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El efecto de los valores profesionales y la cultura organizativa en la respuesta de los auditores a las presiones de tiempo
Abstract
Este trabajo estudia la respuesta de los auditores a las presiones derivadas de los presupuestos de auditoría ajustados, así como el efecto que los valores profesionales de los auditores y otros factores organizativos tienen en su comportamiento. El estudio, llevado a cabo entre 103 auditores españoles, revela que las presiones de tiempo y competencia influyen en la falta de dedicación de tiempo suficiente a los procedimientos de auditoría y en la decisión de no revelar la totalidad de las horas dedicadas al encargo, comportamientos ambos considerados disfuncionales. Los resultados muestran además que la aceptabilidad ética de estas prácticas, la orientación hacia el cliente y la cultura ética organizativa influyen en dichos comportamientos disfuncionales. De este trabajo se derivan implicaciones para las firmas de auditoría, los organismos reguladores y la profesión en su conjunto. En concreto, los resultados apoyan las medidas adoptadas a nivel internacional que promueven la asignación de recursos suficientes, la formación ética y la implantación de criterios de evaluación que reconocen el compromiso con los principios éticos.
... • Social environment (SE) measures social support from peers and superiors, as well as incidents that demonstrate an adverse social environment (such as bullying or harassment). It is one of the primary job resources deployed by accountancy firms and accounting departments to moderate stressors and reduce burnout, turnover intentions [2,22,25,60,61], and dysfunctional behaviors among professionals [62]. Therefore, teamwork is more effective [63], as well as establishing formal procedures to receive feedback from superiors [64]. ...
... In addition, the model showed that SE and WI have a combined positive effect on MW. This moderating effect of SE on the intense working conditions have been previously reported in the literature [2,22,25,60,61,93] and it contributes to the meaning of the work. ...
The primary purpose of the accounting profession is to provide quality information to the market that facilitates the allocation of resources. The context in which it operates must attend to some stressors that can affect the professional’s meaning of the work. Meaningful work (MW) is based on the concept of valuable work and work well done, so it is directly related to the concept of quality at work, which is a constant concern in the accounting profession. The method used to determine meaningful work identifies the set of job quality indexes, as defined by the European Working Conditions Survey (EWCS), related to the MW. This paper has used an integer programming genetic algorithm (GA) to determine the JQIs and the statistically significant combinations. The findings showed that JQIs, skills development and discretion (SD), and physical environment (PE) positively and intensely relate to MW. Likewise, reduction of the work intensity (WI) and improvement of the social environment (SE) are related in the same direction as the MW. On the other hand, the results showed different indicator weightings depending on the age of the accountants. This paper shows the importance that accountants attribute to professional competence and how, throughout their careers, the JQI that most relate to MW is changing, from a social vision to preferences where the care of personal time also prevails.
... On the other hand, the evaluation of a professional's performance is distorted and is expected within an unrealistic time frame. Underreporting time is considered a more ethical strategy than devoting fewer hours than necessary when the budget is too tight [45]. ...
... This circumstance suggests that the negative consequences associated with job autonomy are mitigated in organizations that promote positive attitudes among their employees. In addition, firms that promote values and ethical behaviour increase the level of socialization of its professionals, significantly reducing dysfunctional practices that could arise from time pressures [45]. ...
The Job Demand-Control and Job Demand-Control-Support (JDCS) models constitute the theoretical approaches used to analyze the relationship between the characteristics of labor and occupational health. Few studies have investigated the main effects and multiplicative model in relation to the perceived occupational health of professional accountants. Accountants are subject to various types of pressure in performing their work; this pressure influences their health and, ultimately, their ability to perform a job well. The objective of this study is to investigate the effects of job demands on the occupational health of 739 accountants, as well as the role of the moderator that internal resources (locus of control) and external resources (social support) have in occupational health. The proposed hypotheses are tested by applying different models of neural networks using the algorithm of the Extreme Learning Machine. The results confirm the relationship between certain stress factors that affect the health of the accountants, as well as the direct effect that the recognition of superiors in occupational health has. Additionally, the results highlight the moderating effect of professional development and the support of superiors on the job’s demands
... Time pressure (PT) in an audit is the pressure perceived by the professional to meet deadlines for delivering reports, whether partial or final, in such a way that it affects the quality of the audit (Espinosa-Pike & Barrainkua, 2017;Low & Tan, 2011). ...
Objective: This research presents a research model on the effects of work stress and its components: work overload, time pressure and social influence on audit efficiency, taking into account the perceptions of both the financial and tax auditor. Methodology: A partial least squares structural equation model (PLS-SEM) was used on the basis of a total of 240 responses from financial and tax auditors belonging to the Professional Associations of Lima and Callao in Peru. Results: According to the PLS-SEM model, it is suggested that work overload is the most important factor affecting audit efficiency. Time pressure has an impact on the quality of work, as well as social influence on audit efficiency and its components: quality of work and employee welfare. Research Implications: Further research could address the evolution of the effects of the variables. Also, cross-cultural research should be considered, considering other cities in Latin America. Practical Implications: Senior management and boards of audit firms should consider constructing a career path that encompasses the variables investigated and their impact over time on the auditor's career. Originality/value: The study contributes to the development of scientific literature on the characteristics of financial and tax auditing in Peru and the behavior of auditors.
