In the current competitive and litigious audit environment, auditors must appropriately balance cost control and effectiveness when planning audits. This study experimentally examines the joint effects of fee pressure and client risk on audit seniors' planning judgments and decisions. Consistent with predictions, seniors' budgeted audit hours and inherent risk assessments suggest that seniors are less responsive to increased risk in the presence of fee pressure. Fewer budgeted audit hours in the presence of fee pressure may improve short‐term profitability but may not be in accordance with professional standards and the firm's interest if audit effectiveness is compromised. Further analyses suggest that, in the presence of increased client risk, seniors planned fewer audit procedures when fee pressure was present than when it was absent, with decreases most likely for less reliable audit procedures and low‐risk audit areas. Finally, in the presence of increased client risk, seniors expected to work more hours than budgeted, regardless of the level of fee pressure.
