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FAR Practice Note - Workload allocation process within audit firms
Prof. dr. Eddy Cardinaels Ruiqiong Zhang PhD student Ass. Prof. Amin Sofla Ass. Prof. Simon Dekeyser
Practice Notes - practitioner's notes
20-07-2021
Details
 

Context: Audit firms rely heavily on their intellectually skilled auditors, who manage and lead the engagement team (so-called ‘lead auditors’ in this project). To deliver high-quality audit services to their clients and to offer opportunity for auditors to learn, audit firms should try to achieve proper matching between their clients and the auditors based on compatibility between them. Appropriate matching can constitute a difficult exercise as both the lead auditors and clients may have an important stake that encourages them to intervene in the allocation process. Such interventions may affect the level of audit quality that the audit firm is able to deliver when clients and auditors are not appropriately matched.

Objective and method: The objective of this research is to understand how audit firms determine the lead auditor-client pair in terms of appropriate matching. Given that such allocations take place in a work environment where lead auditors and clients have their own demands and as such can intervene in this process, this research further aims to identify the lead auditors’ motivations for intervening in this process. We will conduct semi-structured interviews with lead auditors and planning department staff of audit firms to address our research questions.

Authors

Prof. dr. Eddy Cardinaels

Eddy Cardinaels (1975) is full Professor of accounting at Tilburg University and part-time professor at KU Leuven. His work combines new insights from psychology and behavioral economics to study how different information presentation (ABC, BSC, summaries of earnings releases) can affect decision making of managers within companies. Other experimental work focuses on drivers of honest reporting and social motives in inter-firm negotiations. He also conducts archival work on corporate governance examining how social connections between board members affect financial reporting, how companies use their networks to engage in tax avoidance and factors that drive (excess) compensation. 

Ruiqiong Zhang PhD student
Ass. Prof. Amin Sofla
Ass. Prof. Simon Dekeyser
FAR Literature Review - Workload allocation process in audit firms
Prof. dr. Eddy Cardinaels Ruiqiong Zhang PhD student Ass. Prof. Amin Sofla Ass. Prof. Simon Dekeyser
Literature Reviews
20-07-2021
Details
 

While the allocation of human resources in audit firms is an important research topic, it has received scant research attention to date. Ideally, when audit firms aim at improving audit efficiency and effectiveness, audit firms should properly assign their clients to auditors who manage and lead the engagement team (so-called ‘lead auditors’ in this project) based on the auditor’s expertise level, industry specialization and other relevant factors that benefit audit efficiency and quality (Becker, 1974; Chatain & Meyer-Doyle, 2012; Durlauf & Seshadri, 2003). However, lead auditors and clients alike may have their own preferences whereby they try to intervene in the allocation process. These interventions may hamper audit quality and efficiency because other factors than proper matching enter into the allocation process. Prior research on workload allocation mainly focuses on the allocation of audit hours to specific audit engagements across staff ranks and how time pressure related to audit assignments may deteriorate audit quality. Only few studies explore the workload allocation process in terms of assigning clients to lead auditors and the consequences of this assignment for audit quality. Our project focuses on a number of factors related to the allocation of lead auditors within the audit firms.

Authors

Prof. dr. Eddy Cardinaels

Eddy Cardinaels (1975) is full Professor of accounting at Tilburg University and part-time professor at KU Leuven. His work combines new insights from psychology and behavioral economics to study how different information presentation (ABC, BSC, summaries of earnings releases) can affect decision making of managers within companies. Other experimental work focuses on drivers of honest reporting and social motives in inter-firm negotiations. He also conducts archival work on corporate governance examining how social connections between board members affect financial reporting, how companies use their networks to engage in tax avoidance and factors that drive (excess) compensation. 

