A recent study published by the American Accounting Association finds auditors don’t place a premium on work-life balance, but the quality of their audits suffers if that balance is absent.

“The conventional wisdom is that job satisfaction and work-life balance are tied to the quality of our work, but nobody had actually tested this for auditors,” said Jagan Krishnan, co-author of the study and a professor of accounting at Temple University.
“We wanted to answer several related questions,” said Joshua Khavis, co-author of the study and an assistant professor of accounting at the University at Buffalo. “What do accounting employees think about their employers? Does job satisfaction relate to the quality of the firm’s audits? What about work-life balance? The answers were surprising.”


To begin addressing these questions, the researchers retrieved data from the jobs website GlassDoor.com, which features company reviews by employees. The researchers ultimately examined 19,673 employee reviews of 137 accounting firms. The reviews offered data on employee satisfaction across many different aspects of the workplace, including compensation, career opportunities, and work-life balance.
The researchers used that data to compute employee rating scores for each accounting firm for each year. They then matched each firm with its clients for the relevant year and looked at each client’s outcomes. This allowed the researchers to establish the quality of each firm’s audits in the given year.


The researchers used computational models to account for extraneous variables, and ultimately found that “career opportunities,” “senior management,” and “culture and values” were the workplace aspects most closely associated with employee satisfaction. Surprisingly, “compensation and benefits” and “work-life balance” were least associated with satisfaction.


However, the researchers also found that job satisfaction was not associated with audit quality.
“Instead, we found that work-life balance was associated with high quality audits,”
Khavis said.


“Our interpretation is that many of the people reviewing employers online were young folks coming right out of college, and they attach more importance to career opportunities and so on, compared to work-life balance,” Krishnan said. “But being overworked affects overall audit quality. Most people understand that when you are overworked, you are more likely to make mistakes. Job satisfaction can’t make up for that.


“For accounting firms,” Krishnan added, “it drives home that recruiting and retaining good personnel isn’t enough. Work-life balance is important to ensure auditors do their jobs well, certifying the quality of financial statements people rely on.”
The paper, “Employee Satisfaction and Work-Life Balance in Accounting Firms and Audit Quality,” is published in Auditing: A Journal of Practice & Theory.


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