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									Auditing research – A review across the disciplinary divide


                  Christopher Humphrey

         Manchester Accounting and Finance Group

                Manchester Business School



Purpose: To review the contribution made by auditing research over the last three

decades to understandings of audit practice and to consider the implications for the

future development of the discipline.

Methodology/approach: Literature review

Findings: Challenges the extent of our knowledge of audit practice, highlighting a

variety of concerns with dominant research approaches/traditions and pinpointing a

range of research questions and approaches which offer potentially rewarding insights

of the audit practice arena.

Practical implications: Emphasises the scope for auditing researchers and

practitioners to think differently about audit practice and to work collectively in

pursuing advances in auditing knowledge and educational processes more generally.

Originality/value of paper:     Illustrates just how vibrant contemporary auditing

research agendas can be when the focus is directly on understanding the practice of

audit and the work of associated regulatory institutions. Argues that the development

of the auditing research discipline has been hindered by desired attachments to so-

called notions of „scientific rigour‟ and a reluctance across significant parts of the

discipline to undertake (or even acknowledge) research of a more „qualitative‟ or

„critical‟ dimension.

Paper type: Research paper

Keywords: Auditing; audit practice; regulation; qualitative; quantitative; research


              Auditing research – A review across the disciplinary divide

A substantial number of papers have been published over the last quarter of a century

on the subject of auditing. Solomon and Trotman (2003), for example, identified that

670 auditing papers had been published between 1976 and 2000 in five accounting

journals – and this did not include a significant number of auditing papers published

in specialist auditing journals1. This paper reviews auditing research during the last

three decades, highlighting some critical features and dividing points in the auditing

literature. The paper is not a comprehensive list of all that has been published in the

field of auditing research, but it is broad ranging in accordance with the remit

specified by the editors of AAAJ and the organisers of the 5th Asian Pacific

Interdisciplinary Research in Accounting (APIRA) conference (at which this review

was first presented in plenary session)2.

The commitment to review studies emerges as a long standing feature of the audit

research discipline, clearly illustrated in major work by authors such as Felix and

Kinney (1982) and Gwilliam (1987). In categorising review studies, it is possible to

divide them into two broad groups. The first group addresses specific auditing issues

such as: audit quality (Francis, 2004; Watkins et al., 2004); audit structure (Bowrin,

1998); audit fees (Hay et al., 2006); auditor independence and non-audit services

  The five journals were: Accounting, Organizations and Society (AOS), Contemporary Accounting
Research (CAR), Journal of Accounting & Economics (JAE), Journal of Accounting Research (JAR)
and The Accounting Review (AR). Solomon and Trotman (2003) used as their starting point the
database of auditing articles (published between 1975 and 1999) compiled by the American
Accounting Association‟s Auditing Section. The most recent version of this archive can be found at The archive is constructed from articles published in the above five
journals, together with those published in Auditing: A Journal of Practice and Theory, Behavioral
Research in Accounting and the Journal of Accounting and Public Policy.

  I am very grateful for comments received on the plenary presentation from attendees at the 5 th Asia
Pacific Interdisciplinary Research on Accounting Conference, Auckland, July 2007 and for the
suggestions made by AAAJ reviewers and a number of fellow audit researchers who kindly
commented on earlier versions of this paper.

(Beattie and Fearnley, 2002; Francis, 2006); auditing expectations (Humphrey, 1997);

audit risk assessment (Allen et al., 2006); audit history (Matthews, 2006); audit

regulation (Cooper and Robson, 2006); audit liability (Pacini et al., 2002; Palmrose,

1997); and auditor reputation (Moizer, 1997). The second group reviews various

research approaches applied in the field of auditing, ranging from studies of

experimental judgement and decision research (see Nelson, 2005; Solomon and

Trotman, 2003;) to contextual and critical research in auditing (Power, 2003b, p. 379)

and historical research (see Fleischman and Radcliffe, 2005; Napier, 2006; Walker,

2005). For readers interested in a particular audit issue or a certain approach to audit

research, the relevant review pieces noted above provide specific reference points.

The primary focal point of this review is the research discipline of auditing, with the

presented analysis raising matters that go beyond singular topics or research

approaches and assessing the prospects for the future development and vibrancy of the


Starting out - what do we know about audit practice?

Despite claims that we know a lot about matters of audit quality (see Francis, 2004),

many of the audit research papers appearing in traditional, US-based journals

arguably consistently struggle to get close to the specifics of audit practice (see

Humphrey, 2001). I would certainly agree with Power‟s (2003b, p. 379) conclusion

that “very little is known about auditing in practical, as opposed to experimental,

settings” and that the role of auditing in the production of legitimacy, and the

consequences of this, remains under-documented and under-researched (p. 392). In

reviewing a small number of papers questioning rationalised accounts of the audit

process and exploring the „back stage‟ of practice3, Power emphasises that the themes

and issues being addressed and discussed by such research (such as processes of audit

change and the way in which practice becomes legitimated) did not favour any one

qualitative methodological perspective and did not exclude quantitative analysis.

What was most critical was for audit research to avoid being hostage to professional

concepts and claims to expertise (p. 392).

It is evident from recent reviews of North American styled audit research that there

are competing views among senior researchers in this field as to the standing and

quality of auditing practice and professionalism. For instance, as Carcello (2005)

sums up an illuminating discussion between himself and Defond and Francis (2005),

“(I)f a glass of water is used as a metaphor for the financial reporting and auditing

process, Defond and Francis would view the glass as half full; I view it as half empty”

(p. 31). Carcello‟s commentary is interesting in that he makes explicit reference to

the work of Wyatt (2004) and Zeff (2003a; 2003b) in questioning Defond and

Francis‟ suggestions that the profession‟s system of self-regulation was adequate and

that Sarbanes-Oxley was an over-reaction. Carcello (2005, p. 33) emphasises that the

greatest problems may have resided not in quality control over audit engagements but

in the more general management philosophy and practice within audit firms: “For

example, firm compensation plans that emphasized revenue growth and client

satisfaction more than professional scepticism and audit quality, management

structures that allowed non-CPAs to serve as office managing partners, and the

managerial mindset that viewed the firms as engaged in the professional services

business rather than the accounting and auditing profession might have been the real

 In other parts of the article, Power also referred to such work as „critical‟ or „counter-mainstream‟

cancer within the profession. None of these issues was included within the scope of

the prior peer review system” (p. 33). Similar points are made by Imhoff (2003, p.

120) in reflecting on the way in which auditing became transformed into a


        “By the late 1980s the major CPA firms had taken the franchise handed down to them
        by the Securities Acts of the 1930s, and turned the audit into a commodity. The
        downward pressure on auditing costs led to relative reductions in salary and quality of
        audit staff, less substantive tests of details and more reliance on analytical review
        techniques, and factors that generally led to a lower-quality audit.” (p. 120)

What is most revealing about Imhoff‟s conclusions is that they do not come from his

own formal, research projects or from a review of the existing audit literature on this

issue. Instead, he explains that his accusations are “based largely on discussions with

audit staff, former audit staff, and former students” (p. 120).

Such an acknowledgment could well invite criticisms as to the validity of such

conclusions – such findings, after all, are not drawn from a tightly controlled research

study or set of experiments. But they will resonate with many who have trained or

worked as auditors. Yet what is frustrating4 is how so much research activity in

countries like the US can carry on with so little attention being given to such issues.

When Zeff (2003b) concludes, on the basis of what has been almost a lifetime‟s

commitment to the dedicated study of the historical development of the accounting

profession in the US, that “business, not professional values, came to dominate” (p.

280) and puts the responsibility for such development firmly in the court of “the

financial incentives given to audit partners by their firms, exacerbated by other

aspects of the firms‟ reward system”, this is a conclusion that cannot be rejected on

 I initially used the word „puzzling when writing this, but anyone who has read the work of people like
Williams et al (2006) will know the importance and power that academic elites can have in terms of
shaping „desirable‟ and „appropriate‟ research agendas.

grounds of a lack of academic rigour. Similarly, when Wyatt (2004) argues on the

basis of forty years of active experience in the accounting profession and a further ten

years observing it, that “commercial interests had undermined the core values of the

professional firm” (p. 50), that firms “need to evaluate the cost to their culture of

introducing individuals who have no understanding of the significance of accounting

professionalism and the importance of ethical behaviour” (p. 52) and that there needs

to be changes in compensation systems so as to give adequate rewards to those who

have been “particularly effective in their technical and professional performance” (p.

52), such conclusions cannot be rejected on the basis that they are ill-informed of the

professional context or lacking practical insight.

However, when one compares the work and thoughts of people like Zeff, Wyatt and

Imhoff with the vast majority of research that appears in journals such as Auditing: A

Journal of Practice and Theory, there is a sense that the former appear to be talking

about a very different audit arena – a commercially driven and politically complex

world of practice inhabited by auditors rather than the scientific laboratory version of

auditing maintained by those conducting research that essentially demonstrates

expertise rather than understand its (social) construction. In this regard, research

which seeks to bridge a knowledge gap and enhance understanding of the practical

realities of audit practice in today‟s commercialised audit environment (e.g. see

Cullinan, 2004; O‟Connell, 2004) does seem to be a pertinent and timely response to

the above assessments of the changing priorities in audit firms.

Political and cultural dimensions within traditional North American audit


While there are evidently different research camps across the audit research

discipline, it is too simplistic to claim that they can be split neatly between those

researchers concerned with/aware of the political and socially constructed nature of

auditing and those that are not5. Indeed, it is of more significance to note the frequent

indications of the politics associated with so-called rigorous, „scientific‟ audit

research – and the numerous questions regarding its validity, reliability and strength

that are raised, not by outside, „critical‟ accounting researchers, but by those working

centrally within the field‟s research parameters.

