Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

Posts

  • Jennifer M Mueller-Phillips
    The Joint Effect of Unfavorable Supervisory Feedback...
    research summary posted November 15, 2016 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale 
    Title:
    The Joint Effect of Unfavorable Supervisory Feedback Environments and External Mentoring on Job Attitudes and Job Outcomes in the Public Accounting Profession
    Practical Implications:

    This study demonstrates that public accounting mentors can provide an important organizational control mechanism, counseling and protecting protégés who experience unfavorable SFEs. The results of the study also suggest that public accounting mentorship training programs should communicate to potential mentors this critical organizational function. 

    Citation:

    Dalton, D. W., A. B. Davis, and R. E. Viator. 2015. The Joint Effect of Unfavorable Supervisory Feedback Environments and External Mentoring on Job Attitudes and Job Outcomes in the Public Accounting Profession. Behavioral Research in Accounting 27 (2): 53-76.

    Keywords:
    supervisor feedback environment, mentoring, job satisfaction, organizational commitment, role clarity, and turnover intentions.
    Purpose of the Study:

    The supervisory feedback environment (SFE) refers to the manner in which supervisory feedback is delivered, processed, and used on a daily basis. Favorable SFEs are helpful, consistent, and tactful, whereas unfavorable SFEs are unhelpful, inconsistent, and often inconsiderate. Preexisting literature establishes the predictable result that unfavorable SFEs have adverse effects on subordinate outcomes, including lower levels of job satisfaction, organizational commitment, and higher turnover intentions. The fundamental question addressed in this study, however, is whether public accounting mentoring support, which is external to the supervisor-subordinate relationship, can attenuate the predictable adverse effects of unfavorable SFEs. Examining the potential moderating effect of having a mentor out of the supervisor-subordinate relationship is important given the negative effects associated with unfavorable SFEs, specifically if support from external mentors diminishes protégés’ elevated stress levels leading to a diminishment in negative job outcomes attributable to unfavorable SFEs. 

    Design/Method/ Approach:

    The authors conducted a survey of public accounting professionals. 

    Findings:
    • The authors find that unfavorable SFEs are associated with lower levels of role clarity and job satisfaction, which, in turn, lead to lower organizational commitment and higher turnover intention.
    • The authors find that external mentoring moderates the negative effects of unfavorable SFEs on both role clarity and job satisfaction. In other words, the negative effects of unfavorable SFEs on both role clarity and job satisfaction are lower for employees who receive higher levels of support from external mentors. 
    Category:
    Audit Team Composition
    Sub-category:
    Staff Hiring - Turnover & Morale
  • Jennifer M Mueller-Phillips
    The Influence of Mood on Subordinates’ Ability to Resist C...
    research summary posted August 30, 2016 by Jennifer M Mueller-Phillips, tagged 04.0 Independence and Ethics, 04.04 Moral Development and Individual Ethics Decisions, 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale, 11.0 Audit Quality and Quality Control, 11.03 Management/Staff Interaction 
    Title:
    The Influence of Mood on Subordinates’ Ability to Resist Coercive Pressure in Public Accounting
    Practical Implications:

     This study should give pause to investors, auditors and regulators about the potential willingness of subordinate auditors to acquiesce to a superior’s unethical request. As such, the accounting profession should make sure to have a better understanding of the nature of and solutions to the problem such as changes in firm/team culture, personnel placement, etc. Additionally, audit firms can better use this information to understand which employees may be most susceptible to such negative influence and preempt such events.

    Citation:

     Johnson, E. N., D. J. Lowe, and P. M. Reckers. 2016. The Influence of Mood on Subordinates’ Ability to Resist Coercive Pressure in Public Accounting. Contemporary Accounting Review 33 (1): 261-287.

    Keywords:
    Affect, Mood States, Unethical Acts, Obedience Pressure, Superior-Subordinate Relationships
    Purpose of the Study:

    This study examines the relationship between subordinate auditors’ various affective states (i.e. mood/emotion) and their effect on auditors’ willingness to comply with a superiors’ unethical directive in six common auditing scenarios.  The authors also employ more real-world event triggers and scenarios compared with previous research.  This study seeks to better refine and test the broad constructs of mood used in previous research.

    Design/Method/ Approach:

    Sample: 118 audit seniors from two large international public accounting firms

    Experiment: Create a broad distribution of arousal, fear and insignificance among participants by manipulating two aspects of the audit client CEO (high/low dominance and high/low prestige) and one aspect of the auditor (above/below average work-life history).

