Learning from Errors: An Interview Study Among Dutch Auditors

• In Event: Learning from Each Other

Abstract

Despite the presence of quality control measures at audit firms, results from inspections by regulators suggest that auditors, as all humans, make errors during their work. Further, inspection reports reveal that errors can reduce audit quality, and inadequate handling of errors may cause them to be repeated. This paper contributes to the auditing literature by examining how auditors and audit firms deal with auditor-committed errors, how auditors learn from errors and the extent to which propositions from the error-handling literature are recognized by auditors in practice. This literature proposes two primary strategies that organizations can use to deal with errors: error prevention and error management. An error prevention strategy is used to minimize errors ex ante, while an error management strategy serves to limit negative consequences and enable learning from errors by stimulating openness about errors and their causes. The most prominent result of our analysis of 22 unstructured interviews with Dutch auditors is that auditors recognize the importance of openness as a key measure to improve error management; however, in practice, error prevention concerns prevail and auditors have a fear of being blamed, resulting in a lack of openness and learning from errors.

Authors

• Oscar Van Mourik, Vrije Universiteit Amsterdam

• Anna Gold, Vrije Universiteit Amsterdam

• Philip Wallage, University of Amsterdam

• Arnold Wright, Northeastern University