FAR Masterclass – Management practices in auditing firms

Do you sometimes have difficulties prioritising different aspects of your audit work? Do you sometimes feel you get different signals in your auditing firm about what is important? Do you feel you are pulled into different directions by the performance measurement systems in place or by rules and guidelines? And how are you influenced by your peers, mentors, supervisors, or the culture of the auditing firm?

Auditing firms have both professional and commercial objectives which they need to pursue. In order to meet their professional objectives, auditors must be able to perform their legal obligations without any undue influence from the client firms or any other source and serve the role of a public watchdog. The commercial goals require attention for the interests of the client firms and revenue maximisation. Combining these goals is inherently complex and different aspects of management (e.g., formal performance measurement, guidelines, training, and culture) can be used to make sure the various goals can be achieved.

Apart from these various objectives and roles, there is also a difference in measurability between objectives. While the measurement of an auditing firm’s commercial performance is relatively easy, the measurement of its professional performance (especially with regard to the quality of the audit) is much more difficult, making the integration of these two objectives more challenging. A further complication is that the eventual user of the audit opinion (the society, investors, customers or banks etc.) is different from the party contracting the auditing firm to give this opinion (the client firm). All in all, auditing firms are complex organisations where auditors from all different levels from trainee to partner need to combine these different objectives and different roles.

Our studies explore the role of different aspects of management (such as formal performance measurement, guidelines, training, and culture) in guiding auditors in this complex environment. During the masterclass we will look at the role different management practices may play in facilitating or hindering professional behaviour and at how they may support auditors in combining different objectives.

After the presentation of the studies carried out so far (30-45 minutes), we will have a break-out activity (30 minutes) in which you will share your own experiences with other audit professionals, reflect on the practical implications of the research findings, and discuss related issues that future research should address. Finally, we will reconvene to discuss your break-out activity insights in a plenary session (15-30 minutes). The masterclass will be followed by drinks.

This masterclass is relevant for audit professionals at all levels of large and small auditing firms who are interested in the topic of management in an auditing context.