FAR Working Paper 2023/06 - 14: Does auditor resilience mitigate the effects of multiple team memberships on quality threatening behaviors?
Audit firms rely on audit teams where memberships are frequently shared, shifted and dissolved. In practice, this means that many auditors are part of multiple engagement teams for a given period of time. This paper examines why and when such multiple team memberships (MTMs) may lead auditors to engage in audit quality-threatening behaviors. We analyze data from a survey of 202 auditors—ranging from assistants to partners—working at Dutch audit firms. Our findings demonstrate that serving on MTMs can undermine auditor learning, and in so doing leads auditors to engage in audit quality threatening behaviors. Analyses show that less resilient auditors—those who are less able to bounce back from experienced difficulties—appear most susceptible to these deleterious effects. In addition, exploratory analyses suggest that the negative effect of serving on many MTMs appears to be more pronounced for field-level auditors than for management-level auditors.
Authors
Dennis Veltrop is an assistant professor at the University of Groningen and holds a position as an economist at the research department at De Nederlandsche Bank. He is also co-founder of BoardResearch.org. His research focuses on corporate governance and board behavior in particular. His papers have appeared in corporate governance and management journals (e.g., Journal of Management, Journal of Management Studies, CorporateGovernance).
Reggy Hooghiemstra is a professor at the University of Groningen. He has published on a wide variety of topics including board processes, corporate governance, the role of culture in auditing and accounting, and impression management. His papers have appeared in both management (e.g., Journal of Management, Journal of Business Ethics) and accounting journals (e.g., Auditing: Journal of Practice and Theory, European Accounting Review).
