This paper synthesizes research on audit firm culture (AFC) over the past decade, reviewing recent developments in research on factors instilling culture in audit firms, and how culture influences audit quality and auditors’ work attitudes. We develop and apply a three-phase model based on prior research and professional guidance (IAASB, 2014), which maps cultural embedding mechanisms (EMs, visible manifestations and organizational conditions to establish culture), perceptions of existing culture, and consequences of culture. Our synthesis shows that the culture of an audit firm is most oriented toward quality if leadership emphasizes professionalism over commercialism, promotes ethical judgments, and facilitates learning through systems, integration of specialists, and interpersonal interactions among auditors. The research cited shows strong influence on AFC of tone at the top set by leadership, as well as incentives in performance/reward systems. Studies we review generally imply continued concern for the influence of commercialism on AFC, but future research should investigate whether recent forces (i.e. pressure from regulators and efforts by the firms) have caused a cultural shift toward professionalism. We close by suggesting opportunities for future research that can strengthen understanding how AFC can be better managed by firms.
Authors
Cristina Tomas Alberti PhD CPA
Cristina T. Alberti, Ph.D., CPA is an assistant professor in the Accounting and Law division. She teaches auditing and financial accounting. Professor Alberti’s research interests focus on how audit firm culture affects auditors’ judgments and decisions, using qualitative research methods to do so. More recently, Professor Alberti has been interested in exploring the accounting academic culture, including how existing institutional hiring practices impact the diversity, equity, and inclusivity of the accounting academic community. Overall, her portfolio of research focuses on understanding how current workplace practices contribute to accounting firm culture, including the broader culture of the accounting profession and accounting academy.
Prof. Jean C. Bedard
Jean C. Bedard is Professor Emerita in the Department of Accountancy at Bentley University. Professor Bedard’s research interests include individual auditor decision quality, risk assessment and adjustment in audit engagements, and the effects of computerization on the audit process. Her primary teaching interests are financial accounting and auditing, and she has taught at the undergraduate, Masters and doctoral levels.
Prof. dr. Olof Bik RA
Olof Bik is professor of Auditing & Assurance at the University of Groningen. In his research he takes a special interest in the study of culture, leadership, and behavior in the realm of the auditing and assurance profession, firms, and teams. Since its inception in 2015 until 2022, Bik was one of two managing directors and academic member of the Board of the Foundation for Auditing Research. He worked in the audit practice of PwC for 18 years, since 2002 always in combination with a university appointment (Groningen), and joined academia in full since 2012 (Nyenrode).
Prof. dr. Ann Vanstraelen
Ann Vanstraelen is Full Professor of Accounting and Assurance Services at Maastricht University and serves as Head of the department of Accounting and Information Management. She coordinates the multidisciplinary research theme “Culture, Ethics and Leadership”. She earned her PhD at the University of Antwerp. Her research interests relate to the broad field of auditing and assurance services, governance, corporate reporting and disclosure, with a specific focus on the quality of accounting and auditing practices.