For example, a recent paper by Hilary and Lennox (2005) found evidence to suggest

that peer review processes undertaken, pre-Enron, by US accounting firms were

credible, although they readily acknowledge that their paper does not provide

unequivocal support for the program. A conclusion that self-regulation was

functioning credibly, however, is a politically powerful one in the current climate of

independent regulation and public oversight. When cited in a review piece by DeFond

and Francis (2005), the paper by Hilary and Lennox is noted as one reporting

evidence that “peer review reports may have been effective” (p. 12) although DeFond

and Francis immediately follow this by stating that “there were very few „nonclean‟

reports, which raises questions about possible under-detecting or under-reporting of
  It is worth emphasising that some care is needed in using a US label or a US vs. Non-US split in
terms of styles and approaches to research. For instance, it is possible to classify journals such as
Critical Perspectives on Accounting as a North American-edited journal, while the AAA journal,
Accounting Horizons, does seem to be receptive to challenging auditing papers on the nature of the
audit practice environment. It should also be said that various US and Canadian researchers have also
published powerful papers in other international accounting journals (such as Accounting,
Organizations and Society and AAAJ) that have been critical of auditing processes or presented
alternative histories or explanations of the development of audit practice and the actions of professional
accounting bodies. Similarly, care needs to be taken with language, so that it does not serve to
reinforce stereotypes and existing hierarchies. For instance, any attempt to classify North American
accounting journals as leading or international journals should recognise that in certain elements of the
accounting (and auditing) discipline they are not leading as they just do not publish such research,
while their editorial board domination by North American academics would, in any other country in the
world, lead to them being classified as national journals (see Lee and Williams, 1999).

quality control problems” (p. 12). What is not mentioned in such conclusions

(although it is noted in the early part of the paper by Hilary and Lennox) is that while

the paper focuses on 1001 reviews issued in the years 1997-2003, Arthur Andersen

was not included in the sample on the grounds that “its peer review was being

completed as the Enron scandal began to unfold” (p. 216). Ironically, Defond and

Francis (2005) do note in an earlier discussion that this was a very significant peer

review report (p. 11): “We believe one critical trigger occurred when Deloitte &

Touche issued a „clean‟ peer review report on Arthur Andersen in December 2001,

just a few weeks before Andersen publicly announced that it had shredded documents

related to the Enron audit. The credibility of the entire accounting profession was

immediately in doubt along with the credibility and integrity of the profession‟s self-

regulation program” (p. 11). Such a conclusion does make one wonder what impact

its inclusion would have had on the paper by Hilary and Lennox (and subsequent

citations of such work).

Francis‟ (2004) important and detailed review of audit quality research is increasingly

being cited as a paper that says we know quite a bit about audit quality and that the

overall picture in terms of auditor performance, at least in larger firms, is pretty

positive. However, it is worth reconsidering some of the claims and arguments put

forward. Francis (2004) pushes hard to argue that auditing is relatively inexpensive

(costing less than 1/10 of one percent of aggregate client sales), that outright audit

failures with material economic consequences are very infrequent (with the number of

lawsuits against auditors being small, despite the often-heard claim about rampant

litigation [p. 347]) and that audit reports are informative, despite the presence of a

small absolute number of false positives and negatives (p. 360). However, a problem

for Francis in trying to argue that audit quality may be at a “socially desirable level” is

that auditors seem to get it wrong when it matters most. Cited work by Carcello and

Palmrose (1994) and Francis and Krishnan (2002) reveals that 70% of bankrupt

companies were preceded by a clean audit report (false negatives), while six out of

seven going concern reports issued are for companies that do not go bankrupt. Would

a soccer referee, for instance, be able to convince sports commentators that he

refereed well the vast majority of the matches over a season, even though on the times

that the ball went in the penalty area (a) he happened to give penalties for tackles

(which 6 out of 7 times) were not fouls and (b) failed to give penalties (on 70% of the

occasions) when fouls were really committed in the penalty area? It is also not much

use the referee saying that over a whole game, far more fouls are committed outside

the penalty area – the penalty area is the critical area and the one in which the referee

has to be right if he wants to retain a position at the top of the profession.

Potential political dimensions also reside in assessments of the relevance and

legitimacy of the data from which research conclusions are drawn. For instance,

studies based on non-US data have been questioned for their empirical relevance to a

US context. Illustrative of such a tendency is a recent paper by Ruddock et al. (2006)

which found evidence of a relationship between audit quality and the provision of

non-audit services but which has been criticised on the grounds that the findings

derive from a very different institutional context (for a review, see Francis, 2006).

Interestingly, such criticisms do not seem to be made, at least not as visibly or in such

depth, in terms of US studies carried out in a pre-Enron context which have politically

powerful conclusions regarding the relationship between different audit regulatory

regimes and standards of audit quality. It is quite possible to argue that pre-Enron

studies (even if published post-Enron) derive from a very different institutional

context than that currently facing auditors and auditing regulators.

Francis (2004) explicitly draws attention to the political dimensions of US auditing

research when considering how the former SEC Chairman (Arthur Levitt) had

pursued a ban on non-audit services, despite the absence of compelling supportive

empirical evidence (p. 359). He notes that research by Frankel et al. (2002)

subsequently provided such evidence but was quickly followed by four papers

refuting some or all of their findings (see Ashbaugh et al., 2003; Chung and Kallupur,

2003; Larcker and Richardson, 2004; Reynolds et al., 2004). Francis leaves it to a

footnote to deliver a pretty frank assessment of the significance of such actions:

         “The Frankel et al. (2002) paper hints at some political dimensions to accounting
         research. The accounting establishment was upset by the Frankel et al. study, and I
         believe there was some sympathy within the academic community to publish papers
         refuting their findings. Top-level accounting research journals do not generally
         publish replications or „no result‟ studies, yet this is what occurred in the non-audit
         services area. A more generous view is that the policy implications are very
         important in this area and there was a genuine appreciation of the need for multiple
         studies to determine if there really is a potential audit quality problem from the joint
         provision of audit and non-audit services6.” (p. 357)

In a subsequent paper, Francis (2006) revisits the issue of the replicative challenge to

the findings of Frankel et al. (2002), noting “(O)ne cannot help but wonder how many

other fragile results exist in the published research literature that might not hold up to

(this) kind of rigorous replication”. Carcello (2005) backs up such concerns regarding

research reliability, noting that research results are often inconsistent, reflecting “the

realities of using different samples, different models, and different variable

definitions” (p. 37).

  Nevertheless, it does raise the question as to whether the same events would have been set in motion
if the Frankel et al study had come out with the conclusion that the provision of non-audit services did
not hinder audit quality.

Some of those working in this field of audit research have raised political and cultural

dimensions when considering the implications of their work for auditors and future

audit research. For instance, Nelson (2006), in a response to a challenging paper by

Moore et al. (2006) on the pervasiveness of conflicts of interest in the auditing

profession, while seeking to defend the achievements of judgment and decision-

making research in auditing, acknowledges the need to respond to criticisms of the

culture within audit firms:

       “More generally, it would be interesting to further consider how auditor
       professionalism can be reinforced and how audit firm cultures can be modified.
       Moore et al and others (e.g. Wyatt, 2004; Zeff, 2003a, b) describe changes in the
       audit industry that have affected auditors‟ perceptions of themselves and their role in
       society….For audit firms to change themselves, they must understand how aspects of
       their operations determine their culture.” (p. 38).

Nelson also talks of the need to address all of the incentives (whether economic,

psychological, conscious or unconscious – social – pressures) in the context of

auditing institutions and goes on to conclude that it “is difficult to envision

institutional arrangements in auditing or elsewhere that do not include conflicts of

interest; the question is how those conflicts are managed” (p. 39).

DeFond and Francis note (p. 10) an evident awareness of the inherent subjectivities of

audit practice and the differential quality of audit practice across audit firms:

       “Given the broad nature of GAAS (Generally Accepted Auditing Standards), there is
       a fair degree of latitude in how accounting firms implement GAAS. That is, there is
       no single correct audit approach to the planning, gathering and interpretation of audit
       evidence that culminates in the audit report.” (p. 10).

They also recognise the problems of demonstrating cause-effect relationships and the

dangers of making inferences from research evidence that is “necessarily indirect,

making it difficult to rule out alternative explanations” (Defond and Francis, 2005, p.

24). Francis (2004), for example, while concluding that the collective evidence is

strongly supportive of larger audit firms providing higher quality audits than smaller

firms, emphasises the difficulty of rejecting an alternative hypothesis (or cause-effect

pattern) that „good‟ companies with „quality earnings streams‟ are more likely to

select Big 4 auditors. “In other words, it‟s not high-quality auditing that causes the

observed audit outcomes; rather, auditor choice is endogenous and it may simply be

that good firms with good earnings quality hire high-quality auditors” (p. 354) (for a

similar conclusion, see Watkins et al., 2004, pp. 175-76). There is also a growing

recognition that Big 4 firms cannot be treated as homogenous (particularly in the light

of a range of corporate scandals and failures that have demonstrated an evident lack of

homogeneity) and the need to focus attention on individual practice offices and

institutional differences across countries (for discussions, see Defond and Francis,

2005; Francis, 2004).

A detailed review of the existing audit literature on structured audit approaches (see

Bowrin, 1998) emphasises that “the adoption of structured audit approaches by large

CPA firms was not simply a technical phenomenon designed to enhance audit

effectiveness and efficiency. The trend toward structured audit approaches was also

motivated by political forces within CPA firms and legitimacy concerns of CPA firms

and the auditing profession” (p. 62). While clearly preferring experimental approaches

to address the efficiency and effectiveness of different audit approaches, Bowrin

(1998) does cite work by Carpenter and Dirsmith (1993) and Francis (1994) which

raised such legitimacy issues as drivers of change and noted the likelihood that some

research avenues (seeking to study the impact of new approaches on processes of

auditor judgment) would require access to potentially sensitive information in the

form of firms‟ detailed documentation about such approaches (p. 64).

