Revealing Oz: Audit Firm Partners’ Experiences with National Office Consultations

• In Event: 2.01 Auditor Judgment II

Abstract

Engagement teams often consult on accounting and auditing matters with the national office (hereafter, “NO”) in an effort to ensure appropriate audit conclusions. Big 4 audit firms’ transparency reports indicate a recent emphasis on collaboration during these consultations. Yet, it is unclear what this approach entails and what factors have contributed to this explicit emphasis. To address these questions, we interview 20 highly experienced Big 4 audit firm partners to gain an understanding of the current consultation dynamic that takes place both internally (i.e., between engagement teams and the NO) and externally (i.e., between audit firms and their clients). Using institutional theory, we find that the NO is evolving into a transparent and more accessible figure that engages in greater collaboration with engagement teams and participates in discussions with clients during consultations. Interviewees further discuss the balance between a client service focus and an emphasis on audit quality. We explore likely outcomes for the auditor-client relationship and audit quality, and further discuss implications for regulators and researchers.

Authors

• Sanaz Aghazadeh, Louisiana State University

• Mary Kate Dodgson, Northeastern University

• Yoon Ju Kang, University of Massachusetts-Amherst

• Marietta Peytcheva, Lehigh University