Christopher Humphrey

The Audit Expectations Gap in Britain: An Empirical Investigation

Abstract This paper reports the results of a postal questionnaire survey to ascertain the perceptions of individuals about audit expectations issues in Britain, including: what the role of the auditor is and should be; what prohibitions and regulations should be placed on audit firms; and what decisions auditors could be expected to make in a series of mini-cases. The questionnaire also included a semantic differential testing instrument which, through factor analysis, provides evidence about what different groups of individuals perceive to be the key attributes of auditing activity. The survey included chartered accountants in public practice, corporate finance directors, investment analysts, bank lending officers and financial journalists.

The audit expectations gap—plus ca change, plus c'est la meme chose?

Abstract This paper explores the response of the accounting profession to the audit expectations gap, with primary reference to the professions behaviour in the United Kingdom during the period of the last 20 years. Starting from a brief examination of the history of expectation concerns over a somewhat longer period, it is argued that both the existence of a gap and the specific aspects of audit performance it comprises have shown considerable continuity and resilience against solution. The professions response to the expectations gap are then discussed, considering them as interrelated with, rather than independent of, the nature of professional interests. Two main strategies of response are identified: a defensive approach focusing on education and reassurance of the public; and a constructive approach, seeking to convey a willingness to change audit activities to meet public concern. The paper evaluates these responses, and their likelihood of success in reducing expectations problems, in the context of the inherent conflicts in the structure of auditing as a self-regulated activity,

In pursuit of global regulation: Changing governance and accountability structures at the International Federation of Accountants (IFAC)

Purpose – IFAC, a Swiss-registered non-governmental organization, is emerging as an important international (auditing) standard setter amongst a powerful group of regulators, including the World Bank, the International Organisation of Securities Commissions (IOSCO) and the European Commission (EC). The purpose of this paper is to focus on the changing governance and accountability structures within IFAC, the way such changes are shaping, or re-shaping, its “public interest” commitments and the resulting strategic implications for processes of auditor regulation and public oversight in the global financial arena. Design/methodology/approach – The material and analysis presented in the paper derives from an extensive review of official reports, consultation documents and related responses, a range of other information available on IFACs web site (www.ifac.org) or those of other key regulatory players in the global financial arena. Findings – The paper analyzes how IFAC is succeeding as an international standard setter with an established place in the global financial infrastructure. From analysis of the recent establishment of a Public Interest Oversight Board (PIOB) and the changing nature of representation on IFACs Public Interest Activity Committees (PIACs), the paper reveals a growing reliance on governance by experts together with a growth in influence of the large, multinational accounting firms. Governance of auditors has become a matter of global importance and governance structures are being reconfigured. Practical implications – By highlighting the changes that have taken place within IFACs governance system, the paper establishes the importance for public policy of further study and debate concerning the nature and practical operation of such a system, particularly given IFACs position within a complex but developing global governance arena. Originality/value – IFAC is becoming an integral player in global financial governance processes and yet has not been subject to any substantial academic accounting research. This paper seeks to rectify this by focusing on the structures and processes underpinning both the development of IFACs International Standards on Auditing (ISAs) and its own global strategy for advancement.

Regulating Audit beyond the Crisis: A Critical Discussion of the EU Green Paper

With the European Commission making global leadership claims in the field of audit regulation, the content of its 2010 Green Paper on ‘Audit Policy: Lessons from the Crisis’ warrants careful scrutiny. Important issues raised in the Green Paper include regulatory oversight, competition in the audit market, the dangers of having very few firms with the capacity to audit global transnational corporations, professional judgement, innovative audit practices and, last but not least, social responsibility. This article analyses the principal perspectives and assumptions underpinning the construction of the Green Paper. The aims are threefold: to enhance understanding of the contemporary regulatory mindset of the European Commission, contribute to policy debate and inspire future research.

Discourse and audit change: transformations in methodology in the professional audit field

Purpose - This paper aims to develop understanding of how the pursuit of practice change in auditing, especially in relation to audit methodologies, is conveyed, presented, reflected in and enabled (or hindered) through discursive, textual constructions by audit firms. Design/methodology/approach - The paper uses an extensive series of interviews with audit practitioners, educators and regulators and a textual study of the content, concordances and narratives contained in two key audit methodological texts published by KPMG, one of the Big Four accounting firms. Findings - Major discursive shifts in audit methodologies are identified over the last decade, with the dominant audit discourse switching from one of “business value” to one of “audit quality”. Such shifts are analysed in terms of developments in the wider, organisational field and discursive (re)constructions of audit at the level of the audit firm. Originality/value - The identified shifts in auditing discourse are important in a number of respects. They demonstrate the significance of discursive elements of audit practice, contradicting influential prior claims that methodological discussions and developments in audit over the last decade had focused consistently on notions of “audit quality”. Methodologically, they demonstrate the importance and opportunities for knowledge development available by combining institutional, field-wide analysis with a detailed discursive study of individual interviews and texts.

Accounting and the social: A pedagogic perspective

The following paper provides an account of a university course which attempts to emphasise the reflexive nature of accounting and society. To be more precise the course is designed to introduce students to notions of accounting and the social which may not be so apparent in other accounting courses which they have studied. This paper recounts the motivation for offering the course, the range of material covered, the way the course is conducted and the way it has progressed during the last 5 years. As justification for the existence of the course the pedagogical aims and benefits are interwoven and explained throughout the text.

