iXBRL Early Adoption, Audit Efforts and Audit Resource Allocation

This study examines how inline XBRL (iXBRL) early adoption impacts auditor efforts and audit resource allocation. While iXBRL can make financial reporting information accessible to a wide range of external stakeholders, the presentation format change should have no impact on auditor behavior. Audit firms note that presenting XBRL metadata on top of audited financial statements could lead to an expectations gap where external stakeholders believe that the inline tags have been audited despite no procedures being required. We find that iXBRL early adoption is associated with higher audit fees. Further, among non-adopting firms, utilizing an audit office or partner with iXBRL experience is associated with a negative audit effort spillover effect. Partner iXBRL experience is associated with a greater likelihood of an announcing a misstatement and a lower likelihood of detecting an internal control material weakness. We provide timely information on iXBRL adoption’s unintended auditor impact.