Ruiqiong Zhang PhD student
Ass. Prof. Amin Sofla
Ass. Prof. Simon Dekeyser
FAR Literature Review: Management control in auditing firms and its implications for managing coexisting objectives
Drs. Sander Tiggelaar PhD student Prof. dr. ir. Paula van Veen-Dirks Dr. Sakshi Girdhar Prof. Breda Sweeney
Literature Reviews
16-07-2021
Details
 

While many organisations have coexisting goals, this is particularly true for auditing firms as they focus on professional as well as commercial objectives. Many studies find that auditing firms’ management control systems play a key role in the context of managing these professional and commercial objectives. While previous research increases our understanding of the relationship between the management control system and auditor behaviour, it typically only incorporates results-based controls (also referred to as output, diagnostic or cybernetic controls) such as the evaluation of financial performance. This stands in contrast to a large body of research which highlights that the management control system in auditing firms focuses relatively strongly on value-based controls (also referred to as socio-ideological or cultural controls) such as common beliefs and informal communication as well as on controls based on mentoring and training.

Authors

Drs. Sander Tiggelaar PhD student
Prof. dr. ir. Paula van Veen-Dirks
Dr. Sakshi Girdhar
Prof. Breda Sweeney
FAR Working Paper: The imitation behaviors of junior auditors: Does it enhance or hamper audit quality?
Prof. dr. Eddy Cardinaels Prof. dr. Kristof Stouthuysen Dr. Evelien Reusen Viola Darmawan PhD student
Working Papers
02-07-2021
Details
 

Imitation of senior auditors might be a valuable strategy for juniors to learn on-the-job and improve their performance. In this paper, the research team experimentally examines how a senior auditor’s working style (high diligence vs. low diligence) interacts with the nature of the audit firm’s promotion system (superior-based vs. consensus-based) to influence junior auditor judgment by affecting junior auditors’ imitation behavior.

Authors

Prof. dr. Eddy Cardinaels

Eddy Cardinaels (1975) is full Professor of accounting at Tilburg University and part-time professor at KU Leuven. His work combines new insights from psychology and behavioral economics to study how different information presentation (ABC, BSC, summaries of earnings releases) can affect decision making of managers within companies. Other experimental work focuses on drivers of honest reporting and social motives in inter-firm negotiations. He also conducts archival work on corporate governance examining how social connections between board members affect financial reporting, how companies use their networks to engage in tax avoidance and factors that drive (excess) compensation. 

Prof. dr. Kristof Stouthuysen

Professor in Accounting and Control at Vlerick Business School and KU Leuven.

Dr. Evelien Reusen

Evelien Reusen obtained her PhD at KU Leuven and is currently Associate Professor in Management Accounting at RSM. 

Evelien’s research concentrates on the role of control, cooperation and trust, in both intra- and interorganizational settings.

Her work has been published in Accounting, Organizations, and Society and The Journal of Supply Chain Management.

Viola Darmawan PhD student
Society paper: denken als een adviseur
Dr. Luc Quadackers
28-06-2021
Details
 

Denken als een adviseur helpt accountant bij frauderisico’s: staan de beste stuurlui toch aan wal?

Beslissen is iets anders dan adviseren. Beslissen gebeurt vaak op instrumentele wijze. Bij het geven van advies wordt meer nagedacht en overwogen. Accountants handelen vaak instrumenteel: ze volgen controleprogramma’s, wensen van toezichthouders en aanwijzingen van leidinggevenden. Dat kan leiden tot inefficiënte en/of ineffectieve controles. Frauderisico’s worden bijvoorbeeld wel gezien, de accountant weet in principe ook best welk extra bewijs moet worden verzameld, maar toch vinden vervolgens onvoldoende aanpassingen plaats in de controlewerkzaamheden. De gedachte achter deze studie is dat accountants met een ‘adviesbril’ beter in staat zijn om dergelijke aanpassingen voor te stellen, omdat ze in de adviesrol een andere mindset activeren dan in de beslisrol.