... Professionals find reasons for satisfaction in other dimensions of the quality of employment and thus neutralize this demand that is consubstantial to the seasonality experienced by the accounting profession. Tight deadlines and work overload have been widely described as job stressors of this profession [17,63] and sometimes used as a means to maintain a high level of productivity [64], as prescribed by the arousal theory [65][66][67]. ...
The traditional machine-part cell formation problem simultaneously clusters machines and parts in different production cells from a zero–one incidence matrix that describes the existing interactions between the elements. This manuscript explores a novel alternative for the well-known machine-part cell formation problem in which the incidence matrix is composed of non-binary values. The model is presented as multiple-ratio fractional programming with binary variables in quadratic terms. A simple reformulation is also implemented in the manuscript to express the model as a mixed-integer linear programming optimization problem. The performance of the proposed model is shown through two types of empirical experiments. In the first group of experiments, the model is tested with a set of randomized matrices, and its performance is compared to the one obtained with a standard greedy algorithm. These experiments showed that the proposed model achieves higher fitness values in all matrices considered than the greedy algorithm. In the second type of experiment, the optimization model is evaluated with a real-world problem belonging to Human Resource Management. The results obtained were in line with previous findings described in the literature about the case study.
... The literature on pressures perceived by accounting professionals (Espinosa-Pike & Barrainkua, 2016;Espinosa-Pike & Barrainkua, 2017;Hatfield, Jackson, & Vandervelde, 2011;Lord & DeZoort, 2001) reveals that most professionals are pressured, both by their superiors and by their clients, to act in a way that compromises their ethical values and professional standards. ...
Purpose – The aim of this study is to examine the effects of public interest commitment, professional commitment, organisational commitment, and organisational ethical culture on organisational professional conflict (OPC). The study also tests for the differences in the perception of OPC among professionals in different work settings: (i) professional accountants in business practice, (ii) tax and accounting advisors, and (iii) auditors.
Design/methodology/approach – This study is based on a questionnaire distributed among 779 Spanish professional accountants.
Findings – The findings show a negative relationship between both individuals’ organisational commitment and OPC and between a strong organisational ethical culture and OPC. Professional accountants working in different settings exhibit differences in their perception of OPC; tax/accounting advisors perceive OPC to a higher extent.
Originality/value – This is the first study that analyses the effect of organisational ethical culture, together with professional and organisational commitment, on the perception of pressures arising from OPC among professional accountants in different work settings. Identifying antecedents of the conflicts that professional accountants may face has implications for organisations’ human resource management and for the quality of the services provided. This study emphasizes the need for future studies to examine the differences in the work context of the different professional accountants.
... Firms accumulate resources in the organization to manage the pressure because they trust the buffering effect, as the JDCS model predicts. Thus, accounting firms promote values and ethical behaviors that have a positive influence on the socialization of teams, which moderates role conflict [61]. Moreover, superiors have an important role in improving the performance of teams, meeting the personal needs of their members, promoting innovative ideas, properly adjusting schedule budgets [62], and promoting a culture of communication and cohesion among team members [63]. ...
The main activity of the accountant is the preparation and audit of the financial information of a company. The subjective well-being of the accountant is important to ensure a balanced professional judgment and to offer a positive image of the profession in the face of the incorporation and retention of talent. However, accountants are subjected to intense pressures that affect their well-being in the performance of their tasks. In this paper, the job demands–resources theoretical framework is adopted to analyze the relationships between job demands, job resources, and the subjective well-being of a large sample of 739 accounting experts at the European level. Applying a structural equations model, the results confirm, on the one hand, the direct effects provided in the theoretical framework and, on the other, a new mediating role of job demands–subjective well-being relationship resources.
Purpose
The purpose of this study is to model the relationship between quality of work life factors and turnover intention for auditors in Morocco.
Design/methodology/approach
The proposed research model gleaned from the literature is empirically tested using a structured questionnaire completed by 60 auditors working for Moroccan audit firms.
Findings
Tests results of partial least squares structural equation modelling provide evidence that “compensation and benefits” and “colleague support” have a significant negative impact on turnover intention while the “work–life balance,” “organizational prestige” and “workload pressure” are not predictive of turnover intention. Taken together, these results show that auditors are already aware of the work pressure they are under, and that adequate compensation and benefits and support from colleagues can alleviate and compensate this pressure.
Originality/value
This study adopted a non-previously tested research model, including quality of work life factors directly related to the auditing profession and their impact on turnover intention, examined in Morocco, which may provide new evidence to contemporary research conducted in developing countries with similar characteristics to the Moroccan auditing market.
The loss of professional identity and a greater orientation towards commercial goals on the part of professional accountants have been considered as one of the main causes of the financial scandals. This ‘deprofessionalization’ has focused on auditors, with few studies analysing other accounting professionals. This study, carried out among more than 800 members of the Consejo General de Economistas, analyses the differences in the professional identity and values as well as the ethical judgment of accounting professionals employed in a company, accounting and tax advisors and external auditors. The results of this paper reinforce the importance of the accreditation and regulation of the professional accountant. Further, findings suggest important measures to be taken by professional corporations and public law institutions to improve commitment to the profession as well as the ethical and professional values of the professional accountants in different work settings.
