporting accuracy while also mitigating the loss of data richness that results from aggregation. This study provides important insights to audit firms, partners, managers, and regulators who rely on audit hours for budgets, measures of staff efficiency, and measures of audit quality.
Original languageEnglish (US)
Number of pages38
StatePublished - Jun 14 2018


  • Auditor Underreporting
  • Aggregation
  • Mental Accounting


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