How 40 Years of Audit Standards Have (and Haven’t) Changed Clients’ View of the Auditor

• In Event: Continental Breakfast & Research and Education Forum
  In Paper Session: Table 15: Regulation

Abstract

Approximately forty years ago, Wilcox and Smith (1977, hereafter WS77) found that when client employees’ and auditors’ perceptions of the auditor’s role differ, client employees reported more conflict with their auditors. Since their study, extensive new standards and regulations, partially motivated by scandal, have attempted to clarify, and redefine the auditors’ role. But have perceptions of the auditors’ role changed? To investigate this issue, we replicate and extend WS77. Our results, from a sample of client employees (n = 63), indicates that the regulatory and standard changes in the audit environment have changed client employee perceptions of some, but not all, aspects of the auditor’s role. Specifically, changes in client employees’ perceptions of the audit and its usefulness, the auditor’s role, and auditor-client conflict, are consistent with greater auditor independence and professional skepticism. However, based on client employees’ perspectives, regulatory reforms may have fallen short of their intended effects with respect to auditor accountability. Finally, despite decades of efforts to strengthen auditor independence the primary metaphor client employees use to describe the external auditor remains “consultant”.

Authors

• Marcus M. Doxey, University of Alabama-Tuscaloosa

• Dan Stone, University of Kentucky

• Robert Ewing, University of Kentucky