Authors

Dr. Luc Quadackers
FAR pre-print: Robotic Process Automation for the Extraction of Audit Information
Jeroen Bellinga WP Tjibbe Bosman RA MSc Seyit Hocuk Dr. Wim Janssen Alaa Khzam
Other Publications
28-06-2021
Details
 

The paper on this subject presents an open-source algorithm to extract data from (draft) annual reports (PDF files) using Python to automate, rather than outsource, the data extraction for reconciliations. 

It was a joint project with Jeroen Bellinga, Seyit Hocuk, Wim Janssen and Alaa Khzam. Wim Janssen and Alaa Khzam developed the programming code.

Authors

Jeroen Bellinga
WP Tjibbe Bosman RA MSc
Seyit Hocuk
Dr. Wim Janssen
Alaa Khzam
FAR Practice Note - Auditing: Lifelong learning (ENG)
Christian Peters PhD student Prof. dr. B. Dierynck Prof. dr. Kathryn Kadous
Practice Notes - practitioner's notes
04-06-2021
Details
 

It is essential that auditors continuously learn. The need for continuous learning is fostered by the changing expectations from society and stakeholders, rapid technological developments, and the increasing complexity of information systems. Auditing regulators and oversight bodies are concerned that certain aspects of the auditing profession may form barriers to effective learning. To gain a better insight in how auditors can effectively learn, it is important to identify and distinguish the different learning processes in the auditing profession. Based on our recent literature review we differentiate between seven learning processes. In this FAR Practice Note, we highlight the most important insights from the academic literature for each learning process. Based on this, stakeholders can develop tools to facilitate auditor learning processes in practice.

Authors

Christian Peters PhD student
Prof. dr. B. Dierynck
Prof. dr. Kathryn Kadous

Kathryn Kadous is the Schaefer Chaired Professor of Accounting and the Director and Associate Dean of the Ph.D. Program at Emory University's Goizueta Business School. She earned a PhD from the University of Illinois. Prior to that, she worked as an auditor and controller. Professor Kadous' research considers judgment and decision-making issues in auditing and accounting. Her current research is focused primarily on using psychology theory to improve auditor decision making and on identifying the antecedents of auditor skepticism. Professor Kadous' research has been published in The Accounting Review, Contemporary Accounting Research, Journal of Accounting Research, Organizational Behavior and Human Decision Processes, The Journal of Behavioral Finance, and Auditing: A Journal of Practice and Theory. 

Professor Kadous has served two terms as an editor for The Accounting Review and two terms as an editor for Auditing: A Journal of Practice & Theory. She serves on several editorial boards and has served on various research and publications related committees and tasks forces for the American Accounting Association (AAA) and the Auditing and Accounting, Behavior, and Organizations Sections of the AAA. She is currently Vice-President (Academic) of the Auditing Section of the American Accounting Association.

FAR Literature Review - Learning in the auditing profession: A framework and future directions
Christian Peters PhD student
Literature Reviews
04-06-2021
Details
 

Rapid changes in capital markets, expanded assurance models, and technological developments have increased the need for auditors to learn in the workplace. Drawing on literature in auditing and workplace learning, this paper develops the Auditor Learning Framework. Based on a general workplace learning framework by Jacobs and Park (2009), the Auditor Learning Framework distinguishes auditor learning processes along three dimensions: the location of learning, the extent of planning involved in the learning process, and the role of the supervisor. We review the auditing literature, classifying papers that directly or indirectly improve our knowledge of auditor learning into our framework to identify gaps in our understanding of the auditor learning processes. Our study provides a comprehensive view of auditor learning processes and provides suggestions for future research aimed at improving auditor learning.

Please click the link to the SSRN publication below.

