Work

Auditor–Client Interactions in the Changed UK Regulatory Environment – A Revised Grounded Theory Model

Year: 2014

Type: article

Abstract: Audit and financial reporting quality are under intense scrutiny nationally and globally. The outcome of high‐level auditor‐auditee discussion and negotiation issues (auditor–client interactions) is central to this debate. Beattieet al. developed a grounded theory model of these interactions in the 1997UKsetting. This paper reports on a field study of 45 interactions in nine case companies in the radically changed post‐SOXregulatory environment. Crucially, interviewees in each case company extend the chief financial officer–audit partner dyad to include the audit committee chair. Fundamental revisions to the model emerge. The strongest influence on interactions has become the national enforcement regime, overlaid upon the international standard‐setting regime. The outcome in both the eyes of the participants and in our evaluation is full compliance (contrary to the findings from the 1997 setting), regardless of the perceived quality of the standards and the integrity of the outcome. Personal and company characteristics, which were of most importance in 1997, have become peripheral. The audit committee chair is shown to fulfil a gatekeeping role in relation to the full audit committee.

Source: International Journal of Auditing

DOI: 10.1111/ijau.12031

Authors: Vivien Beattie, Stella Fearnley, Tony Hines

Institutions: Lancaster University, Bournemouth University, University of Portsmouth

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W1509502549