Differential Post-Reform Impacts: U.K. and Italian auditors’ perceptions and experience after the implementation of the EU Audit Directive (2016)

• In Event: Key Audit Matters and Auditor Perceptions

Abstract

This paper undertakes a comparative analysis of how the regulatory change introduced by the 2016 EU Audit Directive have impacted external financial statement auditors’ governance structures across two different European countries. Evidence is still limited on the impacts of these audit reforms on European auditors, especially in European countries characterised by different regulatory, economic and accounting traditions. Using field research, based on face-to-face interviews and focus groups of Big-4 and non-Big-4 auditors, we captured their perceptions and experience in the U.K. and Italy, two countries with similar audit markets but two different institutional settings. The study conveys, two major institutional pressures – EU audit reforms and increasing inspection requirements from regulators – on European auditors have generated differential organisational responses by the U.K. and Italian auditors. From the views expressed by the participants, auditors have responded to these pressures by changing elements of their internal quality control processes, and risk management systems. This is one of the first studies providing insights on the direct consequences of the 2016 EU audit directive on auditors’ governance structures in a comparative perspective.

Authors

• Michael Kend, RMIT University, Australia

• Giulia Leoni, University of Genoa (Italy)

• Cristina Florio, University of Verona (Italy)