Walking the Talk? Managing Errors in the Audit Profession*

Anna Gold*, Dominic Detzen, Oscar van Mourik, Philip Wallage, Arnold Wright

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Errors reflect unintended deviations from plans or goals and commonly carry negative connotations. Although errors cannot be eliminated, they offer opportunities for learning and innovation. Audit firms employ powerful mechanisms, such as review processes, to prevent or detect audit errors and safeguard their work in the public interest. At the same time, the profession recognizes positive long-term outcomes of errors in terms of continuous learning to enhance auditor skills and, ultimately, audit quality. The current study employs semistructured interviews with Dutch auditors to investigate how they manage the tensions emanating from extant public and regulatory demands for flawless audits while embracing errors as opportunities for learning. Our findings reveal that auditors express a positive attitude toward openly communicating audit errors, but, in substance, they espouse negative emotions and defensive strategies for fear of repercussions. We argue that the excessive emphasis audit firms and oversight bodies place on error prevention conditions auditors into perceiving errors as negative and avoidable events. We assert these attitudes result from the profession's efforts to maintain status and legitimacy in the eyes of the public and the regulator, where any auditor error may shed doubt on auditors' work in the public interest. In sum, our findings indicate that viewing errors as incompatible with audit work makes the profession susceptible not only to repeating errors but also to missing out on opportunities to improve services and to achieve innovation.

Original languageEnglish
Pages (from-to)2696-2729
Number of pages34
JournalContemporary Accounting Research
Volume39
Issue number4
DOIs
Publication statusPublished - Dec 2022

Bibliographical note

Publisher Copyright:
© 2022 The Authors. Contemporary Accounting Research published by Wiley Periodicals LLC on behalf of the Canadian Academic Accounting Association.

Keywords

  • audit profession
  • error management
  • learning from errors
  • legitimacy
  • psychodynamics of work

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