The Impacts of Regulatory and Litigation Challenges on Auditors: A Systematic Literature Review

This systematic literature review examines the impact of regulatory and litigation challenges on auditors and audit quality. In recent decades, corporate scandals and regulatory reforms have intensified oversight of the auditing profession, increasing both compliance requirements and legal exposure for auditors. The purpose of this study is to synthesize existing empirical evidence on how regulatory pressure and litigation risk influence auditor behavior, audit processes, and overall audit quality. Using a systematic review methodology, relevant studies published between 2010 and 2025 were identified from major academic databases. An initial sample of 250 articles was collected. Following the PRISMA screening and eligibility criteria, 20 high-quality studies were selected for final analysis and synthesis. The findings indicate that increased regulatory requirements have generally enhanced audit quality by strengthening accountability, documentation practices, and professional skepticism. However, these benefits are accompanied by higher compliance costs, increased auditor workload, and elevated levels of professional stress. In addition, litigation risk significantly influences auditor behavior, encouraging conservative reporting, expanded audit procedures, higher audit fees, and greater risk-avoidance in client acceptance decisions. While such defensive auditing practices may reduce audit failure risk, they can also limit auditor independence and efficiency. The review also identifies notable gaps in existing literature, particularly the lack of longitudinal studies and limited research focused on emerging markets. The study concludes that while regulation and litigation play a critical role in improving audit quality, policymakers should adopt balanced and supportive regulatory frameworks that enhance effectiveness without imposing excessive administrative or legal burdens on auditors.