Management Accounting Section Midyear Meeting

Investigating the Differences in Performance Measurement and Control Systems of Global Audit Firms across Countries—Comparative Case Studies from Germany, Italy

• In Event: Qualitative Research in Management Accounting

Abstract

Research on performance measurement and control systems (PMCSs) in international settings is scarce and even more so in auditing. This is problematic in light of the recent accounting scandals with an international dimension that have brought the issue of audit quality to the forefront of scholarly, political and societal debates. To illuminate on the potential role of PMCS and analyze the differences across countries, we conducted in-depth case studies within the Italian and German subsidiaries of a Big 4 audit firm. Our case studies highlight considerable efforts to globally harmonize PMCSs at the macro-level – e.g., Information Technology (IT) systems and control techniques – in the Big 4 firm analyzed; they are manifested in a global initiative occurring at the time of our field study. This initiative is embedded in broader regulative efforts to standardize audit processes but moreover driven by significant tensions arising from an increasing commercialism. In contrast, we identify remarkable differences at the micro-level of PMCSs – e.g., patterns and styles of using PMCSs. While our German interviewees experience a considerable flexibility and discretion in the execution of their tasks and in the control processes over this execution, our Italian interviewees report focusing much more on strict compliance with the prescribed rules and procedures. Overall, control systems are more akin to enabling systems in the German and to coercive systems in the Italian subsidiary. We associate these findings with differences in the institutional context of both subsidiaries (such as different levels of trust in formal institutions, different degrees of interpersonal trust but also the different actors involved in the auditing process), highlight potential consequences for audit quality and offer avenues for future research.

Authors

• Angelo Ditillo, Bocconi University

• Christoph Endenich, Essec Business School

• Andreas Hoffjan, TU Dortmund University