    Analyses: 2x2x2 between subjects ANOVA using median splits on each measured variable: fear, insignificance and arousal

    Findings:

    Regardless of affective state manipulations, the audit seniors express a high level of willingness to comply with a superiors’ unethical direction.  However, this willingness to comply is increased when auditors are made to feel more insignificant (i.e. weak/low power position relative to others) and fearful (i.e. elevated uncertainty and lower perceptions of control regarding future events and circumstances) but decreased when auditors are in an active, positive mood state (i.e. arousal).  Interestingly, these results obtain despite significant doubt by the firms’ senior management who reviewed the task that any of their subordinates would express willingness to engage in such behavior.  As such, auditors may be more willing to engage in or overlook unethical behavior than previously thought.  

    Category:
    Audit Quality & Quality Control, Audit Team Composition, Independence & Ethics
    Sub-category:
    Management/Staff Interaction, Moral Development and Individual Ethics Decisions, Staff Hiring - Turnover & Morale
  • Jennifer M Mueller-Phillips
    Attracting Applicants for In-House and Outsourced Internal...
    research summary posted April 18, 2016 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale, 08.0 Auditing Procedures – Nature, Timing and Extent, 08.11 Reliance on Internal Auditors, 13.0 Governance, 13.07 Internal auditor role and involvement in controls and reporting 
    Title:
    Attracting Applicants for In-House and Outsourced Internal Audit Positions: Views from External Auditors.
    Practical Implications:

    This study offers insights into why internal auditing is experiencing a shortage of qualified job candidates and offers a potential solution to the problem. The authors find that external auditors have negative perceptions about internal auditing, and these negative perceptions are associated with a (1) decreased desire to apply for internal auditing positions, (2) lower likelihood of recommending an in-house internal auditing career to high-performing students, and (3) higher likelihood of recommending an in-house internal auditing career to mediocre students. Internal auditors can try solving this problem by improving perceptions about internal auditing via a media campaign that raises awareness about the true internal audit career path.

    Citation:

    Bartlett, G.D., J. Kremin, K.K. Saunders, and D.A. Wood. 2016. Attracting Applicants for In-House and Outsourced Internal Audit Positions: Views from External Auditors. Accounting Horizons 30 (1): 143-156.

    Keywords:
    internal audit, hiring decisions, outsourcing, external auditors
    Purpose of the Study:

    The internal audit function can help organizations strengthen their risk management and corporate governance, yet the demand for qualified candidates to fill internal audit job openings exceeds the supply of interested applicants. Consequently, the internal audit function may find itself short-staffed and/or staffed with lower quality candidates, which may limit its ability to add value to the organization. In order to correct this problem, it is important to fully understand its scope and its root cause(s). Prior research attempting to gain this understanding has focused on investigating how accounting students’ beliefs about internal audit impact their interest to pursue an internal audit career. The authors of this paper extend this research by:

    • Investigating how external auditors’ beliefs about internal audit impact (1) their interest to pursue an internal audit career and (2) their recommendations to students about pursuing an internal audit career,  
    • Investigating differences in external auditor’s perceptions of in-sourced versus out-sourced internal audit, and
    • Asking external auditors to suggest what needs to be done to improve their perceptions of internal audit.
    Design/Method/ Approach:

    The authors use data from three sources. First, the authors performed an experiment using experienced external auditorsmostly seniors or associateswho were asked whether they would apply for a job described as either an accounting, in-house internal audit, or outsourced internal audit position. Second, the authors performed another experiment using experienced external auditorsmostly managers or directorswho were asked whether they would recommend that a high-performing (mediocre performer) student pursue an external audit, in-house internal audit, or outsourced internal audit career. Third, the authors surveyed high-ranking former/current external auditors who never worked in internal audit about what would make internal auditing a more appealing career for them.

