The Expectations-Reality Gap in Auditing: A Comparison of Student Expectations and Auditor Experiences

We examine the effect of changes in audit risk standards on the conduct of financial statement audits in a European setting. We investigate this by analysing the audit hours and audit fees for clients of Big 4 audit firms in Finland in 1996 and 2010. Our results show that audit firms became more sensitive to clients’ business risk due to the introduction of the new audit risk standards, with more audit hours allocated to owner-managed companies in 2010 than in 1996, and fewer audit hours allocated to low-risk clients in 2010 than in 1996. Also, the labour mix in the audit team changed for owner-managed companies, with a greater work load carried by junior auditors in 2010 than in 1996. Regarding the price of audit, we find an increase in audit fees for clients with high business risk while audit fees remained at roughly the same level for low-risk clients. These findings should be of interest to the auditing profession and those involved in the development of auditing regulations.

We examine the effect of changes in audit risk standards on the conduct of financial statement audits in a European setting. We investigate this by analysing the audit hours and audit fees for clients of Big 4 audit firms in Finland in 1996 and 2010. Our results show that audit firms became more sensitive to clients’ business risk due to the introduction of the new audit risk standards, with more audit hours allocated to owner-managed companies in 2010 than in 1996, and fewer audit hours allocated to low-risk clients in 2010 than in 1996. Also, the labour mix in the audit team changed for owner-managed companies, with a greater work load carried by junior auditors in 2010 than in 1996. Regarding the price of audit, we find an increase in audit fees for clients with high business risk, while audit fees remained at roughly the same level for low-risk clients. These findings should be of interest to the auditing profession and those involved in the development of auditing regulations.

The recruitment process is central for managing human capital and attracting staff that are motivated to pursue a career within auditing. In this article, we explore a challenge facing audit firms’ human capital management practices related to the recruitment of junior auditors. When focusing on soft skills during recruitment of junior auditors to secure long-term human capital, audit firms risk creating expectations that are not met during the first year(s). These unmet expectations risk creating negative attitudes about retaining within the occupation. Using longitudinal cohort data on university graduates entering audit firms, we show that perceiving soft (hard) skills being in focus during recruitment positively (negatively) affects the intention to leave the audit occupation and firm after having gained one year of work experience. The positive (detrimental) effect relates only to a perceived focus on soft interpersonal skills and not on soft intrapersonal skills. For a perceived focus on soft interpersonal skills, it is also evidenced that a mismatch of perceived employer skill focus over time drives turnover intentions and that a perceived employer focus on hard skills during the first year of work increases the effect of an initial perceived focus on soft interpersonal skills during recruitment.

ABSTRACTThe authors examine the issue of employability of university accounting students from the perspectives of accounting firm employers, junior auditors, accounting lecturers, and accounting students. Areas of investigation include perceived importance of employability skills and desirable personal qualities; and early employment problems encountered by junior auditors and ways to minimize the problems. The findings indicate that employers value communication skills, analytical skills, and time management skills the most. Employers prefer well-rounded and responsible individuals with positive job attitudes. The most frequently encountered early employment problems include lack of technical knowledge, difficulty in applying knowledge, and lack of English skills.

PurposeThis study investigates the impact of organizational culture on the governance transparency of audit firms operating in the emerging market of the United Arab Emirates. The study unpacks how organizational culture influences audit firms' perceptions and practices regarding transparency in leadership, operations and reporting.Design/methodology/approachThe primary data for this study is collected through an online survey distributed to auditing firms in the UAE, with statistical analysis conducted using multiple regression models and robustness checks. The survey is designed to assess transparency practices in leadership, operations and reporting based on the Financial Reporting Council’s (UK) audit firm governance code. Then, the data is analyzed using SPSS software, representing a diverse sample of auditors from different firm types, ownership structures and sizes.FindingsThe study reveals that organizational culture significantly influences audit firms' perceptions of governance transparency practices. Specifically, cultural aspects such as public interest, improvements and consultation positively and significantly impact voluntary transparency in leadership, operations and reporting. Notably, reporting practices are particularly affected by organizational cultural norms and values. Furthermore, transparency practices vary based on audit firms' size, type and industry. These findings offer valuable guidance for audit firms, regulators and accounting standards setters in developing suitable governance mechanisms for global audit firms, including developed and developing countries.Research limitations/implicationsFuture studies may extend the scope by including additional transparency issues such as independent non-executives and dialogue practices. Further, it would be valuable to investigate the influence of organizational culture components, such as symbols and assumptions shared by employees, on governance transparency and to include an additional set of control variables, such as corporate governance. By incorporating these aspects into research, a more comprehensive understanding of transparency practices within organizations can be achieved.Practical implicationsThis study offers directions for stakeholders in the audit industry, aiding them in developing effective governance strategies both locally and internationally. The study further highlights ways audit firms can foster a culture of transparency, regulators can establish relevant frameworks, and accounting standards setters can contribute to developing consistent and appropriate governance mechanisms across different countries.Originality/valueThis study explores the influence of organizational culture on governance transparency in UAE audit firms, emphasizing the role of cultural elements in shaping transparency practices. It provides insights for enhancing governance mechanisms in global audit firms. Previous studies dealt with different determinants of audit behavior and performance. This study extends this prior literature by focusing on organizational culture as a vital underlying informal mechanism for controlling agency relationships.