This study is designed to investigate empirically the range and frequency of functional and dysfunctional auditor behaviours in Big Five (now Big Four) audit firms in Ireland in response to formal cost control systems, and to identify trends in response behaviours since previous studies. A survey questionnaire was sent to all auditors in second year (audit juniors) and third year (audit seniors) in four of the Big Five firms in Ireland in 1999. The findings suggest that the levels of underreporting of time (URT) and quality threatening behaviours (QTB) in response to tight time budgets have decreased since the previous study in Ireland. The overall level of URT has
also decreased, while overall QTB frequency has increased. This suggests that factors other than tight time budgets are driving levels of QTB in the current audit environment but having no effect all URT. The behavioural patterns of juniors and seniors were not found to be significantly different, but male auditors were found to report significantly higher levels of certain dysfunctional behaviours than female auditors. Contrary to prior literature, the level of documentation between audit areas was not found to be a significant indicator of the most serious form of QTB - premature sign-off (PSO); however, the level of documentation within each of two audit areas was a significant indicator of the level of PSO within those areas.
Using a sample of Portuguese audit firms and their client companies, this study examines the association between gender composition of the partnership structure of audit firms and audit quality. Audit quality is measured through the earnings quality of audit clients. We find that gender diversity in the partnership structure of audit firms, per se, has no association with audit quality. In turn, we find significant evidence that a predominant presence of female Certified Public Accountants (CPAs) in partner positions in audit firms is associated with higher audit quality. In particular, the results indicate that audit firms with female-dominated partnership structures are negatively related with aggressive accounting practices in audit clients.
The present study analyzes the pressures perceived by auditors in their professional activity. Furthermore, it explores the ethical acceptability of questionable practices and the way auditors resolve the conflicts of interest with which they are confronted. This paper also studies the influence of the size of the audit firm and the experience of the auditors on the perception of pressures, their ethical judgment, and the way of resolving conflicts of interest.
Data were collected through a questionnaire administered to auditors from small and medium-sized audit firms in Spain, members of REA (Registro de Economistas Auditores).
This study contributes to the international academic literature on auditing behavior, as it provides new empirical data on the pressures perceived, not only those from the audit client, which have been extensively studied in the academic literature, but in addition, it highlights pressures arising from the audit firm itself that could also have a detrimental effect on the audit quality. It also contributes to the understanding of the effect of these pressures on the behavior of auditors.
The results of this study are also of particular relevance for the legal and professional Spanish auditing regulators as they face, at this moment, the challenge of developing a set of ethical standards that should improve the ethical judgment and behavior of accounting professionals.
The central contention of this paper is that a new paradigm is emerging within the area of professional or expert labour. This process entails a shift from a “social service” evaluation mechanism to a “commercialised” mechanism. This change is but one element in a wider range of alterations entailed in the change from a Fordist regime of accumulation to a Flexible Accumulation regime. The paper examines these issues with regard to the chartered accountancy profession. It analyses the socialisation processes experienced by accountants and the evaluation criteria involved in the promotional process to partnership. The evidence for this paper was gathered from qualitative and quantitative research undertaken in the Big Six accountancy practices in Ireland and the USA.
This study uses the ethical decision-making model to examine underreporting and premature audit sign-off in public accounting. Structural equation modelling results indicate that accountants view premature sign-off activities differently from underreporting activities. For example, those accountants who use a teleological moral evaluation process, and who perceive a greater likelihood of reward are more likely to underreport. That these variables are not significantly related to the likelihood of premature sign-off suggests that accountants may use a consequences-based approach when making decisions having lesser ethical content (like underreporting), but employ a different decision process when faced with decisions having greater ethical content (like whether to prematurely sign-off). The results also suggest that supervisors and managers are less likely to underreport, and to prematurely sign-off, than senior and staff-level accountants, and that accountants with an internal locus of control are less likely (than externals) to either underreport or prematurely sign-off.
Purpose
– The purpose of this paper is to examine the impact of organizational ethical culture on the ethical decisions of tax practitioners in mainland China.
Design/methodology/approach
– The study is based on a field survey of practicing public accountants.
Findings
– As hypothesized, certain dimensions of ethical culture had highly significant effects on intentions to engage in aggressive tax minimization strategies. Cultures characterized by strong ethical norms and incentives for ethical behavior significantly reduced the reported likelihood of engaging in unethical behavior in a high moral intensity case. In a low moral intensity case, intentions to engage in questionable behavior were significantly higher when participants felt that top managers in their firm were unethical and rewarded unethical behavior. Relativism judgments (judgments of what is traditionally or culturally acceptable or acceptable to one's family) emerged as the strongest determinant of behavioral intentions across both cases. Participants also appeared highly sensitive to questions regarding what is traditionally or culturally acceptable in Chinese tax practice.
Originality/value
– This is the first study of ethical decision making among tax practitioners in mainland China, and the findings add to a growing body of literature documenting the significant effects of organizational ethical context on public accountants' decision making processes. This has important implications for CPA firms, suggesting that proactive steps should be taken to promote supportive ethical contexts. The findings for the effects of relativism judgments raise concerns regarding the ethical decisions of Chinese tax practitioners, implying they are likely to engage in unethical behavior if they feel such behavior is common in their cultural environment.
