Exploring the impact of transitioning from the conventional time-based budget model to a non-time-based (NTB) approach in auditing, the study Time Out: Auditor Perceptions and Audit Outcomes When Moving Away from a Time-Based Budget Audit Model by Erin M. Hawkins, Andrew H. Newman, Jesse C. Robertson, Chad M. Stefaniak, and Jeremy M. Vinson provides valuable insights. This research, conducted in collaboration with a regional public accounting firm, explores how such a shift affects auditor perceptions, teamwork, audit quality, and efficiency, providing insights into an alternative approach to audit planning and execution.
The NTB model removes time budgets and eliminates the need for auditors to track billable hours, offering greater autonomy and flexibility in how auditors allocate their efforts. Survey results from participants in the NTB pilot program highlight several benefits, including improved work-life balance, greater job satisfaction, and enhanced teamwork. Auditors appreciated the reduced pressure from performance evaluations tied to billable hours, as this allowed them to focus on delivering high-quality audits and value-added services to clients. These findings suggest that removing time budgets can create a more supportive work environment, fostering collaboration and innovation.
Despite concerns that eliminating time budgets might reduce audit efficiency, the study found no significant differences in the timing of audit procedure completions between the NTB model and the traditional approach. This suggests that auditors maintained their productivity and diligence without the constraints of time tracking. Moreover, the NTB model enabled auditors to provide more valuable insights to clients, such as recommendations for improving business processes and internal controls, thereby strengthening client relationships.
However, the study also acknowledges potential challenges associated with the NTB model. Some auditors expressed concerns about increased ambiguity in performance evaluations and the lack of clear benchmarks for task completion. Higher-ranking auditors were more likely to independently track their time during NTB engagements, indicating that entrenched habits from the time-based model may persist even in a more flexible system.
While the pilot program demonstrated promising results, the firm ultimately decided not to adopt the NTB model long-term, citing competing priorities rather than specific shortcomings of the approach. The researchers conclude that the NTB model offers valuable lessons for modernizing audit practices, particularly as emerging technologies and remote work continue to reshape the accounting profession. Firms considering such a transition are encouraged to weigh the qualitative benefits against potential implementation challenges, adapting the model to suit their unique operational needs.
For a deeper exploration of these findings, the article is published in Accounting Horizons here.