    Findings:
    • When the same job opening is labeled as either accounting, in-house internal auditing, or outsourced internal auditing, the accounting label is likely to attract two times as many external auditor applicants as the other two labels.
    • External auditors are equally willing to apply for in-house internal auditing or outsourced internal auditing positions.
    • External auditors have more negative perceptions of in-house internal auditors than outsourced internal auditors.
    • External auditors have negative perceptions of the internal auditing profession. They believe that (1) others have negative stereotypes about the profession, (2) business professionals do not respect internal auditors, and (3) internal auditors do boring work.
    • Those less interested in applying for internal audit jobs have negative perceptions of internal auditing.
    • The average external auditor willing (unwilling) to apply for an internal audit position would want to receive at least 124% (149%) of his current salary before being willing to switch from his current external audit job to an internal audit job.  
    • External auditors will be most likely to recommend that top-performing students work in external audit and mediocre students work in in-house internal audit.
    • External auditors will equally recommend that top-performing students and mediocre students should consider outsourced internal audit as a second best career path.
    • External auditors have more negative perceptions of outsourced internal auditing than external auditing on most dimensions, except in regards to work-life balance. They believe that work-life balance is better for outsourced internal auditors.
    • Current and former external auditors believe that internal auditing could become more appealing if internal auditors do more interesting work, receive more respect, perform value-added tasks, receive better compensation, and have better promotion opportunities. Because internal auditors appear to already be following these suggestions, internal auditors may benefit from giving others a better understanding of internal audit careers.
    Category:
    Audit Team Composition, Auditing Procedures - Nature - Timing and Extent, Governance
    Sub-category:
    Internal auditor role and involvement in controls and reporting, Reliance on Internal Auditors, Staff Hiring - Turnover & Morale
  • Jennifer M Mueller-Phillips
    A Contemporary Analysis of Accounting Professionals'...
    research summary posted April 18, 2016 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale 
    Title:
    A Contemporary Analysis of Accounting Professionals' Work-Life Balance.
    Practical Implications:

    This study offers (1) insights into how different types of accountants perceive work-life balance and alternative work arrangements (which are supposed to fix the work-life imbalance) and (2) advice from accountants on how firms can make alternative work arrangements more effective. The findings of this study may be useful to public accounting firms (employers in industry) that wish to understand their employees’ perceptions of work-life balance and potentially implement changes to enhance their employees’ actual work-life balance.

    Citation:

    Buchheit, S., D.W. Dalton, N.L. Harp, and C.W. Hollingsworth. 2016. A Contemporary Analysis of Accounting Professionals' Work-Life Balance. Accounting Horizons 30 (1): 41-62.

    Keywords:
    work-life balance, work-family conflict, burnout, alternative work arrangements
    Purpose of the Study:

    Work-life balance is not only the biggest driver of job satisfaction among accountants, but it also has important implications for audit quality and the supply of accountants. Despite its importance, little research has investigated how accountants, employed in various settings, perceive work-life balance (e.g., work-family conflict and job burnout) as well as support for and viability of the alternative work arrangements that are reputed to encourage better work-life balance. The authors address this gap by studying differences in such perceptions between accountants working in (1) Big 4 versus non-Big 4 firms, (2) audit versus tax, and (3) public accounting versus industry. This research not only provides a snapshot of how current accountants, employed in various settings, view work-life balance, but also provides a baseline against which the authors can compare future views of work-life balance.

    Design/Method/ Approach:

    The authors use data from two sources. First, the authors administer a survey to certified public accountants to obtain their perceptions of work-family conflict, job burnout, support for alternative work arrangements, and viability of alternative work arrangements. Second, the authors administer another open-ended survey to a different set of certified public accountants to obtain suggestions for how firms can improve employees’ work-life balance.

    Findings:
    • Support for alternative work arrangements lowers employee burnout, partly by decreasing work-family conflict.
    • Firm Size: Work-family conflict and employee burnout is higher among accountants at Big 4 (mid-sized) firms than their counterparts at mid-sized (local) firms. Big 4 accountants report lower viability of alternative work arrangements than their counterparts at mid-sized firms and local firms.
    • Gender: Work-family conflict is similar between male and female accountants. Male accountants report lower support for and lower viability of alternative work arrangements than female accountants.
      • More female than male accountants report previously utilizing alternative work arrangements. Accountants who report utilizing alternative work arrangements also report higher support for and viability of alternative work arrangements.
    • Rank: Accountants at higher ranks have lower employee burnout than their counterparts at lower ranks. Higher ranking accountants report higher support for and lower viability of alternative work arrangements than lower rankings accountants.
    • Role: Accountants working in audit, tax, and other roles experience similar levels of work-family conflict and employee burnout, as well as support for and viability of alternative work arrangements.  
    • Public vs. Private Sector: Work-family conflict is higher among public accountants than those working in industry. Meanwhile, accountants working at Big 4 firms have higher employee burnout than accountants in industry, accountants working at local firms or as sole practitioners have lower burnout than accountants in industry, and accountants working at mid-sized firms have the same levels of employee burnout as accountants in industry. Furthermore, accountants working in public accounting report higher support for alternative work arrangements than their counterparts working in industry. However, compared to accountants in industry, accountants working at mid-sized firms and local firms report higher viability of alternative work arrangements, but accountants working at Big 4 firms report lower viability of alternative work arrangements.
    • Accountants consider improving work-life balance the best way for firms to improve retention of high-quality employees. Accountants suggest that firms can make alternative work arrangements more effective by:
      • creating greater peer and supervisor support,
      • rating employees on productivity instead of visibility,
      • educating employees more about alternative work arrangements, 
      • keeping promises regarding alternative work arrangements,
      • providing balanced role models and mentors,
      • recognizing that younger employees value work-life balance,
      • offering mini-sabbaticals to employees, and
      • offering other programs to facilitate work-life balance.
    Category:
    Audit Team Composition
    Sub-category:
    Staff Hiring - Turnover & Morale
  • Jennifer M Mueller-Phillips
    Antecedents and Consequences of Perceived Gender...
    research summary posted September 17, 2015 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale, 05.10 Impact of Diversity - e.g., gender - on Group Decision Making 
    Title:
    Antecedents and Consequences of Perceived Gender Discrimination in the Audit Profession.
    Practical Implications:

    The authors’ findings provide public accounting firms with critical factors that can enhance gender equality. Specifically, the findings indicate that (1) firms that offer more support from organizational leaders, (2) firms that provide higher levels of support for alternative work arrangement initiatives, and (3) firms that provide stronger ethical climates are each negatively associated with perceived gender discrimination, suggesting that organizational climate factors have a strong impact on female auditors’ perceptions of gender equality. The findings suggest that female accounting professionals must reach high-status positions within the organizational structure to substantively influence perceptions of gender equality. Public accounting firms should encourage formal and informal mentoring relationships targeting female auditors. 

    Citation:

    Dalton, D. W., J. R. Cohen, N. L. Harp, and J. J. McMillan. 2014. Antecedents and Consequences of Perceived Gender Discrimination in the Audit Profession. Auditing: A Journal of Practice & Theory 33 (3): 1-32.

    Keywords:
    alternative work arrangements, audit profession, ethical climate, female partners, gender discrimination, organizational citizenship behavior, turnover intentions
    Purpose of the Study:

    The purpose of this study is to examine the effects of workgroup composition factors and organizational climate factors on perceived gender discrimination, along with the impact of perceived gender discrimination on several critical organizational outcomes. The authors test a theoretical model of perceived gender discrimination in order to;

    1. Advance theory development within gender-based research in accounting, 
    2. Stimulate future research related to gender equality in the audit profession,
    3. Provide public accounting firms with critical insights regarding the factors that contribute to gender inequality, and
    4. Highlight adverse organizational outcomes associated with gender discrimination in the audit profession.

    Turnover of female auditors leads to a loss of expertise, which, in turn, can reduce audit quality, leading to adverse organizational outcomes. In addition, recent evidence suggests that female audit partners more effectively constrain earnings management by their clients; however, female auditors are more likely than male auditors to leave public accounting prior to reaching the partner level. Therefore, gaining a better understanding of how perceptions of gender equality impact female auditors’ turnover intentions is particularly important. Existing research suggests that organizations that promote gender equality and gender diversity engender high-quality teamwork environments that foster creativity and innovation, resulting in higher levels of organizational performance. Therefore, given the relative importance of high-quality teamwork environments in the audit profession, the authors seek to gain a better understanding of the factors that impact perceptions of gender equality in the audit profession.

    Design/Method/ Approach:

    This paper tests a model of perceived gender discrimination in the audit profession. The authors obtained mailing lists of female CPAs from the Boards of Accountancy in Ohio, Oklahoma, Oregon, Tennessee, and Washington. Using both email and mail requests, the authors gathered a sample of 234 female auditors employed in public accounting firms. From the mail requests, the authors received a 17.1 percent response rate. From the email requests, the authors received an 8.1 percent response rate.

    Findings:

    The results indicate that female auditors report lower levels of gender discrimination when employed:

    1. In firms with more female partners,
    2. In firms with stronger ethical climates,
    3. In firms that are more supportive of alternative work arrangements, and
    4. In firms that provide higher levels of top management support for the personal well-being of their employees.
    • The findings indicate that while female coworker compositions do not impact female auditors’ perceptions of gender discrimination, female partner compositions can, in fact, increase perceptions of gender equality.
    • These results suggest that it is not sufficient for firms to simply hire/retain more females at the staff, senior, and manager levels; instead, the proportion of female auditors in partner positions within the organizational structure must increase to substantively enhance perceptions of gender equality.
    • The results indicate that public accounting firms can impact perceptions of gender equality by cultivating specific organizational climates.
    • The authors find that perceived gender discrimination is directly associated with higher turnover intentions, thereby providing additional motivation for the promotion of gender equality within the audit profession.
    Category:
    Audit Team Composition
    Sub-category:
    Impact of Diversity (e.g. gender) on Group Decision Making, Staff Hiring - Turnover & Morale
  • Jennifer M Mueller-Phillips
    Audit and Tax Career Paths in Public Accounting: An Analysis...
    research summary posted February 24, 2015 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale 
    Title:
    Audit and Tax Career Paths in Public Accounting: An Analysis of Student and Professional Perceptions
    Practical Implications:

    Competition for talent that requires students to make a professional career-track choice at an increasingly early stage in their development can lead to harmful “job market unraveling” that has been observed in other professional fields (e.g., law, medicine).  To the extent aspiring public accountants can make well-informed career track decisions, individuals and public accounting firms should benefit from improved person-job fit.  In this study, we provide systematic survey evidence about tax versus audit career alternatives which should be helpful to future accounting professionals.  We also note that ‘career track choice prior to internship’ appears to be an increasingly prevalent aspect of the public accounting labor market that would benefit from additional research.

    For more information on this study, please contact Derek W. Dalton.

    Citation:

    Dalton, D. W., S. Buchheit and J.J. McMillan. 2014. Audit and Tax Career Paths in Public Accounting: An Analysis of Student and Professional Perceptions.  Accounting Horizons 28 (2): 213-231

    Keywords:
    Theory of Planned Behavior; person-job fit; career choice; audit versus tax
    Purpose of the Study:

    Accounting students increasingly select their public accounting career path, either the audit or tax ‘track’, during university study.  Frequently, a career track decision is made prior to a public accounting internship.  We wanted to learn (1) how students make this important career decision and (2) whether the factors important to students’ audit vs. tax career choice seemed reasonable based on the perceptions of practicing accounting professionals.  In short, we wanted to learn whether students’ employment expectations matched professionals’ perceptions of job reality.

    Design/Method/ Approach:

    We gathered initial perceptions using a survey involving Masters of Accounting students during the fall of 2011.  Results helped us develop a relatively comprehensive survey for 171 upper-level accounting students at two large public universities during spring semester 2012.  The upper-level students largely had not yet made a ‘career track’ decision.  During the summer of 2012, we provided a similar survey to 310 public accounting professionals who had, on average, 10 years of work experience.  Respondents were evenly split as to professional track and were distributed across a wide distribution of employers (e.g., Big 4, national, regional, and local firms).

    Findings:

    Student career path choice is associated with students’ perceptions of job characteristics such as

    • Professional travel requirements,
    • Expected amount of client interaction, and
    • Long-term career opportunities in industry

    In large part, student perceptions agreed with those of practicing professionals; however, career misconceptions were noted.  Contrary to evidence from practicing professionals, students believed that:

    • Tax is less ambiguous than audit,
    • Tax is more difficult than audit, and
    • Auditors are more extroverted than tax professionals.
    Category:
    Audit Team Composition
    Sub-category:
    Staff Hiring - Turnover & Morale
  • Jennifer M Mueller-Phillips
    The O*NET: A Challenging, Useful Resource for Investigating...
    research summary posted November 17, 2014 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale, 11.0 Audit Quality and Quality Control, 11.05 Training and General Experience 
    Title:
    The O*NET: A Challenging, Useful Resource for Investigating Auditing and Accounting Work
    Practical Implications:

    By exploring the O*NET database, the authors discover its potential professional accounting applications. Because of its extensive listing of required occupational skills and knowledge, the O*NET provides a useful starting point for writing accounting job descriptions. The O*NET’s focus on entry-level positions makes it an important resource for recruiting accounting professionals. Its data can help structure and clarify the recruiting process by helping to build descriptions of required knowledge, ability and skills and required competencies. Data can also contribute to designing compensation and performance evaluation systems by defining the required knowledge, skill and abilities required for accounting positions, and, in determining appropriate compensation. Existing or proposed accounting positions can be assessed, i.e., benchmarked, against the standardized O*NET occupational categories of accounting work, as a means of determining their minimal requirements, organizational rank, or compensation.

    For more information on this study, please contact Dan N. Stone.

    Citation:

    Scarlata, A. N., D. N. Stone, K. T. Jones, and C. C. Chen. 2011. The O*NET: A Challenging, Useful Resource for Investigating Auditing and Accounting Work. Accounting Horizons. 25 (4): 781-809

    Keywords:
    auditor employment, entrants, occupations, professional accountancy, recruiting
    Purpose of the Study:

    This paper introduces a data resource, the O*NET, that partially fills the need for a publicly available database that is relevant to investigating accounting and auditing work. The O*NET is a unique occupational data resource regarding U.S. worker attributes, attitudes, knowledge and skill, and job characteristics.  The O*NET was released in 1998, with subsequent annual updates. It provides detailed occupational information from multiple sources both within and outside each profession. Unfortunately, the O*NET is an underused resource, potentially due to complexity and user “unfriendliness”. The authors describe the database and share potential applications for professional accountants and academic researchers.