Authors

Christian Peters PhD student
FAR Practice Note - Accountancy: Een leven lang leren (NL)
Christian Peters PhD student Prof. dr. B. Dierynck Prof. dr. Kathryn Kadous
04-06-2021
Details
 

Het is essentieel dat accountants voortdurend leren. De noodzaak om continu te blijven leren neemt verder toe door de veranderende verwachtingen van maatschappij en stakeholders, snelle technologische evoluties en de toenemende complexiteit van informatiesystemen. Externe toezichthouders spreken echter de zorg uit dat bepaalde factoren het leren van accountants in de weg staan. Om een beter inzicht te krijgen in hoe accountants leren is het belangrijk om de verschillende leerprocessen in het accountantsberoep te onderscheiden. Op basis van recent literatuuronderzoek onderscheiden wij zeven leerprocessen. In deze FAR Practice Note lichten wij per leerproces de belangrijkste bevindingen uit de wetenschappelijke literatuur toe. Op basis hiervan kunnen praktische handvatten worden ontwikkeld om deze leerprocessen te verbeteren.

Authors

Christian Peters PhD student
Prof. dr. B. Dierynck
Prof. dr. Kathryn Kadous

Kathryn Kadous is the Schaefer Chaired Professor of Accounting and the Director and Associate Dean of the Ph.D. Program at Emory University's Goizueta Business School. She earned a PhD from the University of Illinois. Prior to that, she worked as an auditor and controller. Professor Kadous' research considers judgment and decision-making issues in auditing and accounting. Her current research is focused primarily on using psychology theory to improve auditor decision making and on identifying the antecedents of auditor skepticism. Professor Kadous' research has been published in The Accounting Review, Contemporary Accounting Research, Journal of Accounting Research, Organizational Behavior and Human Decision Processes, The Journal of Behavioral Finance, and Auditing: A Journal of Practice and Theory. 

Professor Kadous has served two terms as an editor for The Accounting Review and two terms as an editor for Auditing: A Journal of Practice & Theory. She serves on several editorial boards and has served on various research and publications related committees and tasks forces for the American Accounting Association (AAA) and the Auditing and Accounting, Behavior, and Organizations Sections of the AAA. She is currently Vice-President (Academic) of the Auditing Section of the American Accounting Association.

Professional paper: Hoe leren goed te leren?
Dr. Luc Quadackers
31-05-2021
Details
 

Accountantsorganisaties zijn druk bezig om de determinanten van controlekwaliteit te doorgronden en op basis daarvan hun beleid aan te scherpen. Veel aandacht gaat daarbij uit naar het creëren van een kwaliteitsgeoriënteerde cultuur en het faciliteren van adequaat leergedrag. Recent onderzoek van Maastricht University verschaft hiervoor belangrijke inzichten. Uit de resultaten blijkt onder andere dat toon aan de top, infrastructuur, bedrijfscultuur en job resources het leergedrag in belangrijke mate beïnvloeden. Bijvoorbeeld: de mate waarin ruimte bestaat om verschillen van mening naar elkaar uit te spreken heeft invloed op de kwaliteit van het geleverde werk.

Authors

Dr. Luc Quadackers
FAR Literature Review - The measurement of audit quality in the Netherlands
WP Tjibbe Bosman RA MSc
Literature Reviews
14-04-2021
Details
 

This paper includes several recommendations and lessons learned from the data gathering efforts of the FAR to inform on the availability of audit quality data and measurement of potential AQIs in practice. This paper is also of interest to those audit practitioners managing and designing the quality control (monitoring) systems of audit firms, those involved in preparing the transparency reports, and policymakers and regulators in their considerations of AQI’s

Authors

WP Tjibbe Bosman RA MSc
FAR Practice Note - The measurement of audit quality in the Netherlands
WP Tjibbe Bosman RA MSc
Practice Notes - practitioner's notes
12-04-2021
Details
 

Several committees, institutions, and practitioners are currently working on defining appropriate, and reliable Audit Quality Indicators (AQIs). This project deliberates on a wide range of audit quality measures applied in international academic auditing research. 

Authors

WP Tjibbe Bosman RA MSc