Good hours, bad hours and auditors' defence mechanisms in audit firms

Purpose - The aim of the research is to investigate, using a field survey, the concept of underreporting of time (URT), from both an individual and organisational perspective as a defence mechanism for coping with time budget pressure. Design/methodology/approach - Big Four audit partners and seniors are interviewed regarding the factors that motivate staff auditors to engage in manipulation of time records and the consequences of the behaviour for individual auditors and audit firms. Findings - Findings indicate that time record manipulation is not a single type of activity as suggested previously, but includes a variety of behaviours, six of which are identified in the study. Each of these constitutes a very different type of defence mechanism, motivated by different influences and resulting in different outcomes for the individual and the organisation. The firms engage in a defence mechanism characterised by a series of mixed messages to avoid dealing with inherent cost/quality conflicts and elements of this mechanism become embedded in routine activities at different levels in the firms. Research limitations/implications - The implications for audit firms vary with the type of time record manipulation and future research therefore needs to concentrate on a closer examination of the various practices that make up URT as identified in this study. Originality/value - The insights provided by the research are used to explain apparently conflicting arguments in the literature and to set out implications for research and practice.