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

• In Event: Plenary

Abstract

Engagement teams often engage in national office consultations (hereafter, “NOC”) on
accounting and auditing matters to ensure appropriate audit conclusions. Recent Big 4 audit
firms’ transparency reports indicate an emphasis on collaboration during these consultations.
Yet, it is unclear what this approach entails and what factors have contributed to this explicit
emphasis. We interview 22 highly experienced Big 4 audit firm partners (12 engagement
partners and 10 national office partners) to gain an understanding of the current consultation
dynamic that takes place both between the national office and engagement teams and between
the national office and clients. Using institutional theory to interpret our results, we find that
audit firms scaled back on client collaboration as an immediate response to SOX, and recently
have gravitated back toward a more collaborative approach (consistent with the pre-SOX era).
We explore likely outcomes for the auditor-client relationship and audit quality, and we further
discuss implications for regulators, practitioners, and researchers.

Authors

• Sanaz Aghazadeh, Louisiana State University

• Mary Kate Dodgson, Northeastern University

• Yoon Ju Kang, University of Massachusetts-Amherst

• Marietta Peytcheva, Lehigh University