Auditors’ Sensemaking During Crises: The Case of the COVID‐19 Pandemic in Italian Local Public Administrations

Abstract

Crises such as COVID‐19 cause uncertainty that intensifies the pressure on public sector auditors, prompting them to question their established practices and routines. At the same time, stakeholders demand higher levels of assurance of public spending during crises. Using sensemaking as a theoretical framework, our paper explores how auditors changed the way they perform auditing activities in response to the uncertainty and instability stemming from the COVID‐19 crisis. Our qualitative survey of auditors of Italian municipalities shows that before the crisis auditors focused on compliance; however, in the face of time and information shortcomings as a result of the crisis, auditors collaborated more with municipalities. After the crisis, in an attempt to reclaim independence, auditors withdrew collaboration. At the same time, they imagined a different future in which they would implement auditing processes in a way that made clear their independence. The paper contributes to the literature on auditing by shedding light on how auditors make sense of their role and the activities performed during the main phases of crises. Moreover, it advances theoretical understanding by elucidating how sensemaking processes are developed throughout the main phases of a crisis. At a practical level, this study may help auditors envisage how to adjust their roles and activities at times of crisis in ways that maintain high audit quality levels.