Reducing underreporting by aggregating budgeted time

Research output: Contribution to journalArticlepeer-review


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 budget formatting procedure that reduces underreporting. Using an experiment, I document that individuals with higher underreporting incentives underreport less when given an aggregated budget relative to a disaggregated budget. When individuals have lower underreporting incentives, aggregating the budget has a smaller effect on underreporting. I also provide evidence of the process by performing a mediation analysis. In a second experiment, I examine a budget formatting procedure that reduces underreporting 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)
Pages (from-to)299-319
Number of pages21
JournalAccounting Review
Issue number5
StatePublished - Oct 18 2019


  • Aggregation
  • Auditor underreporting
  • Mental accounting

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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