SYNOPSIS Upper-division accounting students frequently direct their public accounting careers toward audit or tax “tracks” based on what appears to be limited information. Surprisingly, prior research has not investigated the factors that affect this fundamentally important career decision. We conduct two surveys to investigate the relevant factors of the audit-tax decision from the perspectives of upper-division accounting students and experienced public accounting professionals. Our student survey documents the underlying factors that influence the audit-tax decision. For example, accounting students who plan to pursue careers in audit believe that they will have more client interaction, better future job opportunities (i.e., industry positions), and greater knowledge of business processes if they work in audit (as opposed to tax). In contrast, accounting students who plan to pursue careers in tax perceive that they will have a more stable daily routine, develop more specialized skills, and build more collaborative client relationships if they work in tax (as opposed to audit). While our public accounting respondents agree with many of the students' perceptions, professionals also disagree with several of the students' perceptions, suggesting misimpressions of practice. Our results should be of interest to the accounting professionals, firm recruiters, and accounting professors who advise future accounting professionals. Data Availability: Data are available upon request.

This study is aimed to determine whether there are differences in accounting students' career preferences before and after being given information about the pros and cons of public accountants and private accountants. This study utilizes Expectancy theory and Herzberg's two factor theory. The study's population consists of undergraduate accounting students in Padang City, and data is collected by a survey distributed directly and via google form to accounting students at six universities in Padang. Hypothesis testing employs non-parametric analysis, namely the McNemar test. The findings of the study indicated a notable distinction in the career choices of accounting students prior to and following the provision of pros and cons information, with a significant value of 0.001. Salary and work-life balance are two aspects that influence students' motivation and expectations while considering a career as a public or private accountant.

The branding of B-schools has become an important concern for the business education leaders as it communicates about the quality of their offerings, faculties, students, placements, financial resources, and so forth. Also, B-schools are facing cut-throat competition within and across different categories of business education providers. In such a situation, the proper positioning and development of right branding strategies for a B-school are a must. It would be possible to create the right branding strategies for a B-school by understanding the expectations of its stakeholders. The purpose of this study was to understand the expectations of major stakeholders, that is, students, recruiters, and faculty members of B-schools operating at three different levels, that is, premier, national, and regional levels. The study was carried out in 10 B-schools located in Jharkhand state, and data were collected from a sample of 334 students, 48 faculty members, and 34 recruiters. The findings showed that good placement opportunities were the most important expectation of students across the different levels of B-school students. There was a significant positive correlation between the expectations of students of national and regional level B-schools, but in case of faculty members, there was a significant positive correlation between the faculty members of national and premier level B-schools. Recruiters looked for the right attitude and students' ability to adapt to the organizational culture as compared to knowledge or skills. The findings of the study have significant implications for B-school branding. The study suggested that the B-schools must align their strategies and resources to deliver as per their stakeholders' expectations - especially as per the expectations of their students, recruiters, and faculties - to achieve a strong and successful brand image.

This paper studies the “up-or-out” system that rules career management in Big 4 audit firms. In its approach to socialization of auditors, the existing literature has so far rather highlighted a top-down internalization Applying an Eliasian theoretical framework to the analysis of the up-or-out system in audit firms of patterns of behavior and social roles by junior auditors. We consider a more competitive and horizontal dimension of socialization in order to understand how auditors eventually succeed by surviving the up-or- out system. To this end, we use the concepts of figuration and interdependencies, as theorized by Norbert Elias. Based on participant observation and interviews, our research reveals that, in Big 4 firms, individuals are interdependent, as allies as well as adversaries, and that success in the

The objective of this study is to investigate the effect of audit time pressure and locus of control on reduced audit quality. Based on the literature review, it was hypothesized that audit time pressure and locus of control have a significant effect on reduced audit quality. This research was done on auditors of audit firms listing Bapepam-Lembaga Keuangan (LK). Data was collected through questionnaires. The respondents of this research are junior auditors, senior, supervisor, and manager. Data were analyzed using path analysis for testing hypothesis. The results show that audit time pressure and locus of control have a significant effect on reduced audit quality. Spesifically, this study indicate that auditors who experience greater level of time pressure are more likely to commit reduced audit quality. Under conditions of excessive time pressure, auditors failed to adequately use all relevant decision cues. The results also indicate that auditors who are more likely to engage in reduced audit quality tend to possess an external locus of control. This indicate that the personality characteristics (instance, locus of control) play a role increasing audit quality. Since an external locus of control is associated with higher acceptance of audit quality reduction behaviors, audit firms may need to tailor their professional development programs and management practices to reflect an auditor’s locus of control.