This review paper argues that the institutions and sites of professionalization projects and regulatory processes matter. The institutions and locations where regulation takes place affect both the outcome of the regulatory process and the legitimacy of the rules and practices produced. Changes in regulatory processes affect opportunities for democratic control and legitimacy. A common position in the accounting literature is to examine both the process of professionalization and accounting and audit regulation within and around professional associations and related organizations, such as standard setting bodies and regulatory agencies. We argue that professional firms are increasingly important in professionalization and regulatory processes and have not received the attention that they warrant: an examination of the multi-national professional service firms (currently known as the Big 4) can enhance an understanding of professionalization and professional regulation. We suggest that these are important sites where accounting practices are themselves standardized and regulated, where accounting rules and standards are translated into practice, where professional identities are mediated, formed and transformed, and where important conceptions of personal, professional and corporate governance and management are transmitted.
Purpose
The quality of the opinion provided by audit firms is an important determinant of their long‐term survival, but audit quality is difficult to gauge, which makes it particularly sensitive to the behaviour of the individuals who carry on audit work. This paper seeks to identify the incidence of dysfunctional audit behaviours and audit quality reduction behaviours, actions taken by an auditor during engagement that reduce evidence‐gathering effectiveness.
Design/methodology/approach
The paper is based on a survey of 244 auditors working in small/medium and big audit firms in Malaysia.
Findings
The paper identifies key variables leading to dysfunctional audit behaviour.
Research limitations/implications
The paper is subject to the normal limitations associated with survey research.
Practical implications
The paper provides basic empirical evidence of a potentially serious risk of dysfunctional behaviours that may impair audit quality.
Originality/value
The paper provides empirical evidence to address the concerns of the Malaysian regulatory authorities regarding audit quality.
RESUMEN
El desarrollo de la profesión de auditoría conlleva situaciones en las que el auditor se enfrenta a dilemas de carácter ético. Su comportamiento para obtener una solución a los mismos requiere la utilización de un proceso de toma de decisiones donde adquieren especial importancia los valores éticos individuales. En un estudio anterior abordamos el análisis de la ponderación que los auditores españoles establecen de determinados factores que son considerados predictores de comportamiento ético. Asimismo, valoramos la influencia en el proceso de toma de decisiones ante dichos dilemas éticos, de otras variables personales del auditor. En concreto, estudiamos cuatro variables demográficas claves en esta relación: edad, género y experiencia profesional. En el presente trabajo abordamos el estudio desde otra perspectiva: la de los auditores noveles. El objetivo es establecer comparaciones con los resultados obtenidos con los expertos y con objeto de intentar llegar a conclusiones con relación a la influencia de la experiencia adquirida con el paso del tiempo en la ponderación de los citados factores.
Extant knowledge on gender and auditing overwhelmingly relies on evidence gathered from a limited group of Anglo-Saxon countries. It is widely admitted, however, that gender issues are affected by the institutional contexts of the investigation. The Anglo-Saxon settings, we contend, embrace a number of idiosyncratic, institutional characteristics that advise caution in the generalizability of results. Our study addresses the role of gender in Spanish audit practice during the period 1942 to 1988. The environment of the Spanish audit profession witnessed the peaceful transition from a dictatorship to a full-fledged democracy as well as the emergence of a free market economy from a system characterized by stiff economic autarchy and an overriding intervention of the state in the economy. We found that the dominant role of the state in Spanish society affected the structure of the audit profession and made impossible the emergence of an autonomous project. In particular, our findings reveal that the audit profession did not have an independent strategy about the role of women at work, but mimicked the attitudes deployed by the state during our observation period.
This study investigates the effects of lead auditors’ technical and managerial knowledge on audit quality and audit fees. The German institutional environment enables us to track auditors over their careers and measure their various personal attributes. We find that lead auditors’ technical knowledge is more important for audit quality than their managerial knowledge; however, their managerial knowledge is a more influential driver of audit fees than their technical knowledge. The results of various identification strategies including firm-fixed effects models, propensity-score matching, and instrumental variables approaches suggest that the observed relations are treatment rather than selection effects. The findings enhance our understanding of the role and nature of expertise in auditing and demonstrate the value of lead auditor identification as currently discussed by the PCAOB and the IAASB.
This study is an empirical investigation into the operation of control systems in large audit firms in Ireland. All audit seniors in three Big 6 firms were included in a postal survey. The results showed evidence of under-reporting of time, premature sign-off and other audit quality reduction acts. The analysis was extended beyond that reported in previous studies by developing regression models to explain these three types of dysfunctional behavior. Perceived attainability of time budgets and the leadership style of audit managers had a significant influence on dysfunctional behavior, but the perceived amount of emphasis on meeting budgets did not. Although organizational commitment was a further explanatory variable, professional commitment was not. Perceived effectiveness of audit review procedures was found to be significantly associated with lower levels of premature sign-off and other quality reduction acts, while the explicit and implied approval of supervisors was significant in the under-reporting of time decision. The discussion identifies two important types of informal control, and suggests that audit firms need to address a number of key issues in order to improve the effectiveness of their formal control systems. The study contributes to the literature on management control by examining the impact on individual behavior of a widely used formal control system. Furthermore, while previous studies in an audit setting have tended to report perceived influences on auditor behavior, or the outcome of testing involving a single variable, this study constitutes an extension of earlier work by examining the combined effect of specific variables on actual behavior, as reported by practising auditors.