Finally, one can also find recognition of the political nature of processes of

accounting and auditing regulation. Francis (2004), for example, is critical of the fact

that “regulation lacks a tradition of using scientific-based research as input to policy

deliberations. While we may lament this state of the world, the fact is that policy

making is inherently a political rather than scientific process, especially in those fields

where the underlying research domain is in the social sciences and which are

perceived to be „less scientific‟ and more subjective than the natural sciences” (p.

360). Carcello (2005, p. 34) reinforces such points by indicating that there is a

contrast between the typical econometric models used in empirical studies which

“look at the relation between the average level of a test variable and the particular

dependent variable used to proxy for financial reporting or audit quality”.

Conversely, regulators are often interested in the relation between extreme

observations – for example, very high relative or absolute levels of nonaudit fees –

and financial reporting or audit quality.        We need to recognize the institutional

pressures and incentives faced by regulators, and incorporate these factors into our

research designs, if we want our research to influence regulatory deliberations” (p. 34)

The issue between the nature of regulation and the role played by auditing research is

a fascinating one as Francis, DeFond and Carcello are all agreed in terms of the

questionable lack of impact of audit research on processes of auditing regulation (or

the irrelevance of research to policy decisions). Remembering that Francis has been

noted as one of the most prolific and successful researchers in the field of empirical

auditing (see Carcello, 2005, p. 31)7, his comments on the lack of usage of US audit

research by regulators is very powerful and needs to be listened to carefully:

           “(A)cademics often eschew research with explicitly normative policy implications, or
           at least fail to directly address potential policy implications in their research. Part of
           the blame for this may lie in arguments advocating so-called „positive‟ research over
           more explicitly „normative‟ accounting research. However, all accounting research is
           fundamentally normative and deeply ideological in terms of the particular research
           question that is asked in a research study, how the research question is framed,
           preferences for certain research methods relative to others, and the interpretation of
           research findings (Arrington and Francis, 1989). Another reason why academic
           accounting research is ignored by policy makers is that many leading accounting
           academics so clearly adhere to the Chicago school of economics which is generally
           hostile to government regulation. In addition, accounting academics are often viewed
           as apologists for the accounting profession and in particular for the Big 4 accounting
           firms. This view is reinforced by numerous Big 4 professorships and donations to
           accounting departments of US universities, and the general lack of critical reflection
           in accounting scholarship published in leading US research journals.” (Francis, 2004,
           pp. 359-60)

Carcello (2005) comments on how at times he had got frustrated that much research

appears “to be written primarily for other academics working in narrowly defined

areas and for doctoral students” (p. 37) and identifies several reasons why “our work”

has not had much public policy impact. These include academic reward structures that

reinforce narrowly focused research, a lack of research access to necessary data or

timelines set by regulators that cannot be met by researchers – and the general

inconsistency of research findings (that “reflect the realities of using different

samples, different models, and different variable definitions”) which regulators do not

have the time to sift through and understand.

The (unaddressed) question of qualitative auditing research

Strikingly, in all of this review work by Francis, DeFond and Carcello, there is no

serious consideration given as to the potential of adopting qualitative methodological

approaches or ways of viewing auditing and the task/obligations of audit research that

    Along with Mark DeFond, his co-author on several papers.

seek to engage much more closely with the social construction of audit practice. This

is surprising in that their work and a number of their identified research questions

place greater emphasis on the need to examine the ways in which such firms manage

and organise themselves, and the institutional differences that can exist across firms

and countries. Reading Francis‟ (2004) review, there is an obvious progression of

analysis from Big 4, to individual Big 4 firm, to Big 4 city office, to Big 4 city office

partner to (hopefully) individual audit practices – including the way in which Big 4

city office partners manage an individual audit, how they decide what to test, how

they develop confidence in the company accounts, how they see the audit as making a

difference, how they manage the audit team, how they deal with their shifting status

and reputation as an audit partner at a time when auditing may have gained or lost

status or influence as a professional firm activity.

DeFond and Francis (2005) and Carcello (2005), however, do not ask such questions

but see desired examinations very much in terms of studying the relation between

office level metrics and (proxies for) audit quality, exemplified in studies such as

Francis et al. (2005). They do not discuss the potential value of qualitative research

approaches in enhancing understanding of the process of, and structures governing the

provision of, auditing services, even though many of their questions push the

importance of shifting analysis from a macro-level to a more micro-perspective; from

studies that treat accounting firms as homogenous (Big 4) entities to organisations

with the potential source for difference and differentiation at the levels of individual

offices, individual partners and individual clients (for more details, see Francis, 2004,

pp. 355-56). It is particularly interesting to compare their reflections with those of

Hopwood (1998), who also identified the importance of studying the modern audit


        “If research is to be meaningful in the modern era the world view of the research
        community must change. The commercialism of the audit industry must be
        acknowledged. Rather than taking professional claims for granted, the ways in which
        they are sustained must be investigated, as should their consequences … . For surely,
        the privileges and protection still granted in the name of professionalism must be
        even more valuable in the newly commercialised setting.
         So much remains to be known of the economic and social structures of the audit and
        consultancy industries, their modes of internal organization and processes of
        management. Engaged in selling services that are crucially dependent on ideas,
        conceptual understandings and discursive representations, the rhetorical constructions
        engaged in by the audit industry are nevertheless still poorly understood. How are
        audit and consultancy services newly presented? What rationales enter into the
        delineation of the imperatives for their purchase? How have these been changing over
        time?” (p. 516)

Francis emphasises that there are things we don‟t know about audit quality (including

whether US evidence generalises to other countries with different auditing and legal

regimes) but concludes in a relatively positive fashion that we know more about audit

quality than we might have originally suspected (2004, p. 360). But what are the

audit practices that are most effective or powerful? What specific practices, work

approaches and environments are most critical to the provision of a quality audit and

in what ways do they combine to produce or hinder the development of quality

audits? What is it that the Big 4 firms do differently in terms of their audit work or

what are the distinctive styles of work adopted by individual offices within a Big 4

firm? What is the positive evidence of audit practice success? Or is it the case that

accounting and internal control systems may well have been good enough without

auditors doing anything? While it is wrong to presume an audit failure has occurred

just because a business failure happens, similarly it is wrong to presume that business

continuance means audit success.

Francis (2004) and Defond and Francis (2005) certainly do seek to encourage more

questioning of the nature of audit practice by asking questions as to what is an optimal

level of audit quality (i.e., how much auditing and auditing regulation is enough?).

But raising issues of optimality with respect to a function that is recognised as being

socially constructed („there is no one best method of planning and undertaking an

audit‟) is problematic in that one person‟s optimality is unlikely to be adequate for

others. Indeed, the persistent historical existence of an auditing expectations gap

rather suggests that the real priority has to be one of understanding what auditors do

and do not do – rather than seeking to identify some absolute, ideal notion of audit

quality. This appears to be a point that even audit regulators now accept: “There is no

single agreed definition of audit quality that can be used as a standard against which

actual performance can be assessed” (Financial Reporting Council (FRC), 2006, p.


The significance of social construction is evident in aspects of Francis‟ work. For

instance, he cites as positive evidence of the quality of audit practice that actual

litigation rates against auditors are small, but does not comment that the claims about

so-called „rampant litigation‟ against auditors (Francis, 2004, p. 347) often emanate

from the large accounting firms themselves - suggesting that the construction of

auditing expectations and responsibilities is an interested activity and not a collective

pursuit of some idealised, optimal, state. There are also some contrasting conclusions

in Francis‟ (2004) sole authored paper and his 2005 joint paper with Defond. Francis

(2004) concludes that the importance of perceptions is such that the time has come for

the accounting profession to stop providing non-audit services for audit clients, basing

this decision principally on the significance of perceptions and the need to get

auditors more centrally focused on their raison d’être, namely the independent

attestation of financial statements: “To restore public confidence in auditing, and to

possibly increase actual audit quality as well as the public‟s perceptions of quality,

accounting firms can signal their unambiguous commitment to audit quality by

Voluntarily stopping the provision of other (non-audit) services to audit clients in

order to convey in the clearest possible manner that independent auditing is the core

value and the core business of public accounting firms” (p. 364).                    In Francis and

Defond (2005), however, the authors express their belief that “the SOX provision that

bans most nonaudit services is at best misguided, and at worst politically-motivated”

(p. 6) – suggesting that „optimal‟ regulatory arrangements regarding auditing are

somewhat unstable and contextually dependent8.

Again, on this issue, DeFond and Francis (2005) emphasise the importance of

questions which are ideally suited to more qualitative-based research approaches but

essentially contemplate the use of (linear or non-linear) regression models to measure

(or in their terms, understand) “issues such as fee dependency, whether the personal

relationships created by non-audit services are likely to threaten independence,

whether there are contextual issues (such as the firm‟s overall governance

environment) that are important in explaining whether auditor independence is

impaired, and the possibility that these issues only matter when fees are exceptionally

large” (p. 16). The reluctance to draw, for example, on detailed contextual case

studies, is nothing new in much of the auditing literature. Sadly, there is a

longstanding tendency for quantitative-based audit research papers, in their

conclusions, to talk of the potential value of doing case-based work as one way of
 DeFond and Francis (2005) generally appear less critical than Francis (2004). For instance, the latter
noted that auditing researchers were seen as apologists for the auditing profession, while the former
urge that such researchers must not come to be seen as apologists (p. 6).

extending insights of audit practice (but they nearly always leave it for somebody else

to do) with the next paper being another quantitative, market-based, study.

