Audit Firm Culture Revealed: Insights from Audit Engagement Leaders’ Responses to Challenges during COVID-19

Abstract

SUMMARY This study uses crisis management and organizational culture theories to understand how audit engagement leaders’ responses to challenges during the COVID-19 pandemic provide insight into audit firm culture. Semi-structured interviews with 22 U.S. audit engagement leaders during and after the pandemic reveal consistencies and inconsistencies among the organizational mechanisms used to convey and embed underlying cultural values. We find that audit engagement leaders consistently espouse and reinforce professionalism and commercialism as strong values of audit firm culture. However, in maintaining both of these values during the pandemic, leaders respond inconsistently to learning and development, as well as auditors’ mental health and well-being, despite their potential long-term impacts on professionalism and commercialism, suggesting that these are weaker cultural values. The findings reveal the short-term myopia of the audit profession on audit quality and firm profitability. Our findings have important implications for research and practice. JEL Classifications: M40; M42.