Purpose
– The purpose of this paper is to summarize the effect that the passage of the Sarbanes–Oxley Act of 2002 (SOX) by the US Congress had on audit research. More specifically, the paper compares the nature of research about auditing conducted before the Act’s passage to the nature of research about audit regulation that dominates the literature since its passage.
Design/methodology/approach
– The paper builds on an extensive review of the research literature before and after the passage of SOX to suggest and examine potential future research paths that might develop in auditing. The streams of research are linked and organized around four themes: auditing as a competitive process, auditing as a service process, auditing as a production process and auditing as a quality control process.
Findings
– In general, auditing research prior to SOX tended to focus on issues encountered in the practice of auditing with tangential implications for audit regulation. The passage of SOX had the effect of focusing audit research on the nature, costs and benefits of regulation, particularly the components of the law that had the most effect on auditing such as the prohibition against many non-audit services, the establishment of the Public Company Accounting Oversight Board as a standard setter that also inspects audit firms, and the introduction of the requirement that a client’s internal control over financial reporting be examined and opined upon as part of an integrated audit. Although this research has increased our understanding of auditing and regulation, the heavy focus on SOX has pushed research about auditing itself to a lesser role. The profession’s, academy’s and regulatory understanding of auditing may benefit from a more balanced approach to auditing as something separate from the regulation of auditing.
Originality/value
– The intent of this paper is to challenge the way researchers think about research questions in auditing. Hopefully, this approach will encourage auditing researchers to look at the audit and audit regulation through a new lens, testing propositions and aspects of auditing that have been overlooked by the dominate focus on audit regulation over the past decade.
This study tests the association between time pressure, training activities and dysfunctional auditor behaviour in small audit firms. Based on survey responses from 235 certified auditors working in small audit firms in Sweden, the analysis shows that perceived time pressure is positively associated with dysfunctional auditor behaviour, while the level of participation in training activities such as workshops and seminars is negatively associated with dysfunctional auditor behaviour. These findings suggest that audit quality is at risk when auditors experience high levels of time pressure but also that auditors who frequently take part in training activities to a lesser extent engage in dysfunctional auditor behaviour.
Purpose
– The purpose of this paper is to provide evidence on underreporting of time (URT) by audit partners and the factors that drive URT at their level. In particular the study tests the relationship between URT and the following variables: pressures perceived by auditors related to audit budgets, the ethical acceptability of URT, the influence of peers and superiors on the resolution of ethical conflicts, and organisational ethical culture. A deeper analysis of URT practices is necessary, as failing to correctly report the total hours worked by audit partners poses a threat to audit quality, and can have a detrimental effect on individual auditors, audit firms, and even the auditing profession itself.
Design/methodology/approach
– A multiple regression data analysis was conducted, based on 84 responses from Spanish audit partners working in small- and medium-sized audit firms.
Findings
– The results reveal that URT is affected by the pressures perceived by auditors related to audit budgets, the ethical acceptability of URT, and the influence of peers and superiors on the resolution of ethical conflicts.
Originality/value
– This study contributes to international literature on the organisational context of audit firms by analysing URT from the perspective of audit partners. It also has practical implications, as it focuses on understanding the beliefs and behavioural patterns of audit partners, which is critical to proposing mechanisms for avoiding dysfunctional behaviour at all levels of audit firms.
While some research suggests that explicit incentives to meet time budgets have recently been reduced at audit firms, there is also evidence indicating that audit seniors and staff still feel at least implicit pressure to meet budgets. We examine the possibility that both of these findings tell a part of the story. Specifically, we explore whether, and under what conditions, seniors and staff are implicitly encouraged to underreport time through future engagement staffing decisions and the performance evaluation process. Further, we consider the extent to which agency theory can serve as a framework for understanding how the incentives of audit managers and partners influence how they view underreporting by their engagement staff. We place participants in a scenario in which they are responsible for evaluating an engagement senior who appears to have worked more hours than were budgeted. We manipulate the senior’s reporting accuracy (underreporting versus accurate reporting) and the desirability of the client (more versus less desirable). We find that, when managers’ agency-related incentives conflict more strongly with those of the firm (more desirable client), they tend to tacitly encourage underreporting through their evaluations of the senior’s performance. Managers are also more likely to request an underreporter on a future engagement. In contrast, partners placed in the same setting show no evidence of encouraging underreporting. Thus, our results suggest that managers’ tacit encouragement of underreporting is contrary to what the “principals” of the firm (i.e., partners) appear to want. Further, while firms may have reduced their emphasis on formal, explicit incentives to underreport, it appears likely that implicit manager incentives persist.
It is important for both academics and practitioners to understand how biases influence auditing opinions, as well as how we might counteract those biases. According to moral seduction theory, auditors’ judgments are morally induced by conflicts of interest in an unconscious manner. We combined an auditor ethical decision-making model with an expertise model in a laboratory experiment with European auditors to demonstrate that expertise helps to mitigate unconscious reporting bias in the going-concern setting. Our findings suggest that while problem-solving ability reinforces the auditors’ public watchdog function, task-specific experience reduces their fear of provoking the self-fulfilling prophecy effect. Our contribution to the literature is timely since the European Green Paper on Auditing is ignoring auditor education, learning, and training as potentially effective ways to enhance audit quality and increase professional skepticism.