The danger with this tendency is that it means that much audit research is not really

studying audit practice per se; rather, it is very often studying correlations between

independent (market variables) and proxy measures of a dependent audit variable

(such as audit quality), or focusing on a fabricated form of audit practice that has been

generated through a series of audit experiments. A classic illustration of this tendency

is provided in Solomon and Trotman‟s (2003) review of auditor judgment and

decision-making research.      They conclude that while the “auditing profession is

rapidly advancing in response to change in its environment … auditing scholarship is

advancing at a much slower pace” (p. 409), and hope for a new revolution in auditing

scholarship. Solomon and Trotman place most store on papers “that pose and test

theories that are well suited to the changing environment and task demands faced by

the auditor” (p. 409) and emphasise the value of „future directions‟ papers that either

describe the factors giving rise to changes in auditing thinking and how auditing is

being done and/or focus on new theories for framing and methods for studying the

contemporary audit discipline (p. 409). Interestingly, though, their conclusions are

quite different to those of Power (2003b) in the very same issue of Accounting,

Organizations and Society. While seeing some value in case-based research, their

evident preference is for more experimental testing (p. 408) (a recommendation also

advocated by Francis, 2006).

       “We believe that there is an urgent need for further research on audit judgment and
       decisions. In addition, we believe that experimentation continues to be a viable
       means of testing and refining theories of auditor behaviour. This latter statement
       should not be interpreted to mean that we do not see value in research approaches
       such as field studies and surveys. On the contrary, we believe strongly in the
       triangulation that results when researchers conduct studies employing different

       research approaches. On the other hand, because of its high internal validity,
       experimentation is likely to continue to play a valuable role in advancing the audit
       judgment and decision knowledge frontier.” (Solomon and Trotman, 2003, p. 408)

Solomon and Trotman do go on to make the valid point that “the large accounting

firms have frequently changed their audit approach over the last 25 years but there has

been very little use of experiments to test these changes in advance of their adoption”

(2003, p. 408, emphasis in original). However, they do not consider whether case-

based research, for example, has a value in itself, as against just being a useful tool in

a process of triangulation. They also fail to provide any detailed comment on the

limits of research methodologies that have low external validity.

Solomon and Trotman‟s analysis is similarly intriguing in terms of the questions that

it chooses not to address or to encourage others to address. For example, they want to

test whether audit methods should be changed, but do not raise what are legitimate

and valuable research questions as to what drives audit firms continually to change

their audit approaches, what factors help to promote and ensure acceptance of

particular (new) methodologies, what roles do such methodologies play in

legitimating or bolstering expectations of audit practice and understanding whether

and why previous approaches struggled to deliver what was expected of them.

Similar challenges can be made towards other fields of auditing research. For

instance, in the audit fee area, for all the regression-based studies, how much do we

really know as to how auditors, themselves, price an audit? How do they determine a

tender bid and what distinguishes the behaviour and presentation strategies of audit

partners or firms with higher success rates in winning audit tenders? How many audit

firms price their audits using extensive/detailed regression equations? Similarly, with

audit committees, while studies may make recommendations as to desired changes in

their structural set-up, what do we know about what audit committees do in terms of

their day-to-day practice, and how, as bodies charged with improving standards of

corporate governance, have they managed to convince as a solution or strategic

development when containing structural flaws? (see Turley and Zaman, 2004; 2007;

Gendron et al., 2004).

Scientific rigour and the subordination of audit research

Many of the above questions seek to place emphasis on understanding auditors‟

behaviour and audit work practices, with a need to move beyond approaches that

focus on identifying key correlations and the construction of predictive models that

link variables and outcomes but say little about the process by which such outcomes

arise. A key issue, therefore, is what is causing researchers to pull back from a more

active study of the subjectivity and variability of audit practice, the drivers of change

in audit practice and/or the political nature of auditing regulation. Why do highly

respected researchers ask questions ideally suited to a qualitative mode of research

and either fail to contemplate its applicability or choose, fairly automatically, to

pursue a more quantitative based approach?       Why do such audit researchers seem

happy to stay on what could be regarded as the outside perimeters of audit activity

and never get down to studying exactly what is or is not done, documented, argued,

challenged, feared, worried, ignored, overridden, changed or developed in the name of

audit? Why do they fail to reference work which has sought to address such themes

and issues, but from a different research approach or perspective? Why do they stick

with the same philosophical approach to audit research when they readily

acknowledge that the issues and questions raised in relation to auditing and the

auditing profession have been around for a long time (Defond and Francis, 2005, p.


The resounding and overriding reason for such behaviour is the strong belief that

auditing research must maintain its claimed attachment to so-called notions of

scientific rigour:

        “the criticism in SOX is unusually intense and appears to be partially motivated by
        political expediency and often based on anecdotes. Thus, we strongly encourage
        researchers to use their training in the scientific method to bring rigour and discipline
        to address the criticism implicit in SOX.” (Defond and Francis, 2005, pp. 6, 9; )

        “As researchers our differential advantage is that we are trained in the scientific
        method and as such should be able to bring more rigour to inquiries about what is
        wrong with the system.” (Defond and Francis, 2005, p. 9)

        “Policy makers and regulators also share in the blame, however, For example,
        accounting regulation lacks a tradition of using scientific-based research as input to
        policy deliberations.” (Francis, 2004, p. 360).

The direct consequence, and real danger, of such a perspective and belief system is

that it essentially subordinates research to the regulatory process, rather than allowing

audit research to be an activity that seeks to study the political and various other

dimensions of the regulatory process. There has to be a questionable value to audit

research (and an inherently frustrating task for researchers) if it is destined only to test

the „empirical validity‟ of regulations, knowing full well that the demands and

pressures on regulators can lead to changes in regulations on the grounds of political

necessity and expediency rather than being based on solid empirical evidence. There

are some illuminating comparisons that can be made here with the literature on value-

relevance studies in financial reporting and accounting standard setting. For instance,

Holthausen and Watts (2001, p. 64) criticise value-relevance studies for not

incorporating factors other than association with equity value in their theories of

accounting and standard setting. “Standard setters would be aided if accounting

researchers spent more resources investigating the many forces that shape accounting.

Moreover, we believe such research would lead to a more fully developed theory of

accounting.   We worry that many researchers have begun to assume (without

supporting evidence) that financial reporting is predominantly concerned with equity

valuation and have lost sight of the other important roles for accounting” (p. 64). The

response to this paper by Barth et al. (2001, pp. 86-89) makes very clear the restricted

nature of value-relevance research and the understanding that researchers are there to

provide inputs into the standard setting process and avoid addressing the political

dimensions of the accounting standard setting process.

       “(W)hen it issued SFAS No. 107, the FASB was concerned with questions such as:
       Are SFAS No. 107 disclosures useful to financial statement users incremental to
       items already included in financial statements? Are fair value estimates, especially
       those relating to loans, too noisy to disclose? Academic research generally avoids
       such normative questions because they require a more comprehensive analysis than is
       possible in a typical academic study. Instead, value relevance research provides
       insights regarding answers to these questions by asking questions such as: Do SFAS
       No. 107 fair value estimates provide significant explanatory power for bank share
       prices beyond book values?” (Barth et al, 2001, p. 86-87)

       “Value relevance cannot be a sufficient condition for standard setters because they
       must make social welfare trade offs that cannot be captured by value
       relevance….Value relevance research is designed to provide evidence to accounting
       standard setters that can update their prior beliefs about how accounting estimates are
       reflected in share prices and, thus, can be informative to their deliberations on
       accounting standards…..The extent and pervasiveness of the value relevance
       literature in the leading academic accounting journals…as well the adaptations of
       several of the studies in professional journals and the FASB Research Supplements,
       are testimony to its perceived contribution to academic research and relevance to
       accounting practice.” (Barth et al, 2001, pp. 88-89)

Barth et al. conclude that it takes considerable time and effort to learn about questions

of interest to various financial reporting constituencies (p. 99), but they seem content

that the question increasingly dominating professional and public debate (namely, the

social legitimacy of accounting standard setting bodies) is not one that accounting

researchers need to address. Rather, accounting research has to play a narrower role of

just providing „empirical‟ inputs into the decision-making processes of standard

setters. It is interesting to compare such conclusions with those of academics who

were involved in the very early days of the development of decision-usefulness

research in accounting and who had a close attachment to the standard setting process.

Staubus (2003), for instance, in a review of his academic career, observed that he had

published more than any other living author in The Accounting Review, and while he

considered it to have been the best of the accounting journals, he added that he found

“little of interest in it these days” (p. 182)!

In one of his earlier papers, Francis (1990) wrote that attempts by the profession to

portray auditing as a scientific-like activity would not work in the long-run and was

very likely to prove counter-productive. In reaching such a conclusion, he noted that

Dirsmith et al. (1985) had persuasively made the case that good judgmental auditing

is more likely to keep the auditors out of court and would outperform “over-

objectified and over-structured approaches to auditing” (Francis, 1990, p. 14). Such a

statement readily invites the question as to why the same type of conclusion does not

apply to auditing research, especially when it is claimed by some of those advocating

scientifically rigorous auditing research that such work is routinely ignored by

regulators, and when such people are able to recognise the importance of exploring in

more depth and empirical detail the context within which auditing work is undertaken

and not assuming that such environments are homogenous within or across firms and

countries. If auditing is a socially constructed activity, why not research it with the

whole barrage of tools and different trains of thought that make up the social sciences

instead of applying a very small (and practically highly debatable) kitbag of so-called

„scientific‟ techniques? As Whitley (1988) observed many years ago in a damning

critique of positive accounting research, the “idea that scientific research will lead to

the construction of precise and complete quantitative theories of social phenomena

which could be incorporated into managerial and accounting techniques, in a similar

way to theories of ideal machines and electron discharges in light bulbs being

incorporated into engineering designs … seems unreasonable” (p. 639).