Rethinking impact and redefining responsibility: The parameters and coordinates of accounting and public management reforms

Purpose - The starting point for the paper is an assessment of the impact of a 1993 special issue of Design/methodology/approach - The paper is written in a reflective fashion, including assessments of: our role as guest editors of the special issue; the continuing pertinence of key messages emanating from the special issue; and broader considerations drawn from our own working experience in managerial roles in universities and personal reflections on the state of the public management literature. Findings - The paper highlights the long-standing litany of failure attached to such public management reform movements, as well as the limited degree of cross-disciplinary learning within the field. The paper emphasises that we need to rethink the parameters of “public sector” (accounting) research, and avoid the partitioning of (accounting) research into ever smaller and self-referential sub-areas. We need more cross-national studies. We need to know more about which management practices travel readily, and which travel less easily, and what happens when implementation is problematic. We need also to reinforce the importance of historical analyses, if we are to derive the most benefit from studies of the interrelations among accounting and public management reforms and wider transformations in ways of governing economic and social life. Finally, we need to retain or reinstate curiosity at the heart of our concerns, in order to dispel the self-evidence or taken-for-grantedness of so much of our present. Research limitations/implications - Personal reflections, while being beneficially close to the subject under consideration, inevitably suffer from claims of bias and a lack of independence. We have sought to control for such risks by drawing on a variety of sources of information with respect to impact, including (albeit ironically) citation counts and an analysis of the writings of individual authors contributing to the special issue. Originality/value - The paper is novel in that it seeks to combine an analysis of the literature on public sector accounting and management reforms over several decades with our own, multi-faceted, engagement with public management research and practice.

More than a numbers game: qualitative research in accounting

Purpose – The purpose of the paper is to outline the development of academic research in the discipline of accounting, paying particular attention to the important contribution made by qualitative research projects.Design/methodology/approach – Provision of a historical trajectory based on a review of developments in academic journals, the size and breadth of the academic community and other dimensions of the academic discipline of accounting.Findings – The review indicates that accounting has developed into a pluralist discipline in the UK. Qualitative research features in many sub‐disciplinary areas of accounting.Practical implications – The paper identifies the sibling discipline of finance as an area where qualitative research has not developed fully. It makes some suggestions and provides some indicators of how qualitative research in the areas of accounting and finance may develop in the future.Originality/value – The paper provides the only attempt to date to analyse and review developments of qual...

Public sector accounting, accountability and austerity: more than balancing the books?

Purpose - – The era of austerity that has followed the outbreak of the global financial crisis has posed a myriad of challenges for public services, with demands for major cuts in government spending, the delivery of balanced budgets and zstrategies for deficit reduction. The purpose of this paper is to consider how public sector accounting and accountability systems are implicated in the development and implementation of austerity policies. Also, it pinpoints a range of issues that accounting researchers need to be contemplating on the subject of accounting for austerity. Design/methodology/approach - – Interdisciplinary literature review, coupled with an illustrative discussion of the changing nature of public sector accounting practices under austerity. Findings - – Despite the significance and scale of austerity, public sector accounting research on the topic is in its infancy, with the prominent focus being on how accounting technologies are used to manage austerity. There have been few attempts to debate critically the construction of austerity and to provide alternative accounts of austerity. Accounting for austerity, especially in terms of its implications and consequences, is far too complex and challenging to be categorized as simply seeking to “balance the books”. Research limitations/implications - – As an academic community, we need to be developing understanding of public sector accounting research under austerity across different organizational levels and contexts. Also, we should be framing the accounts of austerity in ways that respect and build on a sound understanding of the extensive available interdisciplinary research on this topic. Key research questions to address include: how is accounting shaping constructions of, and impressions, attitudes and behaviors toward, austerity and the status of governments and public service organizations? What do such patterns of development mean for the roles and contributions of public sector accountants under austerity? Are accounting systems destined to be used primarily as vehicles for cost-cutting, or can they be used as engines for growth and for thinking about public service responsibilities in more socially inclusive forms? Originality/value - – Accountings of austerity in the field of public sector accounting research have been worryingly limited. This paper and the papers in this special issue of

Re-theorizing the configuration of organizational fields: the IIRC and the pursuit of ‘Enlightened’ corporate reporting

This paper studies the emergence of the International Integrated Reporting Council (IIRC) and its attempts to institutionalize integrated reporting as a practice that is critical to the relevance and value of corporate reporting. Informed by Suddaby and Viale’s [(2011). Professionals and field-level change: institutional work and the professional project. Current Sociology, 59, 423–442] theorization of how professionals reconfigure organizational fields, the paper delineates the strategies and mechanisms through which the IIRC has sought to enroll the support of a wide range of stakeholder groups for the idea of integrated reporting in order to deliver a fundamental reconfiguration of the corporate reporting field. The paper’s analysis reinforces the significance to any such field reconfiguration of the reciprocal and mutual arrangements between influential professionals and other powerful actors but does so in a way that (a) refines Suddaby and Viale’s theorization of processes of field-level change and (b) pinpoints the fundamental policy challenges facing the IIRC. Gieryn’s [(1983). Boundary work and the demarcation of science from non-science: strains and interests in professional ideologies of scientists. American Sociological Review, 48 (6), 781–795] notion of boundary work is operationalized to capture some of the complexity and dynamism of the change process that is not sufficiently represented by Suddaby and Viale’s more sequentialist theorization. From a policy perspective, the paper demonstrates just how much the IIRC’s prospects for success in reconfiguring the corporate reporting field depend on its ability to reconfigure the mainstream investment field. Ultimately, this serves to question whether the IIRC’s conceptualization of ‘enlightened’ corporate reporting is sufficiently powerful and persuasive to stimulate ‘enlightened’ investment behavior focused on the medium and long term – and, more generally stresses the theoretical significance of considering connections across related organizational fields in institutional analyses of field reconfiguration efforts.