FAR Practice Note: 'The Effect of Audit Culture on Audit Quality'

In this practice note, the researchers discuss why designing a management control system that directs effort towards audit quality is so tricky. They discuss the different ways that audit firms motivate effort and highlight “culture controls” where, through selection and socialization, audit firms create a workforce of auditors that value and, therefore, work hard to ensure audit quality. They also discuss the importance of directing auditors’ efforts towards audit quality and distinguish three critical elements. Auditors must: (1) understand the importance of audit quality, (2) possess the right tools and capabilities, and (3) prefer those tasks that lead to audit quality. The researchers share some preliminary results of their research that examines how successful five Dutch audit firms are at this non-trivial task. This provides firms with the knowledge to critically examine and improve their own current management control system. This study is relevant for Dutch audit firms as well as for auditors all over the world.

To read the practice note, click here.