Whitley‟s suggestions regarding the way in which accounting research needed to

develop have a continuing resonance to the field of auditing research:

       “(A)ccounting researchers concerned to understand accounting practices with a view
       to „improving‟ them in some way should become more modest in their aims and
       focus on how particular social processes helped to produce particular sets of practices
       in certain circumstances. The constitution and change of accounting practices as ways
       of generating various sots of information for different groups then become objects
       requiring explanation rather than taken-for-granted „realities‟ … By providing better
       understanding of why particular conventions arise and how they should function,
       accounting researchers should enable practitioners to improve their practices and
       procedures that produce accounting information for particular purposes in particular
       situations” (Whitley, 1988, p. 640).

Whitley emphasised that the pursuit of „scientifically rigorous‟ research in accounting

was seriously flawed and did not threaten current practices and conventions because

research was being constructed in such a way that it was not dealing with such

practices but working in „imaginary‟ worlds of economic equilibria and rationality

(also see Williams, 1989). Again, such conclusions are highly relevant in the field of

auditing research.

An Americanised world of auditing research?

Whitley rightly anticipated that the „scientific‟ take-over of US accounting research

would be long-lasting. The issue which should be confronting audit researchers

nowadays, however, is the extent to which such an approach is dominant

internationally.     Across many aspects of the international auditing research

community, the approaches to audit research traditionally identified with journals

such as Journal of Accounting Research, The Accounting Review and the Journal of

Accounting and Economics are certainly privileged. A powerful illustration of this in

the context of auditing research is the database put together by the AAA auditing

section entitled “30 years of auditing research”. Without a hint of explanation, the 30

year database only lists papers published in eight journals9 and ignores a whole range

of critical, historical, contextual and market-based studies of auditing practice and

regulation published in numerous other journals10.

For researchers rooted in the social and critical dimensions of accounting research,

such behaviour is probably not that surprising and indicative of US-based accounting

research traditions and academic hierarchies (see Lee, 1995; 1999; Reiter and

Williams, 2002; Lukka and Kasanen, 1996). It is also supported internationally by, or

reflected in, the growing global use of formal journal rankings in the institutional

performance assessments of, and promotion decisions concerning, academic

researchers11. Many of these formal rankings routinely rank such US-based journals

highly, making it very likely that researchers keen on gaining promotion will seek to

publish in them. Indeed, increasingly audit researchers who speak English as a second

language, comment that they perceive it as much easier to do quantitative-oriented

   Accounting, Organizations and Society, Auditing: A Journal of Practice and Theory, Behavioral
Research in Accounting, Contemporary Accounting Research, Journal of Accounting and Economics,
Journal of Accounting and Public Policy, Journal of Accounting Research and The Accounting Review.
   Which include, in terms of English speaking journals, publications such as: Abacus; Accounting,
Auditing and Accountability Journal; Australian Accounting Review; Accounting and Business
Research; Accounting and Finance; Accounting, Business and Financial History; Accounting Forum;
Accounting Historians Journal; Accounting History; Accounting Horizon; British Accounting Review;
Critical Perspectives on Accounting; European Accounting Review; Journal of Business Finance and
Accounting; International Journal of Accounting; International Journal of Auditing; and Managerial
Auditing Journal.
   Interestingly, in the above example, there is some indication that that the AAA is not averse to a
degree of politicking in the auditing field. For instance, when Solomon and Trotman (2003) undertook
their review of experimental judgment and decision making audit research they only concentrated on
what they saw as the „top five‟ journals and this did not include Auditing: A Journal of Practice and

research, particularly in terms of getting papers published, with qualitative research

being seen to require much higher English writing abilities and much better levels of

contact with professionals working in auditing firms or regulatory agencies. It is also

argued that it is much harder to disguise the (non Anglo-American) context in which a

case-study was undertaken, meaning that researchers can save time and effort by not

having to come up with arguments to convince reviewers that their study is

internationally relevant. It is also said to be far easier to handle supervision and

examination arrangements for doctoral students if they choose a market-based study.

For those audit researchers working in countries with small scale stock markets, there

is no quandary over trying to disguise their own national context – they just choose to

work with US data. However, this can prove quite problematic, with such researchers‟

understanding of the US audit practice and regulatory environment contrasting poorly

with their evident expertise and understanding of their own country and the structural

and social conditions governing the operation of financial markets and auditing


Other such characterisations of the developing world of audit research include

listening to young researchers who tend to talk more about the journal in which they

are seeking to publish or proposing to send their paper, than the precise contents of

the paper and what motivates or interests them in terms of the research issues being

studied. Much of today‟s audit research arena is about attending seminars where

fewer and fewer people have ever worked as an auditor or had any experience , as a

participating observer, on an actual audit assignment. Or presenting at audit

conferences where the vast majority of papers are not of a qualitative form. It is about

listening to academics explaining that lengthy multiple regression equations have not

inordinately complicated the subject matter being researched but make it easier to

identify which variables, ultimately, have a significant impact on practice12. It is also

about European-based researchers who seem to have given up in terms of seeking to

demonstrate or even argue themselves that there is anything distinctive about

European auditing research – and seldom even seeking to reference work done by

European audit researchers – because they know that they can progress more quickly

in their careers by publishing in North American-based accounting journals. It is even

about regulatory bodies claiming knowledge and expertise in the field of auditing, yet

failing to recognise significant proportions of relevant auditing literature13.

The intriguing aspect here is that such developments are happening even though, as

the above analysis has demonstrated, leading researchers in this element of the

auditing discipline are pretty critical as to the impact and achievements of such

research. Indeed, it is important to remember that the above mentioned criticisms,

particularly in the area of policy impact, have not come from researchers applying

critical perspectives to auditing research. It is from those who have devoted much of

their researching lives to such work. It is also important to remember that for the

limited number of auditing papers published in academic journals, there are likely to

be many more, of a similar ilk, not even making it into such journals. So it is arguably

a very substantial amount of effort that is required to achieve not so much in terms of

enhanced understanding of international auditing practice and associated regulatory

  Felix et al (2005), for instance, while acknowledging that their data set did not allow them to explore
the nature of internal audit work, chose to assess the impact of such work with the help of a 15
independent variable regression equation – with the contribution of internal audit being equal to β0 + β1
  A classic example here was provided in the above mentioned FRC‟s (2006) discussion paper on audit
quality, which although noting the socially constructed nature of audit quality, relied on a literature
review which only referenced quantitative, market-based studies of audit quality.

processes. It is also worth pointing out that criticisms of such research emphases are

also made by US researchers studying auditing from different disciplinary

backgrounds. In a recent exchange of views, Moore et al. (2006) use moral-seduction

theory and issue-cycle theory to claim that fundamental structural reform of the US

auditing system is still necessary in a post-Sarbanes-Oxley world. Nelson (2006)

seeks to counter such arguments, essentially arguing that it is important to give the

reforms a chance to work and that alternative major proposed reforms are not

sufficiently convincing to be implemented. Bazerman et al. (2006), in reply, rally

against what they classify as Nelson‟s proposed careful, incremental approach for

ignoring “overwhelming evidence suggesting that the current (auditing) system is

profoundly flawed” (pp. 43-44).

       “This careful incremental approach is endorsed by accounting firms themselves, and
       it bears a striking resemblance to the approaches advocated by the leaders of other
       industries attempting to stave off regulation in the face of strong evidence that they
       have been misleading the public. For example, tobacco industry executives have
       argued that we need more research on the causal effects of smoking, or that we need
       more research on the causal effects of second-hand smoking. Similarly, a number of
       energy companies (e.g., ExxonMobil) have attempted to question the strong scientific
       consensus regarding the reality of climate change and the casual role that humans
       have played...As in the case of second-hand smoke and global warming, we believe
       that the evidence is in: if the auditing industry honestly wants to provide independent
       audits, major changes are needed.” (Bazerman et al, 2006, pp. 43-44)

Bazerman et al. emphasise the dangers of relying on cost-benefit analysis of existing

and proposed reforms to the audit system, stressing that it should not be used in a way

where the default position is to maintain the status quo. “Rather, if it is not worth the

costs to create independence, we need to question why we even have an auditing

profession” (2006, p. 47). Bazerman et al.‟s critique is a further challenge to the

nature and impact of much „traditional‟ audit research and the need for a more radical

policy response. However, there is value in not over-polarising things in terms of

desired research directions. There is a big set of research possibilities between

determining and advocating an „ideal‟ or „optimal‟ auditing system and rejecting the

existing system. Likewise, in the case of Francis‟ (2004) arguments and concerns,

there is much space between his implicit categorisations of a commitment to

„rigorous‟, „scientific‟ research and researchers working in a fashion that is indicative

of professional capture.

The bigger world of auditing research

Ultimately, research is about the questions that you ask and seek to answer, and many

of the auditing research papers published in non-traditional North American and other

international accounting and auditing journals occupy the quite large ground of

inquiry and policy work that falls between „scientific investigation‟ (or the empirical

determination of optimal levels of auditing) and the outright dismissal of the existing

audit function and associated regulatory systems. A key task for such research is one

of understanding, whether in terms of studying the political nature of audit regulatory

processes or what happens when auditors and regulators claim to work in the name of

the public interest and how auditing and auditing regulations help to define and/or

translate matters of social concern (see Cooper and Robson, 2006; Humphrey, 2001;

Power, 2003b). Similarly, there are important questions to be addressed as to what,

technically, economically or philosophically drives processes of audit change. There

is great importance in knowing more about what it means to be an auditing

professional in different countries or institutional sites, particularly given the current

commitments to deliver convergence in international auditing standards and practices.

As Cooper and Robson (2006) emphasise, it would be very valuable to know “how is

professional work, and indeed competence and skill constructed and reproduced

across countries” (p. 420).