This study aims to investigate whether the Government Regulations No 20 the Year 2015 regarding the rotation of auditors will affect auditor independence. This study conducted observations on mining companies listed on the IDX by dividing into two observation periods, namely before and after the regulations applied. The results showed no change in auditors' independence to issue going concern audit opinions influenced by Audit Firm (AF) tenure. Both before and after the regulations applied. However, there are changes in audit partner (AP) tenure in influencing auditor independence before and after the regulations applied. The article suggests that audit partner supervision by authorities and professional associations needs to be improved based on the results of the study. It includes increasing supervision and supervision from Audit Firm leaders on all audit teams in the field, from junior auditors and senior auditors to in-charge managers.

The objective of this study is to investigate the effect of audit time pressure and locus of control on reduced audit quality. Based on the literature review, it was hypothesized that audit time pressure and locus of control have a significant effect on reduced audit quality. This research was done on auditors of audit firms listing Bapepam-Lembaga Keuangan (LK). Data was collected through questionnaires. The respondents of this research are junior auditors, senior, supervisor, and manager. Data were analyzed using path analysis for testing hypothesis. The results show that audit time pressure and locus of control have a significant effect on reduced audit quality. Spesifically, this study indicate that auditors who experience greater level of time pressure are more likely to commit reduced audit quality. Under conditions of excessive time pressure, auditors failed to adequately use all relevant decision cues. The results also indicate that auditors who are more likely to engage in reduced audit quality tend to possess an external locus of control. This indicate that the personality characteristics (instance, locus of control) play a role increasing audit quality. Since an external locus of control is associated with higher acceptance of audit quality reduction behaviors, audit firms may need to tailor their professional development programs and management practices to reflect an auditor’s locus of control.

PurposeThe purpose of this paper is to explore the effects of varying motivation induced by financial incentives and common uncertainty caused by time pressure on audit judgment performance.Design/methodology/approachThe experimental method is used to examine how financial incentives and time pressure affect audit performance, based on predictions by both economic and behavioral theories. The relative performance contract and the profit sharing contract are two incentive schemes considered. To achieve the incentive effect on subjects when conducting the experiment, all subjects were compensated with real cash rewards, according to their incentive contracts as randomly assigned.FindingsAs predicted, major results show that both incentive contract and time pressure affect audit judgment performance. The audit performance is generally better under the relative performance contract than under the profit sharing contract. Additionally, it is demonstrated that an increase in the level of time pressure significantly improves recall, recognition, and total efficiency under both types of incentive contracts, but impairs recall and total performance, particularly under the relative performance contract. Moreover, the reduction of recall and total performance under the relative performance contract is significantly greater than under the profit sharing contract. Nevertheless, in this case, the relative performance contract still outperforms the profit sharing contract.Research limitations/implicationsThe findings suggest the relative superiority of the relative performance contract in comparison with the profit sharing contract in improving auditors' judgment performance for structured tasks.Practical implicationsThe relative performance contract would motivate junior auditors to exert more effort to increase their performance in the work environment of increased time pressure. The audit firms may incorporate relative performance evaluations into incentive schemes, to improve junior auditors' performance for structured tasks.Originality/valueThe paper is of value to audit firms in the design of performance‐contingent incentive contracts.

Undergraduate nursing students' course expectations, actual experiences, and associated satisfaction levels: A mixed methods survey

This study analyzed the perspectives of students of the Accounting Sciences course at the Federal University of Santa Catarina (UFSC) in relation to their future professional career. The objective was to understand the expectations of these students regarding the job market and their career choices. The research was classified as quantitative and descriptive with a cross-sectional approach, using a sample of 86 students from a universe of 766. A questionnaire structured in four blocks of questions was the data collection instrument, which were obtained both by institutional e-mail and in person in classrooms. The main objective was to analyze the expectations of UFSC Accounting students in relation to their future professional career, identifying motivations, influences and perspectives for action. The research had a quantitative and descriptive approach, applying a questionnaire to a sample of 86 students. Data were collected through institutional e-mail and in person in the classrooms. The analysis considered demographic aspects, motivations for choosing the course, family influences, professional experiences and future career expectations. The results showed that the majority of students (41.58%) are in the age group of 21 to 25 years, with a significant increase in students over 30 years compared to previous studies. About 60.4% of the students attended high school in public schools. The Accounting course was the first choice for 61.39% of the students, and most of them were satisfied with their choice and with the course. In terms of professional performance, 89.11% of the students are employed, mainly as employees governed by the CLT and interns. However, many do not work directly in the accounting area, reflecting a varied satisfaction with remuneration. As for career prospects, students showed interest in taking public exams, doing specializations and working in specific areas such as auditing and business accounting. The study revealed that, despite a strong interest in specific areas of accounting and in civil service examinations, many students are employed outside the accounting sector, indicating a possible disconnect between academic training and available job opportunities. The results suggest the need for greater alignment between the course curriculum and market demands. The survey also highlighted the importance of expanding future studies to include more institutions and regions in order to better map the profile and expectations of accounting professionals in training.