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    Globalization and the Coordinating of Work in Multinational...
    research summary posted May 3, 2012 by The Auditing Section, last edited May 25, 2012, tagged 05.0 Audit Team Composition, 05.05 Diversity of Skill Sets e.g., Tenure and Experience, 05.09 Group Decision-Making, 10.0 Engagement Management, 10.03 Interaction among Team Members 
    Globalization and the Coordinating of Work in Multinational Audits
    Practical Implications:

    The results of this study are important for audit firms to consider when conducting multinational audits involving several different local offices. The results suggest that local offices of audit firms may modify inter-office instructions and firm audit methodologies to suit the needs of their local client, including adapting materiality levels. Additionally, results suggest that while some local offices see the worldwide audit team as their “client” other offices are focused on meeting the needs of their local client.


    Barrett, M., D.J. Cooper and K. Jamal. 2005. Globalization and the Coordinating of Work in Multinational Audits. Accounting, Organizations and Society 30 (1): 1-24.

    International matters, audit team composition, globalization, international business enterprises, auditing, international relations, accounting, international affairs, and structuration theory (communication)
    Purpose of the Study:

    Many of the largest companies today are multinational, with operations in different countries. Because of this, auditors must be able to conduct their audits on a global scale, coordinating with auditors in other countries. This paper takes an in-depth look at how auditors coordinate across countries to perform an audit for a multinational company, and how effectively the auditors are able to communicate. The paper focuses on relationships between the local offices by looking at two key coordinating mechanisms: 

    • Inter-office instructions
    • The firm’s risk based audit methodology 

    The paper also looks at how the inter-office instructions are interpreted and how closely they are followed at different locations, also how any changes are communicated back to the coordinating office. The paper also discusses how different offices adapt the firm’s risk based audit methodology.

    Design/Method/ Approach:

    The authors observed the audit team conducting their audit from July 1996 to September 1997. The authors spent time in the offices of a Canadian audit firm, attended firm trainings, and spent time with the Canadian, U.S., and worldwide engagement teams at the client sites. Throughout this time period, the authors also conducted interviews with the auditors, as well as several senior financial officers and the chief internal auditor of the client.

    • The firm’s risk based audit methodology and inter-office instructions were designed globally, but adapted at the local level based on auditors’ experiences with the client, including changing materiality levels.
    • North American audit teams (Canada, U.S.) were able to suggest changes to the worldwide engagement team that affected the worldwide engagement team’s approach to business advisory services.
    • While the study was being conducted, the audit firm changed to a “review by interview” method, where managers and  patners reviewed the work of staff and seniors on the spot, by asking them direct questions rather than leaving review notes. Most of the staff interviewed seemed uncomfortable with this new review process.
    • The audit teams (particularly in the U.S. and Canada) focused on trying to identify consulting opportunities with the client w while conducting their audit. Staff interviewed seemed less confident in their ability to provide value-added consulting services to the client.
    • The local audit team in the U.S. viewed the worldwide audit team as their “client” and built their audit around satisfying their requests (via the inter-office instructions), while the local audit team in Canada viewed the local office of the company as their client, and adapted inter-office instructions to fit their local client.
    Audit Team Composition, Engagement Management
    Diversity of Skill Sets (e.g. Tenure & Experience), Group Decision-Making, Interaction among Team Members
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