The essential spirit of research in this form is one of seeking to know more about what

is done in the name of audit practice and how such practices relate to, influence and

are influenced by, broader social, organisational and regulatory contexts. One can see

how research on the subject of the auditing expectations gap developed from its initial

focus on measuring the scale of the gap and/or identifying ways to close the gap. „Gap

closing‟ research was imbued very much with the same desire to identify some

„optimal‟ position or form of audit provision as some of the traditional US research

identified earlier. While it is still possible to find a range of studies seeking to

measure expectation gaps in various countries (and often in countries where levels of

economic and social development suggest an audit expectation is not likely not to be a

matter of huge concern), researchers have increasingly sought to understand why

expectations gaps exist and what such reasons tell you about the nature of the audit

function and processes of audit regulation. For instance, a variety of papers from the

early 1990s onwards highlighted the similar, recurring nature of problems and debates

in the auditing arena, challenging prior claims as to the social responsiveness of the

auditing function and suggesting that so-called auditing expectations gaps are more

static in content and reflective of fundamental tensions in the auditing function (e.g.

see Chandler and Edwards, 1996; Humphrey, 1997; Humphrey et al, 1992; Sikka et

al, 1992). This type of work emphasises the interested nature of (self) regulatory

processes and, classically, in the case of Fogarty et al. (1991), the sheer amount of

effort in which professional bodies engaged in to maintain a regulatory status quo.

A whole host of studies over the last 20 years have studied systems and processes of

regulation (for a review, see Cooper and Robson, 2006). Interestingly, many of these

have tended to be classified as papers on accounting regulation and not auditing.

Those most focused on auditing have been concerned with notions of public interest -

examining the way in such a concept is defined and operationalised in audit

regulatory arrangements, and particularly the way it has been used by professional

and auditing standard setting bodies to legitimise their social power and influence

(e.g. see Baker, 2005; Canning and O‟Dwyer, 2001; Lee, 1995; Loft et al, 2006; Neu

and Graham, 2005; Sikka, 1992; 2001; 2002; Sikka et al, 1989; Willmott, 1990; 1991;

Willmott et al, 1993).

A fascinating and highly influential contribution to audit research over the last decade

in terms of enhancing and challenging our understanding of the social role of auditing

(and by implication, its ability to serve the public interest) comes from the work of

Michael Power and his related theses regarding the audit society and the respective

explosion and implosion of audit activity (see Power, 1994; 1996; 1997; 2000). The

essential idea that we have become a society obsessed with checking and monitoring

rather than „doing‟ captures a sentiment that resonates with many of our day-to-day

experiences. There is much to discuss, both theoretically and empirically, in terms of

the rise of the audit society but Power‟s work has certainly opened up the world of

auditing to many different and interdisciplinary research ideas and possibilities (see

Humphrey and Owen, 2000; Maltby, 2007; Power, 2003a; Strathern, 2000). It is also

important to consider what Power says about the way in which he approaches his

work and builds his ideas. In his most recent book (Power, 2007), he makes various

apologies to people adopting different research styles, whether conducting detailed

organisational case studies or deeply theoretical pieces, and sums up his research style

as a “messy hermeneutical approach to hunches and intuitions, layered upon each

other like strata in a (slow) process of accretion. The method is one of progressively

and continuously refashioning a family of arguments in a process of self-critical

writing, a constant and restless trade and exchange between theoretical precepts and

bits of the empirical world, each mutually explicating the other in a „to and fro‟

process” (Power, 2007, p. ix). It is by no means easy to do what Power does, and in

different hands his approach might not work at all. Clearly, people have all sorts of

different skill sets and interests that shape the way in which they work and what they

feel comfortable doing. However, his methodological reflections are important

because they emphasise the importance of working creatively with ideas and

observations of audit practices across different sites and contexts, using different

perspectives and intertwining both academic and practitioner reflections and

contributions. – even though this can seem increasingly rare in today‟s factory like

research world, with increasing emphasis on „hard results‟, verification and „quality

control‟. I am not advocating any strict hierarchy of „ideas‟ people over „empiricists‟

and, for certain, the critiques of Power‟s work tend to be rooted in more detailed

empirical reflections than he provides. However, Power‟s work has been highly

influential and of interdisciplinary appeal – and you certainly get the sense that he

enjoys his research and the stimulus provided by his chosen way of working.     Again,

his most recent book (Power, 2007) gives a nice illustration of the intrigue and

inherent uncertainties associated with the research process and the importance of

maintaining some sense of anticipation of future research contributions. Talking of

the way he mixes reading of academic and professional texts and of learning from risk

practitioners without studying them to a level of depth that could be labelled as

participant observation, he notes that he now has “an extensive collection of risk

management conference brochures – an archive I am reluctant to throw away for

reasons I barely understand…Who is really to say that this text is part of the

phenomenon of the risk management explosion and that one is not?              Often the

dividing line between scholarly and practitioner discourses in an emerging and

changing area is very indistinct” (p. ix)

One of the more obvious ways of reflecting, challenging or rewriting understandings

of, and accepted or taken-for-granted assumptions about, auditing practice is through

detailed (institutional and historical) analyses of significant shifts in audit work and

the context in which audit work is undertaken. Various research studies, essays and

personal reflections have questioned standard rationalisations of the existence or

emergence of auditing concepts and traditions (e.g. see Flesher et al, 2005; Maltby,

1999; Quick, 2005) and charted such things as a claimed decline in professionalism

and the status of auditing within accounting firms, the rise of business advisory/multi-

service firms and the influential role of reward and performance evaluation structures

within such firms (e.g. see Hanlon, 1994; Lee, 2002; Squires et al, 2003; Stevens,

1991; Toffler, 2003; Wyatt, 2004; Zeff, 2003a; 2003b). There has also been a wide

range of work on the development of auditing methodologies and their practical

application, with a central emphasis on understanding the drivers, patterns and

consequences of change and the complex interplays between various institutional and

contextual influences. Recently this has seen attention being devoted to the promotion

and decline of business-risk based approaches to auditing (e.g. see Curtis and Turley,

2007; Jeppesen, 1998; 2007; Knechel, 2007, Lemon et al, 2000; Robson et al, 2007).

Similarly, there has been detailed analysis of the jurisdictional battles encountered and

unrealised visions arising when professional accounting institutes seek strategically to

expand the knowledge claims of accountants and auditors in arenas such as business

consulting, risk management and assurance services (e.g. see Barrett and Gendron,

2006; Covaleski et al, 2003; Fogarty et al, 2006; Shafer and Gendron, 2005). The

subtitle of Shafer and Gendron‟s (2005) work usefully serves to demonstrate an

essential difference to earlier referenced work in that it explicitly focuses on the

„rhetoric and politics‟ surrounding particular initiatives by bodies such as the AICPA.

That certain projects struggled in practice because of a publicly perceived

inconsistency between the claimed capacity to provide independent assurance and a

growing commercialistic logic emphasises the policy value in academic researchers

undertaking in-depth studies of regulatory processes.

Thinking differently about auditing

The importance and value of this type of research focus is evident nowadays, with

auditing practice and regulatory developments increasingly international in their

construction. International and cross-national trade statistics and capital flows are

repeatedly used to emphasise that our focus has to be global, and closely linked to the

demands and requirements of global capital markets. The overwhelming desire for

international convergence in practice, however, is rather ironic in that the initial driver

in the field of international accounting and auditing was a desire to recognise and

learn from different practices and traditions. Nowadays, one is more likely to hear that

international differences are not a source of learning but something that is against the

„public interest‟. Such a transformation certainly presents many interesting questions

for researchers keen to study what is being done in the name of international auditing

practice and its regulation. For example, what gives international standard setters

their legitimacy, how do they maintain it and do they deserve to maintain it? How

transparent and democratic are their regulatory processes and how is the balance

determined between a reliance on expertise and a respect for (global)

representativeness? How do national bodies retain or gain influence on the global

stage?   In whose interests is the pursuit of the „public interest‟, the „European

common good‟ or the „global public interest‟ in audit standard setting? How are such

conceptions of interest conceived, shaped and operationalised? In what ways are the

demands of global capital markets shaping auditing practice and expectations of such


Not surprisingly, research in this arena is assuming an increasing interdisciplinary

significance (e.g. political scientists these days are very interested in the functioning

of international accounting standard setting bodies) because the questions and issues

are broad social and political ones. The interdisciplinary nature is evident within

auditing practices themselves, in that there are clear relationships between what is

determined as legitimate practice in the field of the statutory financial audit and what

is deemed appropriate in other audit fields such as public sector, social and

environmental, quality and internal auditing.       In this regard, it is particularly

interesting to see how so-called radical or broader stakeholder conceptions of

organisational accountability can seemingly rely on fairly conservative notions and

limited understandings of the nature and limitations of financial auditing practice. Or

to see how public sector initiatives and reforms intent on improving organisational

efficiency and effectiveness seldom question the capacity of auditing and related

financial management techniques to deliver on such grounds, or challenge (in the

search for best-value) the transfer of trust from service providers with proven track

records to auditors of whom little is known. There is certainly scope for more learning

across subject or functional boundaries within the discipline of auditing.

In many respects, international regulatory structures are in their formative years, and

the complexity and (in certain areas) lack of transparency of global regulatory bodies

means that there is an important role for academic research to play in keeping under

review the regulatory bargain that the accounting and auditing profession and global

financial regulators have struck with society (for more discussion, see Cooper and

Robson, 2006; Loft et al., 2006). There is a sense of irony in that we are living in a

supposedly global world but how many professional and academic accountants know

much about the work of bodies such as the FSF, Basel Committee, UNCTAD,


sensitive to the shifting regulatory balance in terms of the work of national

professional accounting bodies and the multinational accounting firms? What do

teachers of international accounting students know of the various ways in which

formal international accounting educational standards are changing? In some

countries, it is heralded as an achievement that professional accountants are not

required by international accounting educational guidelines to have a „relevant‟ first

degree (i.e. in accounting and finance) on the grounds that it enables the profession to

recruit from the widest possible pool of graduate talent. However, how many newly

qualified audit staff have a good understanding of the history of auditing, the way in

which auditing practices responsibilities have changed over the years and the reasons

for such changes? The importance of academic researchers and teachers having an

active involvement here is reinforced by the way the large accounting firms, large

national institutes and a whole range of regulatory bodies/NGO‟s are holding

themselves out as „thought leaders‟ in the field of international auditing and

regulation, claiming to advance auditing practice in the name of the public interest.

