Audit Firm Culture: Recent Developments and Trends in the Literature

Cristina Thomas Alberti, Jean C. Bedard*, Olof Bik, Ann Vanstraelen

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This paper synthesizes research on audit firm culture (AFC) over the past decade, reviewing recent developments in research on factors instilling culture in audit firms, and how culture influences audit quality and auditors’ work attitudes. We develop and apply a three-phase model based on prior research and professional guidance (IAASB, 2014), which maps cultural embedding mechanisms (EMs, visible manifestations and organizational conditions to establish culture), perceptions of existing culture, and consequences of culture. Our synthesis shows that the culture of an audit firm is most oriented toward quality if leadership emphasizes professionalism over commercialism, promotes ethical judgments, and facilitates learning through systems, integration of specialists, and interpersonal interactions among auditors. The research cited shows strong influence on AFC of tone at the top set by leadership, as well as incentives in performance/reward systems. Studies we review generally imply continued concern for the influence of commercialism on AFC, but future research should investigate whether recent forces (i.e. pressure from regulators and efforts by the firms) have caused a cultural shift toward professionalism. We close by suggesting opportunities for future research that can strengthen understanding how AFC can be better managed by firms.
Original languageEnglish
Pages (from-to)59-109
Number of pages51
JournalEuropean Accounting Review
Volume31
Issue number1
Early online date2020
DOIs
Publication statusPublished - 1 Jan 2022

Keywords

  • audit firm culture
  • audit quality
  • ethical culture
  • professionalism
  • Audit firm culture
  • ORGANIZATIONAL-CLIMATE
  • PERFORMANCE
  • SUPPORT-SYSTEM
  • ERROR MANAGEMENT
  • Professionalism
  • ACCOUNTING FIRMS
  • Ethical culture
  • FRAUD RISK-ASSESSMENT
  • IMPACT
  • INFORMATION-TECHNOLOGY
  • Audit quality
  • PROFESSIONAL SKEPTICISM
  • ETHICAL CLIMATE

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