Home
›
Projects
›
2023B04 – The organizational setting of Big 4 and mid-sized audit firms and audit quality
Project Number – 2023B04
Research output

2023B04 – The organizational setting of Big 4 and mid-sized audit firms and audit quality

What?

What?

In their effort to uphold their public responsibility and provide high quality assurance, audit firms’ most important input is audit talent. When auditors enter the profession, their talent is mainly shaped by skills and expertise acquired via education. Once in the audit firm, auditors integrate their entry skills and expertise with those acquired through on-the-job learning. Finally, as long as auditors are retained by the audit firm, their talent contributes to audit outcomes. Despite the relevance of the life cycle of audit talent for audit outcomes, research on this topic is limited and mainly gravitates around audit partners and managers.

Why?

In this project, we aim to contribute to this scant body of research by unraveling the dynamics behind an auditor’s life cycle and investigate whether and how the auditor’s life cycle differs between Big 4 and mid-sized audit firms. In a first study, we will examine the attraction of audit talent by examining student perceptions of the audit profession. In a second study, we will examine the retention of audit talent by focusing on auditors’ decisions to leave the auditing profession. In a third study, we will investigate how auditors acquire and develop their skills and expertise while working in an audit firm by studying auditors’ on-the-job learning. In all three studies, which will focus on Dutch auditing firms, we will compare Big 4 audit firms and mid-sized audit firms. By doing so, we aim to contribute to the public debate and the academic literature suggesting that Big 4 and mid-sized audit firms differ along several labor market dimensions.

The Expectations-Reality Gap in Auditing – A Comparison of Student Expectations and Auditor Experiences