Their publications and policy documents are worthy of independent academic study

and engagement as they are very capable of shaping global understandings of the role,

status, history and achievements of the audit function.

In relation to the above research issues, there is scope for market-based or archival

auditing research but it is not a dominant one, or at least not as dominant as the one

typically represented in a number of the reviews referenced earlier in this paper. What

is most needed is constructive, sensitive, conceptual and challenging academic

engagement in the international field of auditing practice and the various institutions

that serve to make up this arena. There is also value in researchers approaching such

work with open minds and not ones which are fixed in a ready acceptance of existing

traditions, approaches and hierarchies. For instance, in undertaking this review I

found that exploring papers on value-relevance, discretionary accruals and audit fee

modelling (and the debates that authors were having about the limitations of their

work) served to stimulate different thinking on my own part – certainly, in terms of

reinforcing the value of studying regulatory processes and structures rather than just

the outputs of such processes (e.g., auditing standards). It is also worth noting that a

good percentage of people who tend to prefer to study audit practices through market-

based and experimental research modes do have a valuable capacity to draw off some

excellent professional contacts and levels of access to audit practice and standard

setting processes, which could certainly facilitate the conducting of more in-depth,

case-based empirical analyses of audit assignments and relationships. That said,

discussions on audit quality research at the recent Fourth European Audit Research

Network (EARnet) conference (Aarhus, Denmark, November, 2007) did provide

some cautionary observations in this regard – noting that the growth of public

oversight and audit inspection systems (somewhat ironically) was serving to hinder

research access, with audit firms and regulators increasingly sensitive to any public

exposure of the intricate details (and uncertainties) of audit and inspection/oversight

work With Williams et al (2006) highlighting the institutional forces that have led to

the decline in behavioural decision research in the US, the prospects for research work

that seeks to get close to the day-to-day nature of audit practice can look bleak.

However, it is also worth noting the real possibilities of what can still be done through

engagement across the different strands of the auditing research discipline. A recent

illustration here is provided by Knechel (2007), with his reflective piece on the

development of business risk based auditing approaches – a study which in large part

drew on his personal experiences as an auditor, his links with senior audit

practitioners and the access to audit practice that such connections can generate, but

which also had its origins in some exciting exchanges at international auditing

research workshops. One can find other examples of high profile US-based audit

researchers engaging with international auditing issues and making clear

commitments to conduct research outside of traditional US contexts (e.g. see Francis

et al., 2003).    In this regard, though, it is very important for the continuing

development of international auditing research that such processes of engagement

generate a real    exchange of ideas and methodological approaches, give proper

consideration to the different dimensions and contributions of work across the

auditing discipline - and do not end up serving to colonise the world of audit research

around a few preferred styles of audit research.        The risk of the latter is well

illustrated by a new internet journal established by the AAA auditing section, entitled

Current Issues in Auditing. Just 9 of its 70 editorial board are from outside of the

USA, which is not very indicative of the international nature of the contemporary

auditing function – particularly given the extra-territorial powers enshrined in

Sarbanes-Oxley, the sheer scale of the pursuit of international convergence or

harmonisation of international accounting/auditing standards and the existence of

global regulatory bodies such as the International Forum of Independent Audit

Regulators (IFIAR). It is also apparent that the research specialisms of the journal‟s

board members draw from a limited subset of methodologies capable of being applied

in the field of auditing research – typified in many respects by the fact that the only

European country with any editorial representatives is the Netherlands (with 3

representatives), a country that is increasingly adopting or paralleling the dominant

auditing research traditions of the USA14.

The value of an open mind and a commitment to exploring the various dimensions of

the audit practice arena is of great significance to the way in which auditing is taught

in universities and professional accountancy tutoring firms. Knechel (2007), for

example, laments the general lack of consideration of business risk-based auditing

approaches in auditing textbooks and courses (although, see Knechel et al, 2006). He

suggests that the reason for such a state of affairs relates directly to the inherent

conservatism among auditing teachers and textbook writers, in the sense that they

would only switch the focus of their educational texts and programs when it was

   A counter to such concerns was recently provided by the award of the 2007 American Accounting
Association (AAA) Deloitte Wildman Medal to Beattie et al (2001) for their interview-based study of
the interactions between the external auditors and finance directors of six UK listed companies and the
contextual factors influencing financial reporting and audit practice.

demonstrated that a business risk-based methodology had become a permanent feature

of the audit process rather than a passing fad. It could be argued, however, that a

valuable educational focal point on any serious auditing course is to study the

emergence and disappearance of any such fads and passing fancies in auditing

practice. Why firms choose to switch their methodologies (even if temporary) is an

interesting issue and one that could provide much insight into the forces driving audit

practice in audit firms and the contextual pressures on auditors as they go about their

day-to-day work. When I trained as a chartered accountant, the firm I worked for

produced a new audit manual and on its cover was the dictionary definition of the

verb „to think‟. The message was very clear – the audit process was not a mechanical

process but was something that required thought, awareness, even ingenuity on the

part of auditors. Yet the dominant tendency in auditing education remains one of

teaching procedures and rules, even when there is a ruling rhetoric of principles-based

auditing. A good test here is to ask audit practitioners why their methodologies have

changed – they will be very convincing on the merits of the current approach and will

be able to tell you the supposed faults with the previous approach. However, they will

not be able to explain why their firm continued with such an approach for so long.

They will also struggle in terms of explaining the processes that were gone through in

devising a new methodology (see Humphrey and Moizer, 1990) and will not readily

be able to tell you why other audit firms have utilised different approaches and what

are their comparative advantages.

As more publicity is given to the findings of regulatory inspection reports (although a

still considerable proportion of the material in these reports is kept out of the public

domain on grounds of client confidentiality), it is possible to gain greater insight into

the practices being employed by audit firms. Such material has been highlighted

recently as valuable for audit teaching purposes (see Miller, 2007). Miller‟s

observations and comments are interesting in two important respects. First, the notion

that detailed reference to audit practice and regulatory inspection reports is seen as

capable of “enhancing the credibility and relevance of teaching” is fascinating as the

same concerns do not seem to apply to the undertaking of so much North American-

based audit research which is content to work with proxies for audit practice.

Secondly, Miller illustrates the scale of the difference in outlook between different

elements of the academic auditing community when noting that while using

regulatory reports that have been critical of large firms‟ audit practices, he

anonymises the regulatory findings (“to avoid embarrassing the firm” - p. 6), even

though such reports are publicly available, and are increasingly being challenged by

the audit firms for the questionable validity of the regulators‟ findings and judgements

regarding the quality of the firms‟ audit practices.

We do need to think broadly about auditing educational issues, not just in terms of the

impact that certain North American research traditions are having internationally on

the conduct of auditing research but also in terms of whether academic career paths

are such that we will soon have few researchers with any practical experience of

accounting and auditing. Audit researchers need to think deeply about the structures

developing around them, at both a practice and research level. This applies not only in

countries with strong auditing research traditions, but in those where auditing

traditions are changing or where auditing practice is starting to develop and become

more influential. There is much that can be done educationally (for a review, see

Humphrey, 2005), particularly when the global emphasis is on principles-based

practice and regulation. In this respect, it is significant to see educational

commentators emphasising the contemporary importance of the US learning from

overseas experiences and not the other way around (see Diamond, 2005). At the very

least, it should be possible to stop pretending that audit research does not exist outside

of a very limited number of academic journals.


In conducting the review, a number of findings and observations stand out as worthy

of closing comment. The frequency of review papers across different aspects of the

audit research discipline could be taken as a healthy sign that all is well in the

discipline – with an inbuilt re-energising process, critically taking stock of itself,

promoting major achievements, highlighting weaknesses and limitations and

developing new agendas. Alternatively, it could suggest that the discipline is tainted

by the same monitoring over-eagerness that has led to talk of an audit society or audit

explosion.    Or, it might be an indication of an inherent lack of direction in the

research field, and a recurring need to make overall sense of a whole set of

contradictory and conflicting results. Indeed, it is striking how many review papers

highlight clusters of papers that have concluded one thing and then set this against

another cluster that have found precisely the opposite – or papers that have found no

effect whatsoever.

Taking this line of argument a bit further, the proliferation of reviews may suggest

that there is an inherent lack of confidence in the strength of certain, established, parts

of the discipline, such that reaffirmations of the faith are regularly required. Such

thoughts were triggered in part by seeing how critical some researchers can be of the

achievements of work that they and many other senior audit researchers have been

doing for many years, and yet how they struggle to advocate alternative

methodological perspectives and research methods and go beyond the constraints and

boundaries they, or the institutions in which they work, wrap around their research

arena. It is, at times, very evident that some researchers know and respect work that is

being done in what is typically labelled „alternative audit research‟ and that they have

genuinely tried to broaden the nature of the auditing discipline, but they also seem to

recognise the lack of economic or institutional incentives to undertake such work, and

even the risk that gaining any sort of reputation for conducting such work could well

prove to be counterproductive.