    Design/Method/ Approach:

    The Occupational Information Network database (O*NET), a publicly available employment and occupation resource created and maintained by the U.S. Department of Labor, contains considerable relevant data on accountants’ and auditors’ work and employment. The authors explore data from the O*NET database (Version 15.0, released in June 2010), which includes about 1,100 occupations. They consider the history, organization and validity of the O*NET, as well as its potential value in non-accounting, professional accounting, and scholarly accounting applications. 

    Findings:
    • The O*NET provides an important publicly available, longitudinal and cross-sectional resource for investigating accountancy employment and work. 
    • The content model, around which the O*NET is organized, includes six “domains” or categories of data, each of which identifies a related set of activities and characteristics of workers and occupations. Data is in the following domains: 1) Worker characteristics, 2) Worker requirements, 3) Experience Requirements, 4) Workforce Characteristics, and 5) Occupation-Specific Information.
    • Data is collected and updated annually from multiple sources including job analysts, surveys of employers and employees, and labor economists’ employment projections.
    • Users of the O*NET include scholars, state employment agencies, employers, career counselors and job seekers.
    • The O*NET provides research opportunities for both accounting professionals and academics.
    • The limitations of the O*NET include overly broad categories of accounting work, issues related to biases and construct validity, and poor organization and unfriendly interface. 
    Category:
    Audit Quality & Quality Control, Audit Team Composition
    Sub-category:
    Staff Hiring - Turnover & Morale, Sustainability ServicesTraining & General Experience
  • Jennifer M Mueller-Phillips
    The Integration of Women and Minorities into the Auditing...
    research summary posted November 17, 2014 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale 
    Title:
    The Integration of Women and Minorities into the Auditing Profession since the Civil Rights Period
    Practical Implications:

    The auditing profession has been at least as successful as other comparable professions at integrating women and members of most minority groups. However, despite relatively good pay for black workers in auditing, blacks have been persistently underrepresented among auditors. Some have proposed that the underrepresentation of black workers in the auditing profession has been caused by a shortage of qualified black applicants as a result of either a lack interest in perusing accounting degrees among black students choosing college majors or low graduation rates among black students pursuing accounting degrees. The evidence in this study is inconsistent with these claims and suggests that black underrepresentation in the auditing profession can be traced to the time at which college graduates with accounting degrees take their first jobs. The findings are insufficient to confidently identify the cause of black underrepresentation in the auditing profession, but they suggest that the efforts of the auditing profession to attract black workers are likely to be most fruitful if they focus on identifying why relatively abundant black college graduates holding accounting degrees are not entering the auditing profession, and how this pattern can be reversed. 

    Citation:

    Madsen, P. E. 2013. The integration of women and minorities into the auditing profession since the civil rights period. The Accounting Review 88 (6): 2145-2177. 

    Keywords:
    occupational diversity; occupational integration; Current Population Survey; National Survey of College Graduates; Higher Education Research Institute Freshman Survey.
    Purpose of the Study:

    Following the Civil Rights Movement and the ‘‘quiet revolution’’ in women’s work over the years from 1950 to 1970, women and minorities increasingly joined the auditing profession while the profession ramped up efforts to encourage integration. The purpose of this study is to rigorously examine how the integration of auditors has evolved since the civil rights and quiet revolution period to inform policymakers in the auditing profession about the status of the profession’s integration efforts and to explore how resources devoted to increasing the integration of the profession might be most effectively used. The study examines the representation of women and minorities at three stages along the pipeline supplying new auditors: as they enter college, as they graduate from college, and as they enter the workforce. The primary distinctive feature of this study is that it evaluates the auditing profession’s integration by comparing it to samples of occupations similar to auditing for the purpose of isolating auditing-specific forces influencing integration.

    Design/Method/ Approach:

    The study’s main tests use survey data collected from random samples of individuals in the United States each year from 1968 to 2010. Data for supplementary tests come from surveys of random samples of incoming college freshmen conducted each year from 1971-1999 and college graduates conducted in 1993 and 2003.

