Coordination and Communication Challenges in Global Group Audits

• In Event: Group Audits and Off-Shoring

Abstract

This paper investigates the coordination and communication challenges faced by auditors in performing effective and efficient global group audits. Prior research suggests that management of geographically distributed work can be problematic in any context, but made more difficult when diverse teams perform interdependent activities in an inherently complex environment such as auditing. We investigate sources of complexity that differentiate engagement experiences identified by a sample of group audit leaders as having significant vs. insignificant challenges. We then study three specific coordination and communication strategies identified by prior research and used in the auditing context: (1) modularization (planned reduction of interdependencies between team members); (2) tacit coordination methods (leveraging and developing common ground between team members based on shared knowledge); and (3) ongoing communication methods (building and using communication channels). Model results show that greater component auditor knowledge and engagement experience (measures of tacit coordination) are associated with a lower probability of challenges from all sources of complexity that we study. Other effects of strategies are contingent on the nature and level of complexity. For example, greater direct involvement of component auditors in the group team’s meetings (an ongoing communication strategy) decreases challenges when language/cultural barriers are high and the client’s global structure is more complex. Taken together, our results provide the first available evidence for a large sample of global group audits on factors that make these engagements challenging and provide insight into specific areas of concerns raised by regulators.

Authors

• Denise Ryan Hanes, Villanova University

• Jean C Bedard, Bentley University