No Need to Compromise: Evidence of Public Accounting's Changing Culture Regarding Budgetary Performance

Abstract

McNair (1991) discusses the "proper compromises" made by junior auditors in large public accounting firms by arguing that the conflict between high-quality and low-cost auditing leads to "ethically ambivalent" behavior. Specifically, McNair provides evidence that success during the early stages of a public accounting career requires auditors to complete quality audits in an unreasonably short period of time. Completing quality audits within insufficient time constraints puts junior auditors in the following dilemma: report time truthfully and fail versus underreport time and succeed. We reevaluate this conflict approximately one decade after McNair's study and provide evidence that pressures toward "ethical ambivalence" have been reduced in public accounting firms.