Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    Reaching Key Financial Reporting Decisions: How Directors...
    research summary posted October 13, 2015 by Jennifer M Mueller-Phillips, tagged 12.0 Accountants’ Reports and Reporting, 13.0 Governance, 13.05 Board/Audit Committee Oversight, 14.0 Corporate Matters, 14.06 CFO Tenure and Experience 
    Reaching Key Financial Reporting Decisions: How Directors and Auditors Interact.
    Practical Implications:

    The author of this article believes that this book should be on the must read list of researchers interested in audit committees and financial reporting, regardless of their research approach. For qualitative researchers, the book not only provides valuable insights into the on-process dynamics in reaching financial reporting decisions, but it is also a textbook example of how a researcher may conduct multiple case studies in accounting and gain access to key individuals in organizations to obtain private information about the financial reporting process. For empirical and experimental researchers, the book provides explanations that could be useful in developing their theoretical framework and raises many issues that could be researched in the future. The book should also be of interest to regulators, auditors, accountants, and students who are interested in the financial reporting process and the impact of recent regulation on this process.


    Bédard, J. 2012. Reaching Key Financial Reporting Decisions: How Directors and Auditors Interact. Accounting Review 87 (5): 1819-1820.

    auditing, financial reporting decisions, CFOs, audit committees
    Purpose of the Study:

    The book, Reaching Key Financial Reporting Decisions: How Directors and Auditors Interact by Vivien Beattie and Stella Fearnley, explores how chief financial officers (CFOs), audit committee chairs, and audit engagement partners resolve issues that have given rise to interactions, discussions, or negotiations, between two of these three participants. It is a follow-up of Behind Closed Doors (Beattie et al. 2001), which received the Deloitte/American Accounting Association’s Wildman Medal in 2007. The book provides an update of the 1999 results in the 2007/2008 U.K. regulatory environment that, as the U.S. one, has undergone significant change since 1999. The book consists of two parts.

    Reading each case is very interesting; it provides the reader with information that normally stays behind “closed doors.” The advantage of a book, compared to a journal article, is that there is more space to provide detailed information about the cases. With approximately 30 pages per case, the reader has a good understanding of each case. Even then, sometimes the author wanted to know more about the interaction issues.

    Design/Method/ Approach:

    This article is a book review. 


    The last part of the book presents the cross-case analysis of the 50 interactions using the framework developed in Beattie et al. They find that the key influence on the interaction outcomes has changed significantly since the previous study. The influence of the general company/audit firm context and specific context of the interaction is greatly reduced, while the national regulatory regime now has the strongest influence on the interaction (events, strategies, outcomes, and consequences). In the new regulatory environment, it appears that the higher threats from various regulatory agencies as seen by the CFO, audit partners, and audit committee chairs encourage compliance with accounting and auditing standards.  

    Whether readers need to read Behind Closed Doors to understand this new book depends on their interests. If readers are interested in how directors and auditors currently interact in reaching financial reporting decisions, the current book would be self-sufficient. However, if readers are interested in how the process has evolved over time, reading Behind Closed Doors would be useful.

    Accountants' Reporting, Corporate Matters, Governance
    Board/Audit Committee Oversight, CFO Tenure & Experience