    Findings:
    • Replicating prior work, the study finds that female and minority workers across the entire labor force are paid poorly relative to men and non-minorities even after controlling for a number of worker characteristics.
    • However, pay for women and minorities working as auditors is not significantly different from pay for men and non-minorities working as auditors.
    • Poor pay in the labor market generally speaking, combined with equal pay in auditing, means that women and minorities might be expected to enter the auditing profession at high rates to take advantage of the better pay available to them in the auditing profession. The study examines the representation of women and minorities in the auditing profession by comparing it against other similar professions. It finds that, relative to similar professions, women, Hispanics, and misc. minorities are well represented in the auditing profession as might be expected given the relatively high pay. However, black workers have been persistently underrepresented in the auditing profession. This is an anomaly given that black workers receive relatively high pay in the auditing profession.
    • The study includes supplemental analyses to examine potential explanations for the underrepresentation of black workers in the auditing profession. It finds that the accounting major is popular among black college freshman, ranking ahead of more than 80% of other college majors in terms of black representation. Black college graduates also received accounting degrees at relatively high rates, ranking ahead of more than 58% of other college majors in terms of black representation. However, black accounting graduates enter the auditing profession at disproportionately low rates, making up fewer than 34% of auditors under 31 years old. 
    Category:
    Audit Team Composition
    Sub-category:
    Staff Hiring - Turnover & Morale
  • Jennifer M Mueller-Phillips
    “When You Make Manager, We Put A Big Mountain In Front Of Y...
    research summary posted October 31, 2013 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale, 10.0 Engagement Management, 10.03 Interaction among Team Members, 10.04 Interactions with Client Management 
    Title:
    “When You Make Manager, We Put A Big Mountain In Front Of You”: An Ethnography Of Managers In A Big 4 Accounting Firm
    Practical Implications:

    This study points out the paradox that managers find themselves in as they struggle to manage relationships with staff, partners, and clients while simultaneously engaging in non-client productive activities in order to gain notoriety in the firm and impress the partners. The “mountain” referred to in the title of this article represents the different and unpredictable obstacles that managers must overcome in order to reach the other side of their career; partnership.

    For more information on this study, please contact Martin Kornberger.
     

    Citation:

    Kornberger, M., L. Justensen, and J. Mourtsen.2011. When you make manager, we put a big mountain in front of you: an ethnography of managers in a big 4 accounting firm. Accounting, Organizations and Society 36 (8): 514-533.

    Purpose of the Study:

    The “missing link” between trainee accountants and their senior employees, i.e. partners is the manager. This article suggests that becoming a manager is a rite of passage with two main effects:

    • Destabilization of the manager’s previous identity.
    • Shaping of the new identity as a manager through a set of new practices.

    The authors address the important, yet under-researched, role of the manager through an ethnographic analysis of their fundamental transition from junior trainees to potential partners in the context of a Big 4 Firm. This analysis outlines how managers in a complex network balance being an efficient client manager while also being a good team and time manager; additionally, how managers generate visibility to develop a “fame agenda” is addressed.

    Design/Method/ Approach:

    The authors collaborated with a Big 4 Firm to gather the data.  The data consisted of four sources of empirical materials. First, the Big 4 Firm’s website, newsletters, and other publicly accessible materials were analyzed along with confidential internal documents including employee satisfaction surveys, performance reports, change management surveys, exit surveys, and employment statistics. Second, the research team performed un-obtrusive on site observation including participating in meetings, planning sessions, client site visits, and other internal gatherings. Third, they conducted semi-structured interviews with 17 employees from different divisions of the organization and included partners, managers, and directors. Fourth, researchers shadowed 7 organizational members, managers and directors, for one working day each. The empirical research for this study was conducted between January 2005 and September 2006. However, a second round of interviews with senior executives was conducted from mid- 2009 until May 2010. An ethnographic approach was deemed the most appropriate method to allow researchers to focus on real data from many sources.

    Findings:
    • Managers must manage relationships with junior staff which involves acting as a mentor, a supervisor, a nurturer, and also as a person responsible for reviewing work and providing feedback.
    • Managing client relationships is another key role for a manager. This role involves adjusting behavior towards the client according to the hierarchical position of the client representative as well as handling relationships with global and local clients differently. Relationships with higher ranked representatives and with local clients are more nurtured because of the increased influence that these clients have when deciding to keep the Big 4 Firm as the auditor. Additionally, managers have to find a way to use clients as a vehicle for self-promotion.
    • Managers also have to be able to manage partner relationships. Managers must begin to show interests in different aspects of the firm to impress the partners who are ultimately responsible for the future of the managers. Managers must be able to handle the uncertainty that comes with a partner that can override any and all of a manager’s decisions.
    • However, one of the most important things that managers must be able to do has no technical relevance at all; it is to become visible to the firm. Managers must find time to get involved with firm initiatives in order to essentially gain popularity and increase their chances for promotion. This is referred to in the article as developing a “fame agenda”.
       
