Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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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 -