This paper proposes an evaluation approach – “Efficiency Motivated Evaluation” (EME hereafter) – that auditors use in response to increased efficiency demands. EME is defined as discounting (emphasizing) negative (positive) audit evidence and making favorable assessments as the demands for efficiency increase. We propose that increased time pressure will exacerbate auditors' use of EME but that experience will mitigate this tendency. We conduct an experiment in which 83 auditors differing in experience evaluated internal control effectiveness under high or low time budget pressure. Consistent with expectations based on EME, auditors assess overall internal control effectiveness higher, and positive information about controls as more relevant, under high (compared to) low time budget pressure. Moreover, we find that less (compared to more) experienced auditors under high time budget pressure rate negative information about controls as less relevant. The results suggest the importance of assigning experienced staff to high time budget pressure engagements.
Although client familiarity is desirable from the auditor’s perspective, identifying with clients threatens auditor objectivity. This study examines the extent to which non-Big 4 auditors identify with clients, the effect of auditor–client identification on auditors’ client acquiescence to client-preferred treatment, and, finally, whether the harmful effects of auditor–client identification can be extended to a broader set of reduced audit quality acts. The responses of 141 practicing auditors at non-Big 4 firms in Sweden support our theoretical predictions. We find that auditors tend to identify with their clients, and that an auditor who identifies relatively more with a client is more likely to acquiesce to client-preferred treatment and to commit reduced audit quality acts. While previous research has considered only Big 4 firms, the current findings suggest that the problems with auditor identification with clients also hold for non-Big 4 auditors.
Purpose
– The purpose of this paper is to address the impact of ethical culture on audit quality under conditions of time budget pressure. The study also tests the relationship between ethical culture and time budget pressure.
Design/methodology/approach
– The study is based on a field survey of financial auditors employed by audit firms operating in Sweden.
Findings
– The study finds relationships between three ethical culture factors and reduced audit quality acts. The ethical environment and the use of penalties to enforce ethical norms are negatively related to reduced audit quality acts, whereas the demand for obedience to authorities is positively related to reduced audit quality acts. Underreporting of time is not related to ethical culture, but is positively related to time budget pressure. Finally, the study finds a relationship between two ethical culture factors and time budget pressure, indicating a possible causal relationship, but ethical culture does not mediate an indirect effect of time budget pressure on reduced audit quality acts.
Originality/value
– This is the first study to report the effect of ethical culture on dysfunctional auditor behavior using actual self‐reported frequencies of reduced audit quality acts and underreporting of time as data.
Intuition has been long seen as an element of effective human performance in demanding tasks (i.e. expertise). But its form, constitutive elements and development remain subject to diverse explanations. This paper discusses these elements and explores theories and empirical evidence about what constitutes intuitive expertise, and offers an account arising from a review of these explanations. Commencing with a consideration of examples of intuition from distinct fields of working life, it uses a cognitive perspective to open up the discussion for theorizing about intuition from an information processing perspective. It evaluates the widely acknowledged theory of two systems of information processing that proposes two parallel operating systems: the rational and intuitive. This theory provides foundations for understanding experts’ abilities to act intuitively in high-performance-level activities. Research on expertise, finally, opens an educational perspective on intuition, with the progression from novice to expert being understood as an enduring and long-term learning process that inherently generates intuitive capabilities. The paper concludes by returning to and making connections with the literature on workplace and professional learning to provide insights into how individual and social learning processes support the development of intuitive expertise.
Dysfunctional behavior (DB) and staff turnover are associated with decreased audit quality (Public Oversight Board 2000). Dysfunctional behaviors such as premature sign‐off, gathering of insufficient evidence, altering or replacing audit procedures, and underreporting of time have negative effects on the auditing profession. While recent studies suggest that dysfunctional behavior is a widespread problem (Smith 1995; Otley and Pierce 1995), extant research fails to adequately explain the causes. In this study, the organizational behavior and industrial psychology literatures provide the basis for developing and testing a model that identifies locus of control, performance, and turnover intentions as determinants of auditor acceptance of DB.
Using a cross‐organizational design and a structural equation modeling technique, survey results from 106 auditors generally support the explanatory model. Results indicate that auditors who are more accepting of DB tend to possess an external locus of control, report lower levels of self‐rated performance, and exhibit higher turnover intentions. These results suggest that individual auditor characteristics play a role in identifying those who are more accepting of DB.
In this article we explore how notions of the client and client service are constructed within two `Big 5' professional services firms. Drawing upon a range of qualitative materials, we argue that the client is a central term in the socialization of trainee accountants within these firms and the emergence of their professional identities. We illustrate this with reference to recruitment, appraisal and daily work practices. We then move on to consider the power effects of a discourse that privileges the client in this way by attending to what is `written out' of such a discourse. We suggest that management control, friends, family and the profit motive are all written out. However, we also point to what such a discourse enables, both materially and symbolically, for the trainees in the study.