To investigate whether student expectations match with early-career realities at Big 4 and midsized audit firms, we analyze survey responses from 344 Dutch business and accounting students and 161 junior auditors. The findings reveal that students consistently misjudge key aspects of the junior auditor role: they underestimate attractive features - such as intellectual challenge, client interaction, and autonomy -and overestimate less appealing features, including repetitiveness and overtime. These misperceptions are particularly pronounced for Big 4 audit firms. Moreover, a larger expectations-reality gap for job content and organizational culture significantly decreases students’ likelihood of pursuing an audit career. Our results highlight the need to improve the accuracy of student expectations to help address the audit talent shortage. Yet, our analyses show that conventional outreach methods, with the exception of in-house days, have limited impact, suggesting a need for alternative approaches to better align student expectations with the realities of audit work.
External →publications.aaahq.org
Narrowing the Expectations-Reality Gap in Auditing: Implications for Recruiting and Developing the Next Generation of Auditors
Audit firms across jurisdictions face a persistent and increasingly acute challenge in attracting and retaining early-career audit talent. A commonly cited explanation for this trend is that today’s students and junior professionals are less willing to accept the demanding working conditions traditionally associated with auditing. While workload and work-life balance undoubtedly play an important role, this explanation implicitly assumes that students possess an accurate understanding of what early-career audit work actually entails. We argue that this assumption is questionable. Drawing on evidence from our recent Accounting Horizons study (Dierynck, Marangoni, Peters, and Weijers 2025), we suggest that an important, but underappreciated, driver of the audit talent shortage is an expectations-reality gap: a systematic mismatch between what students believe the junior auditor role involves and what junior auditors actually experience in practice. Understanding this gap is critical for audit practice. If students base their career decisions on inaccurate or overly pessimistic beliefs about audit work, firms may lose potential entrants before recruitment efforts can meaningfully engage them. Moreover, misaligned expectations at entry may contribute to early dissatisfaction and turnover, further weakening the talent pipeline.
Read PDF
More Info
Understanding Auditors’ Reliance on Emerging Audit Technologies
Audit firms are rapidly integrating Generative AI (GenAI) into their workflows. While these tools can enhance efficiency and support complex judgments, the key challenge is not whether AI provides useful input, but whether auditors use it appropriately. The literature shows that auditors’ reliance on AI is shaped more by behavioral responses, system design, and organizational context than by the underlying technology. Three insights emerge. First, auditors face a calibration problem. They may under-rely on AI due to algorithm aversion, discounting AI-based evidence, relative to human experts, even when it is equally reliable. At the same time, they may over-rely on AI when outputs appear authoritative, fluent, or easy to use. Both problems impair audit quality: under-reliance biases judgments toward management, while over-reliance reduces professional skepticism. Second, reliance depends critically on how AI is designed and embedded in the audit process. Features such as perceived control (e.g., the ability to provide input), adaptability of algorithms, and task–technology-fit influence whether auditors trust and use AI outputs. AI is more effective when it aligns with task uncertainty and complexity, and when auditors can meaningfully engage with the system. Poorly designed or poorly communicated tools risk being ignored or misused. Third, AI affects not only decisions but also how auditors think about decisions. GenAI can improve understanding of complex evidence and help auditors better identify when to raise issues, particularly in remote settings. However, AI can also inflate confidence while reducing self-monitoring, making auditors less aware of when they may be wrong. This creates a risk of overconfidence and inappropriate reliance. Overall, the literature highlights that successful AI adoption is also a behavioral and organizational challenge, not just a technological one. To realize the benefits of AI, audit firms should consider three key levers. First, governance: providing clear guidance on when and how AI should be used and evaluated. Second, design and communication: ensuring that tools align with task demands and enable auditors to meaningfully engage with the system. Third, training and oversight: developing auditors’ ability to critically assess AI outputs and appropriately calibrate their reliance.
Read PDF
More Info
Human Capital Development in Auditing: A Qualitative Study of Learning Mechanisms, Challenges, and Differences across Audit Firms
Human capital is the most crucial input in auditing. While auditors possess skills and competencies when entering the audit firm, on-the-job learning is crucial for the further development of human capital. While prior research has typically focused on one specific learning mechanism, there is a lack of a comprehensive and holistic view of how learning currently manifests in the audit practice. Using 23 semi-structured interviews, this study provides an overview of key learning practices in audit firms, the differences in learning practices between audit firms of different sizes, and barriers to learning in audit firms. This study helps researchers to understand the institutional setting of learning in audit firms and to identify future avenues for research. Furthermore, this study helps practitioners in identifying barriers to learning that may warrant attention.
Read PDF
More Info
The first decade of the FAR: past, present and future
This commemorative booklet marks the tenth anniversary of the Foundation for Auditing Research (FAR). It reflects on FAR’s journey as a unique platform where academic research and audit practice meet to advance audit quality. The publication highlights:
  • FAR’s Mission and Impact: How FAR evolved from an ambition into a reality, fostering collaboration between researchers and practitioners through access to real-world audit data.
  • Insights from Leadership: An interview with founding academic director Jan Bouwens and his successor Anna Gold on FAR’s achievements, challenges, and future priorities.
  • Research Highlights: Four featured studies on topics such as auditors’ commercial efforts, student expectations versus auditor experiences, data analytics and professional skepticism, and learning within audit teams.
  • Key Figures and Projects: An overview of FAR’s outputs, including practice notes, masterclasses, conferences, and a growing portfolio of research projects.
The booklet not only looks back with pride but also outlines ambitions for the future of strengthening knowledge transfer, increasing practical usability of research, and deepening engagement across audit firms and academia.
Read PDF
More Info
The Expectations-Reality Gap in Auditing – A Comparison of Student Expectations and Auditor Experiences
The findings of the study reveal that students consistently misjudge key aspects of the junior auditor role: they underestimate attractive features – such as intellectual challenge, client interaction, and autonomy – and overestimate less appealing features, including repetitiveness and overtime. Moreover, a larger expectations-reality gap for job content and organizational culture significantly decreases students’ likelihood of pursuing an audit career. Our results highlight the need to improve the accuracy of student expectations to help address the audit talent shortage.
Read PDF
More Info
Auditor task prioritization: the effects of time pressure and psychological ownership
The authors study how auditors prioritize their tasks and how differential task prioritization affects auditors’ judgment performance. We leverage Conservation of Resources theory to build our predictions and test these predictions using three experiments with over 350 professional auditors. The first two experiments focus on investigating whether task prioritization affects auditors’ judgment performance. Across two settings, the authors manipulate task order and find that prioritizing an easy task leads to lower judgment performance than prioritizing a difficult task. In their third experiment, the authors gave auditors discretion over task ordering and find that they tend to prioritize easy tasks over difficult tasks. Easy task prioritization is further exacerbated under higher time pressure and is least prevalent in conditions where time pressure is lower and psychological ownership is enhanced.
Read PDF
More Info
No related podcasts found.
No related events found.

Project info

Project Lead

Bart Dierynck

Research team

Lobke Weijers
Christian Peters
Claudia Marangoni
Bart Dierynck

Involved University

Tilburg University
University of Wisconsin
Project Number – 2023B04

Newsletter

Receive updates on FAR research, publications and events.

Back to overview

Filter projects: 

Project Lead
University Filter
1 - 10 of 52 projects