What is then equally frustrating, if not verging on academic madness, is the

willingness of a substantial part of the academic and professional auditing

communities to accept the privileged, claimed top-rank status of US-oriented

research, despite (1) its acknowledged limitations; (2) the journals that routinely

publish such research being dominated by US-based researchers; and (3) a failure to

engage with, or in many cases, even read research published in other journals. In

some ways, as Tinker (1985) argued long ago, professional firms, institutes and

regulators could be expected to be content to promote, or at least not disturb, a

research production line that keeps its distance from day-to-day audit practice and

subordinates itself in terms of any involvement with regulatory processes by retaining

a „comfort blanket‟ commitment to so-called „scientific research‟. However, what

lasting value did such research provide to firms like Arthur Andersen or to institutes

such as the AICPA? Did a desire to provide scientific input into the accounting or

auditing regulatory arena help to prevent the demise of self-regulatory structures?

Would it really have been more damaging to study the politics and lack of

transparency associated with self-regulation or the actual shifts taking place in audit

practices and cultures within audit firms or audit businesses rather than to ignore


The astounding nature of events surrounding the Enron case, related scandals and the

regulatory and legislative changes that followed have brought forth all sorts of

fascinating audit research opportunities. However, new regulations and laws have also

provided the justification for a whole new string of market oriented or regression-

based studies, with many new regulations capable of being studied in terms of their

impact on earnings-quality. While Nelson‟s (2006) review of Moore et al.‟s (2006)

paper does make a number of good points in terms of future research directions, it is

possible to empathise with Bazerman et al.‟s (2006) frustration with the apparent

inability of much North American-based audit research to think „out of the box‟ (also

see Bazerman, 2007). A telling example here can be provided by consulting the

AAA‟s audit section‟s website and look at the minimal guidance that is provided on

conducting qualitative auditing research. It is not surprising that many doctoral

students choose not to pursue such lines of investigation. However, there really is

little justification for those genuinely committed to the advancement of auditing

knowledge and the nature of the discipline to allow, whether deliberately or by

default, the subject area to be dominated by one ruling set of views and assumptions

regarding audit research and its connections to practice.

Importantly, such observations do not lead to an outright rejection of either

quantitative or qualitative research approaches. There can be merits in both,

depending on how they are used in an auditing research context. What is certainly

needed are studies and approaches that seek to understand what is, or has been done,

in the name and development of audit practice. The problem with so much audit

research is that it does not explore audit practice per se, but rather fabricates such

practice, studying around the edges of the „black box‟ of auditor decision-making or

constructing experiments that cannot ever really be expected to replicate either the

real pressures and career challenging or threatening scenarios that some auditors can

encounter in their actual working environment.         Alternatively, models of audit

decision-making can end up ignoring or glossing over the routine and mechanical by

presenting audit work in ways that are rather more exciting and controversial,

demanding decisions and judgments of auditors who are more used to muddling

through and quietly accommodating the evident mismatches between claims of high-

powered professionalism and the mundane nature of day-to-day audit practice.

Some authors are critical of papers that start with claims that we know little about the

research area on which their paper is focused but this is very much still the case with

auditing practice. The paradox with much auditing research is that it is supposedly

being done on the grounds that it is a valuable input into regulatory or standard setting

processes, yet it is rare to come across audit practitioners or regulators who seem to

have any substantial understanding or appetite for such research, and who even tend

to sub-contract out the analysis of such research to academic advisors when it is felt

that regulatory reports need to make reference to such work. Ironically, you do hear

talk of some auditors adjusting their work approaches to ensure that they review

levels of so-called „discretionary accruals‟ as they know this is an area of research

attention. Further, at the same time as criticising research for being too divorced from

practice, audit firms remain quite cagey and sensitive in terms of providing

researchers with access to study the development and implementation of audit

practices at close-hand, on grounds of client or commercial sensitivity. While such

access issues can often be accommodated by the careful nurturing of relationships

with audit firms and the development of trusting and mutually respectful

relationships, there are evident dangers that such traditions, pressures and fears can

leave academic audit researchers very much on the periphery of the subject, studying

audit practice from too great a distance.

The global nature of much audit practice and practice-related issues regarding

standard setting and regulation, however, presents many exciting opportunities for

audit researchers. It is an arena in which auditing and accounting academics have

much to offer and is not something that should just be left in the hands of political and

other social scientists. Many audit researchers have a level of contextual knowledge

and a contemporary and historical awareness of the key institutions, individuals and

personalities involved in such processes that invariably is not held by those outside

the discipline. This has to be capable of being put to better effect than it is at present,

but it requires an acknowledgement in some parts of the auditing discipline that there

is real merit in studying the practical, political realities of regulatory processes. One

important way in which shifts in the global regulatory arena could help to open up

research possibilities is through promoting collaboration between academic

institutions and national professional accounting bodies. It is increasingly common

these days to see professional bodies talking of their commitments to „thought

leadership‟. Such claims could be (and probably were in the past) viewed with a fair

degree of cynicism, either because such work was expected to be underpinned by a

desire to defend the profession, re-shape public expectations of auditing and/or

promote members‟ interests. However, these days it is important to remember that

national institutes are increasingly free from the responsibilities of being a standard

setter or serving oversight functions and with the resources at hand have a real

capacity to challenge and to innovate in a genuine pursuit of advancement in auditing

knowledge. Indeed, it is worth remembering that bodies such as the Institute of

Chartered Accountants in England and Wales still have as their primary mission the

advancement of the “theory and practice of accounting”. One obvious advantage that

a national professional body should have, particularly when they are influential on the

international stage, is the capacity to draw on professional networks and more easily

secure required research access or bring together roundtables of key players in certain

fields of activity or interest.

Pursuing new and different ways of collaborative working is important because we

are in danger of certain auditing and governance traditions disappearing without trace

and proper understanding in today‟s global push for accounting and auditing

harmonisation. We also know very little about the international standard setting

institutions which have assumed over recent years significant levels of legitimacy and

power. There is also a great need for more work exploring audit firms as institutions –

on explaining the forces driving working priorities and practice changes, on

understanding the organisational cultures within firms, the reward and remuneration

structures and the impact these have on the construction and behaviour of auditors,

audit teams and audit clients. Arguably, a good proportion of auditing staff has been

brought up in eras where auditing traditions were either not respected by auditing

firms (who were pursuing modernisation and a more consulting orientation) or not

trusted (post-Enron) by regulators (who promote „compliance with standards‟

approaches and have assumed the primary responsibility for auditing development

and innovation). What implications does this have for the future development of audit

practice and attitudes of resistance to/acceptance of change?

A number of research issues and themes identified in this paper could benefit by a

grouping or coming together of like-minds. But they also require a changing of minds.

Further, when respected commentators on the US educational scene refer to

accounting education having been stuck in neutral for 30 years (see Diamond, 2005),

or when we note all the acknowledged limitations of North American-oriented audit

research highlighted by authors within the field, it is evident that any such changing is

not one which sees the world of auditing research copying the standard North

American approach and outlook. Indeed, arguably, there are grounds for suggesting

that the centre of gravity in terms of global regulatory developments is shifting

towards Europe, a point reinforced by Camffermann and Zeff (2007) when

emphasising that the body that did most for the global status of the IASC/IASB was

the EU in committing to the use of IFRS for public limited companies by 2005, and

also by recent actions on the part of the SEC in considering the possibility of US

listed companies preparing financial reports in accordance with International

Financial Reporting Standards (IFRS).

It is hoped that the arguments in this paper will be listened to by those working in

other parts of the auditing discipline, not least because they draw on and develop

criticisms made by some leading researchers in these parts. In particular, it is hoped

that the paper will serve to influence those thinking of or just starting out on a

research career in auditing or more established accounting academics and

professionals contemplating engaging with an audit research issue or trying out a

research approach that has, hitherto, seemed too risky, out of character or

institutionally not possible. Finally, it would be nice if the analysis could assist in

helping to free up the auditing research discipline. At times, we appear to be in

serious danger of over complicating and/or discouraging the undertaking of certain

types of research instead of seeking to nurture and stimulate debate. In qualitative

research, it is vital that creative thinking is encouraged and that we do not emphasise

the pursuit of process over the development of ideas. Case studies are difficult

enough to do without whole new sets of methodological restrictions being applied to

their undertaking. Indeed, it is important to remember that published case studies can

grow in status and interest as people make use of them – and, very often, in ways that

could not have been predicted at the outset or anticipated through the journal review

process. In quantitative research, the growth in available data sets can certainly be

attractive but there is a similar priority in terms of creative thinking. As Hay et al‟s

(2006) very thorough review of audit fee research aptly demonstrates, the availability

of data to test a particular hypothesis is not necessarily a good thing. They found that,

collectively, studies in this area have drawn on 186 different variables in seeking to

understand the nature of audit-fee pricing. In putting this in context, it is worth

remembering that the periodic table in chemistry which contains all known chemical

elements only has 118 elements, potentially suggesting that the pricing of audits is

more complex than the meaning of life! Hay et al. do go on to emphasise that many

variables were only used in singular studies and that a much more limited number of

variables proved to have explanatory significance, although the fact that one variable

(i.e. company size) tends to explain about 70% of the variation does raise significant

questions as to the value of such studies and their associated audit fee models15.

It might seem somewhat ironic in a subject underpinned by a desire for truth and

fairness and claims to objectivity, but the audit research discipline still needs to

respect the spirit of Medawar‟s (1976) conclusion as to the ways in which (social)

audit reporting needs to develop:

        “I would suggest that we pay more attention to producing relevant reports than
        objective ones. There are two lessons to be learned here from the Social Audit report
        on Avon which, for all its shortcomings, and with a complete disregard for
        objectivity, I would maintain is one of the most relevant reports on the social
        behaviour of a company that has ever been produced.” (p. 394).

  Hay et al. (2006) and Knechel and Willekens (2006) argued that this whole field of research has been
characterised by a production oriented approach and ignored potential demand-side factors that may
well drive audit fees.


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