Research suggests a correlation between commercial concerns, time pressures and junior staff's ‘irregular auditing’ that results in audit failures. This article examines junior staff's irregular auditing in the context of trainees' normal auditing responsibilities and the specific nature of time pressures at their firms. The discussion recognises that omnipresent commercial concerns often leads to adoption of new audit methods that may militate against time pressures. Empirical evidence from in-depth interviews is used to highlight that firms that use risk-based auditing expect their trainees to help realise commercial gains by focusing audit work on areas where material misstatements could occur. The evidence shows that trainees do concentrate work on areas where material misstatements could occur. Acts that reduce audit quality occur in other areas and may often be seen by senior staff who may sanction extra work, if necessary. The article uses these findings to infer that junior staff do not have low regard for audit protocol.
Research suggests that dysfunctional behaviour by auditors may be related to the perceived tightness of time budgets. Using data collected from practising auditors, examines the nature of such a relationship. Found that the frequency of dysfunctional behaviour increased sharply as budgets were seen to approach unattainable levels of performance. Recognizing the importance of auditors’ perceptions regarding the attainability of budgets, examines antecedent variables affecting budget attainability. Found that the influence of client fee expectations, the level of audit senior participation and the influence of the audit programme were significant influences. Discusses implications for practice and possibilities for future research.
Purpose
Irregular auditing practices, such as false sign‐off, are evidence that proper implementation of work programmes by audit fieldworkers is not always achieved. That such behaviours have been widely attested in the literature raises important questions about the impact they have on the audit engagement. In order to get further insight into the phenomenon, seeks to adopt a qualitative approach, deemed appropriate to complement the mostly quantitative studies available in the literature.
Design/methodology/approach
The research is based on 15 semi‐directive interviews performed with current and former French audit seniors. The interviews were meant to highlight the role of irregular auditing in view of the individual and organisational strive for legitimacy that characterises the audit profession.
Findings
The research showed that, far from being systematically dysfunctional, irregular auditing plays an important role in audit firms, and that it can only be understood in view of the nested personal (individual auditor), organisational (audit firm) and institutional (auditing as a profession) constraints of the audit environment.
Research limitations/implications
Owing to the limited number of interviews and their situated context, the study has an exploratory nature. Its findings are used to provide recommendations for future research into various aspects of auditor performance.
Originality/value
The study of irregular auditing has major consequences for understanding of the professional status of audit fieldworkers. It also provides insights into the recent evolution of auditing methods and of the profession's ideology.
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.
The paper reports a postal survey of successful finalists of the exams of the Institute of Chartered Accountants in England and Wales. The auditing profession has faced increasing cost pressures arising from competition and economic recession. Firms have striven to increase auditefficiency and reduce chargeable time. It was hypothesized that time budget pressure and other factors might produce irregular short cuts in audit procedures: i.e., that similar behaviour to that reported by Raghunathan (1991) and other studies would be found in the UK. Respondents were asked about the impact of time budget pressures on their work, about irregular auditing practices similar to premature sign off and certain contextual variables. An appreciable incidence of irregular auditing was discovered which was associated, inter alia, with perceptions of time budget pressure, perception of a firm culture of acceptance of irregular short cuts and areas of work which were felt to be unimportant. The implications of the findings for the auditing profession and individual firms are considered together with recommendations for future research.
This study examines the impact of a range of demographic variables (gender, firm size, degree type, level of education, length of experience, age and work area) on ethical intentions, ethical judgement, perceived ethical intensity and perceived ethical culture. Cases containing information on four types of time pressure-induced auditor dysfunctional behaviours were distributed to trainee accountants attending a professional education programme of the Institute of Chartered Accountants in Ireland. The findings suggest that gender, firm size and degree type had a significant association with ethical decision making. These variables also had a significant association with perceived ethical intensity as did work area. Gender, firm size, level of education and length of experience showed evidence of a significant association with perceived ethical culture. Implications of the findings and areas for further research are discussed.
The accounting profession, like all professions, has a commitment to advance the interests of the general community, as well as those they are contractually bound to serve. Providing services altruistically, at times without compensation, is a salient feature of the public interest ideal. A review of the literature indicates that the profession has abandoned its public interest role so that serving self-interest now appears to have primacy (Bédard 2001;Canning and O'Dwyer 2001;Parker 1994;Saravanamuthu 2004). The aim of this paper is to examine members' interpretation of the public interest ideal and to elicit their perceptions on issues arising from the literature. The results of a survey to members of CPA Australia indicate that members can iterate the formal definition of the public interest, but their application of the public interest in conflict of interest situations is inconsistent with this definition.
This study examined the impact of perceived ethical culture of the firm and selected demographic variables on auditors’ ethical
evaluation of, and intention to engage in, various time pressure-induced dysfunctional behaviours. Four audit cases and questionnaires
were distributed to experienced pre-manager level auditors in Ireland and the U.S. The findings revealed that while perceived
unethical pressure to engage in dysfunctional behaviours and unethical tone at the top were significant in forming an ethical
evaluation, only perceived unethical pressure had an impact on intention to engage in the behaviours. Country was also found
to have a significant impact, with U.S. respondents reporting higher ethical evaluations and lower intentions to engage in
unethical acts than Irish respondents. Implications of the findings and areas for future research are discussed.
