TY - JOUR

T1 - Auditor-client interactions in the changed UK regulatory environment

T2 - a revised grounded theory model

AU - Beattie, Vivien

AU - Fearnley, Stella

AU - Hines, Tony

PY - 2015/3

Y1 - 2015/3

N2 - Audit and financial reporting quality are under intense scrutiny nationally and globally. The outcome of high-level auditor-auditee discussion and negotiation issues (auditor-client interactions) is central to this debate. Beattie et al. (2001) developed a grounded theory model of these interactions in the 1997 UK setting. This paper reports on a field study of 45 interactions in nine case companies in the radically changed post-SOX regulatory environment. Crucially, interviewees in each case company extend the chief financial officer - audit partner dyad to include the audit committee chair. Fundamental revisions to the model emerge. The strongest influence on interactions has become the national enforcement regime, overlaid upon the international standard-setting regime. The outcome in both the eyes of the participants and in our evaluation is full compliance (contrary to the findings from the 1997 setting), regardless of the perceived quality of the standards and the integrity of the outcome. Personal and company characteristics, which were of most importance in 1997, have become peripheral. The audit committee chair is shown to fulfil a gatekeeping role in relation to the full audit committee.

AB - Audit and financial reporting quality are under intense scrutiny nationally and globally. The outcome of high-level auditor-auditee discussion and negotiation issues (auditor-client interactions) is central to this debate. Beattie et al. (2001) developed a grounded theory model of these interactions in the 1997 UK setting. This paper reports on a field study of 45 interactions in nine case companies in the radically changed post-SOX regulatory environment. Crucially, interviewees in each case company extend the chief financial officer - audit partner dyad to include the audit committee chair. Fundamental revisions to the model emerge. The strongest influence on interactions has become the national enforcement regime, overlaid upon the international standard-setting regime. The outcome in both the eyes of the participants and in our evaluation is full compliance (contrary to the findings from the 1997 setting), regardless of the perceived quality of the standards and the integrity of the outcome. Personal and company characteristics, which were of most importance in 1997, have become peripheral. The audit committee chair is shown to fulfil a gatekeeping role in relation to the full audit committee.

KW - auditor-client interaction

KW - audit comittee

KW - audit committee chair

KW - discussion

KW - enforcement1

KW - financial reporting quality

KW - IFRS

KW - ISAs

KW - negotiation

U2 - 10.1111/ijau.12031

DO - 10.1111/ijau.12031

M3 - Journal article

VL - 19

SP - 15

EP - 36

JO - International Journal of Auditing

JF - International Journal of Auditing

SN - 1090-6738

IS - 1

ER -