    Category:
    Audit Team Composition, Engagement Management
    Sub-category:
    Interaction among Team Members, Interactions with Client Management, Staff Hiring - Turnover & Morale
  • Jennifer M Mueller-Phillips
    A Post-SOX Examination of Factors Associated with the Size...
    research summary posted October 31, 2013 by Jennifer M Mueller-Phillips, tagged 01.0 Standard Setting, 01.05 Impact of SOX, 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale, 13.0 Governance, 13.01 Board/Audit Committee Composition 
    Title:
    A Post-SOX Examination of Factors Associated with the Size of Internal Audit Functions
    Practical Implications:

    This study provides insights that should be useful for CAEs and boards of directors (or audit committees) in discussions related to (1) internal audit philosophy regarding its potential contributions to an organization, (2) alternative staffing models, (3) resource allocation, and (4) embracement of audit technology. The study could also help guide external auditors’ evaluation of client internal audit functions. The authors find that the mission of internal audit functions differs from organization to organization. Additionally, the results suggest that internal audit functions used for leadership development purposes (i.e., a rotational staffing strategy) are larger, presumably because the staff have less experience and staff are rotating in and out of the department more frequently. Finally, these findings help illustrate the importance of internal audit proving that it is ‘‘value added’’ to the organization. Management and audit committees are often looking for more than financial statement compliance, and those internal audit functions that have responded to these greater needs are rewarded with more resources, likely because they are perceived to deliver more value.

    For more information on this study, please contact Karla Johnstone.
     

    Citation:

    Anderson, U. L., M. H. Christ, K. M. Johnstone, and L. E. Rittenberg. 2012. A Post-SOX Examination of Factors Associated with the Size of Internal Audit Functions. Accounting Horizons 26(2): 167-191

    Keywords:
    Internal Audit; resource allocation; budgeting; staffing.
    Purpose of the Study:

    Internal auditing is a key element of an organization’s governance, risk management, and internal control structure. However, many organizations struggle to know if the investments they make in the internal audit function are appropriate and use size benchmarking data (e.g., firm assets, revenues, number of employees) to determine if internal audit is appropriately sized. However, benchmark data fails to incorporate other factors that influence internal audit size such as the effectiveness and efficiency of an internal audit function, the scope of the internal audit mission, or internal audit objectives and staffing strategies. Therefore, the objectives of the study include the following:

    • Develop and test a conceptual model that articulates the factors associated with internal audit size in the contemporary post-SOX era. The model includes four determinants of internal audit size: (1) audit committee characteristics, (2) internal audit characteristics and mission, (3) assurance activities performed by others (including internal audit outsourcing providers and assurance provided by other functions within the organization), and (4) organization characteristics.
    • Conduct an examination using contemporary post-SOX data in order to extend earlier related research on internal audit sizing by considering a variety of previously unexamined characteristics that differentiate internal audit functions from one another.
    • Examine the state of internal audit staffing in the post-SOX environment.
       
    Design/Method/ Approach:

    The authors collected data with which to test their model by first conducting field interviews with a variety of chief audit executives across a broad range of industries. The authors then distributed a survey to chief audit executives that are members of the Institute of Internal Auditors. The survey includes questions related to each of the four determinants of internal audit size (as mentioned above), as well as internal audit size based on number of internal audit personnel. The field interviews were conducted between August 2006 to November 2006 and the survey was conducted from August 2007 and October 2008.

    Findings:

    The authors find that internal audit size is positively associated with:

    Audit Committee Characteristics:

    • the size of the audit committee;
    • the frequency of audit committee meetings with the CAE
    • audit committee review and approval of the internal audit budget.

    Internal Audit Characteristics and Mission:

    • CAE tenure in the organization;
    • performance of IT auditing;
    • the use of a staffing model in which internal audit is used for rotational leadership development
    • the use of sophisticated audit technology.

    Organization Characteristics:

    • the total assets of the organization
    • the number of foreign subsidiaries that the organization possesses.


    Further, the authors find that internal audit size is inversely associated with:

    Internal Audit Characteristics and Mission:

    • the percent of audit staff designated as Certified Internal Auditors.

    Internal Audit Activities Performed by Others:

    • the extent of internal audit activities outsourced to a third party.
    Category:
    Audit Team Composition, Governance, Standard Setting
    Sub-category:
    Board/Audit Committee Composition, Impact of SOX, Staff Hiring - Turnover & Morale

Filter by Type

Filter by Tag