Keywordsauditor conflict-ethical culture-ethical decision making-underreporting of time-quality threatening behaviours-time pressure
This paper examines the relationship between organizational ethical culture in two large international CPA firms, auditors'' personal values and the ethical orientation that those values dictate, and judgments in ethical dilemmas typical of those that accountants face. Using an experimental task consisting of multiple judgments designed to vary in "moral intensity" (Jones, 1991), and unique as well as tried-and-true approaches to variable measurements, this study examined the judgments of more than three hundred participants in our study. ANCOVA and path analysis results indicate that: (1) Ethical judgments in situations of high moral intensity are affected by personal values and by environmental variables, such as the professional code of conduct (direct and indirect effects) and previous ethics instruction (direct effect only). (2) Corporate ethical culture, and a relatively strong firm rules-orientation, affect auditors'' idealism but not relativism, and therefore indirectly affect ethical judgments. Jones'' (1991) moral intensity argument is supported: differences in the characteristics of specific judgment tasks apparently result in different decision processes.
This study examines the impact of the strength of an accounting firm’s ethical environment (presence and reinforcement vis-à-vis
the presence of a code of conduct) on the quality of auditor judgment, across different levels of audit expertise. Using a
2 × 2 full factorial ‹between subjects’ experimental design, with audit managers and audit seniors, the impact of different
levels of strength of the ethical environment on auditor judgments was assessed with a realistic audit scenario, requiring
participants to make judgments in respect of an inventory writedown. Based on prior research, and as hypothesized, participants
possessing greater auditing experience made higher quality technical judgments. While there were no significant differences
between the quality of audit judgments made by participants in the stronger ethical environment, over-all results indicate
that managers are more sensitive to differences in the strength of the ethical environment than seniors. This is consistent
with the hypothesis, and with prior research which suggests that the impact of the code will only be significant if it has
been bilaterally internalized by individuals. This has important implications for accounting firms and regulators, given that
the International Standard on Quality Control 1, requires the communication and reinforcement of ethical principles as part
of firms' quality control processes. It suggests that firms will need to carefully consider the means by which they communicate
and reinforce ethical principles, as it is possible to differentially impact auditors of different rank.
Public accounting firms face an inherent dilemma, wherein conflicting cost and quality goals are create a setting where social ambivalence thrives. This paper explores this dilemma, using an interpretative framework and data collected through interviews. The results suggest that, rather than directly addressing this dilemma, audit firms promote an attitude of compromise within individual audit staff members. This compromise, though, is never openly discussed, hence in Argyris' words (Accounting, Organizations and Society (1977) pp. 113–123), a double bind exists within the control system: the undiscussable remains undiscussable. Blending auditor comments with related research, it is suggested that the social ambivalence, through undiscussability, is translated into ethical ambivalence (Jansen & von Glinow, Academy of Management Review (1985) pp. 814–822), resulting in individualized reconciliations of the cost/quality dilemma. The discussion ends with implications for research and practice.
As Giddens has observed “Nothing is clearer than that gender is a matter of learning and continuous work, rather than a simple extension of biologically given sexual difference” (1991, p. 63). In this paper, we discuss the processes of professional socialization implicated in the reproduction of gender relationships in UK offices of two multi-national audit firms. The gendering of audit firms is viewed as connected not simply to important elements of the formal organizational structures, such as temporal organization and appraisal processes, but also to the tacit, informal components, such as the correct form of socializing involved in `getting in and getting on' [Sociology 28 (2) (1994) 479] within Big Five audit firms. Our focus is upon practices, including the discursive practices trainees pick up and mobilize during their everyday interactions. In our conclusion, we signal how informal and formal organizational processes are intertwined so as to reproduce gender domination, and comment upon the problems that policy initiatives and reforms face in attempting to redress organizational gender imbalances.
Society's perception of the legitimacy of the accounting profession and its members is grounded in the verbal and visual images of accountants that are projected not only by accountants themselves but also by the media. The paper uses the critical literature on stereotypes to examine how books written for a general readership on Enron and other recent corporate failures portray accountants and accounting, and the implications their authors draw for corporate governance and the survival of the financial system. The paper explores how commentators have analyzed the changing activities of accountants (including the rise of consulting) and have contrasted the personalities of "founding fathers" of the US accounting profession with their early 21st-century successors. The paper concludes that changing stereotypes of accountants are evidence of "negative signals of movement" for accounting as a profession.
No abstract available.
Findings are reported from an empirical investigation of cost-quality conflict using a survey of audit juniors and seniors in four of the Big Five audit firms in Ireland. Prior findings, mainly from US studies, indicate the presence of a cost-quality conflict in the audit environment. Conventional accounting controls are only partially effective and, in response to such controls, auditors sometimes engage in dysfunctional behaviours. Evidence from this study suggests that dysfunctional behaviours are significantly related to time pressure (created through a combination of budgets and deadlines) and performance evaluation (incorporating both style and frequency of evaluation). The relationship between dysfunctional behaviours and other specified variables (participation and leadership style) was not statistically significant. There was evidence that major changes have taken place in the audit environment such as a flattening of organizational structures and a de-emphasis on budgets as a form of control. The findings are interpreted in the context of the changed audit environment. Implications for resolving the cost-quality conflict from the perspective of audit firm management are set out and future research opportunities are identified.