IDEAS home Printed from https://ideas.repec.org/a/eee/aosoci/v41y2015icp55-72.html
   My bibliography  Save this article

Risk and the construction of a European audit policy agenda: The case of auditor liability

Author

Listed:
  • Samsonova-Taddei, Anna
  • Humphrey, Christopher

Abstract

In 2008, following a sustained policy campaign by the large international accounting firms, the European Commission issued a Recommendation that European Union (EU) Member States should limit civil liability for statutory auditors. The Recommendation, however, was far from the firms’ desired outcome because, as a non-binding policy document, it left it to individual Member States to decide whether (or not) and how to limit auditors’ liability exposure. This paper analyzes the European transnational audit policy-making processes by which such a decision was reached and what prevented the firms from securing a more definitive EU-wide policy solution with respect to auditor liability limitation. Drawing on Hilgartner’s concept of a ‘risk object’, the paper reveals how a search for a policy consensus on auditor liability was invariably frustrated by the competing conceptualizations of, and exposure to, risk attributed to particular proposed liability arrangements. As such, auditor liability emerges as a constantly shifting regulatory construct rather than a dilemma waiting to be resolved. The study also emphasizes the residing significance of the authority of the nation state in the European audit policy context, with policy preferences of individual EU Member States having a substantial influence on the outputs of European audit policy making.

Suggested Citation

  • Samsonova-Taddei, Anna & Humphrey, Christopher, 2015. "Risk and the construction of a European audit policy agenda: The case of auditor liability," Accounting, Organizations and Society, Elsevier, vol. 41(C), pages 55-72.
    • Handle: RePEc:eee:aosoci:v:41:y:2015:i:c:p:55-72
    DOI: 10.1016/j.aos.2014.08.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0361368214000725
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.aos.2014.08.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cooper, David J. & Robson, Keith, 2006. "Accounting, professions and regulation: Locating the sites of professionalization," Accounting, Organizations and Society, Elsevier, vol. 31(4-5), pages 415-444.
    2. Canning, Mary & O’Dwyer, Brendan, 2013. "The dynamics of a regulatory space realignment: Strategic responses in a local context," Accounting, Organizations and Society, Elsevier, vol. 38(3), pages 169-194.
    3. Anna Samsonova-Taddei & Christopher Humphrey, 2014. "Transnationalism and the transforming roles of professional accountancy bodies," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 27(6), pages 903-932, July.
    4. Arnold, Patricia J., 2005. "Disciplining domestic regulation: the World Trade Organization and the market for professional services," Accounting, Organizations and Society, Elsevier, vol. 30(4), pages 299-330, May.
    5. Suddaby, Roy & Cooper, David J. & Greenwood, Royston, 2007. "Transnational regulation of professional services: Governance dynamics of field level organizational change," Accounting, Organizations and Society, Elsevier, vol. 32(4-5), pages 333-362.
    6. Bengtsson, Elias, 2011. "Repoliticalization of accounting standard setting—The IASB, the EU and the global financial crisis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(6), pages 567-580.
    7. Ted To, 1999. "Risk and evolution," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(2), pages 329-343.
    8. Shapiro, Brian & Matson, Diane, 2008. "Strategies of resistance to internal control regulation," Accounting, Organizations and Society, Elsevier, vol. 33(2-3), pages 199-228.
    9. Anne Loft & Christopher Humphrey & Stuart Turley, 2006. "In pursuit of global regulation: Changing governance and accountability structures at the International Federation of Accountants (IFAC)," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 19(3), pages 428-451, April.
    10. Arnold, Patricia J. & Sikka, Prem, 2001. "Globalization and the state-profession relationship: the case the Bank of Credit and Commerce International," Accounting, Organizations and Society, Elsevier, vol. 26(6), pages 475-499, August.
    11. Quick, Reiner & Turley, Stuart & Willekens, Marleen, 2008. "Auditing, Trust and Governance. Developing regulation in Europe," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 35700, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    12. Richardson, Alan J., 2009. "Regulatory networks for accounting and auditing standards: A social network analysis of Canadian and international standard-setting," Accounting, Organizations and Society, Elsevier, vol. 34(5), pages 571-588, July.
    13. Marie-Laure Salles-Djelic & Kerstin Sahlin-Andersson, 2006. "Introduction: A world of governance: The rise of transnational regulation," Post-Print hal-01891998, HAL.
    14. Axel Haller, 2002. "Financial accounting developments in the European Union: past events and future prospects," European Accounting Review, Taylor & Francis Journals, vol. 11(1), pages 153-190.
    15. Ian Dewing & Peter O. Russell, 2008. "Financial Integration in the EU: the First Phase of EU Endorsement of International Accounting Standards," Journal of Common Market Studies, Wiley Blackwell, vol. 46, pages 243-264, March.
    16. Kim Jeppesen & Anne Loft, 2011. "Regulating Audit in Europe: The Case of the Implementation of the EU Eighth Directive in Denmark 1984-2006," European Accounting Review, Taylor & Francis Journals, vol. 20(2), pages 321-354.
    17. Barrett, Michael & Cooper, David J. & Jamal, Karim, 2005. "Globalization and the coordinating of work in multinational audits," Accounting, Organizations and Society, Elsevier, vol. 30(1), pages 1-24, January.
    18. Anna Samaonova-Taddei & Christopher Humphrey, 2014. "Transnationalism and the transforming roles of professional accountancy bodies: Towards a research agenda," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 27(5), pages 903-932.
    19. Tim Büthe & Walter Mattli, 2011. "The New Global Rulers: The Privatization of Regulation in the World Economy," Economics Books, Princeton University Press, edition 1, number 9470.
    20. Tanja E. Aalberts, 2004. "The Future of Sovereignty in Multilevel Governance Europe ‐ A Constructivist Reading," Journal of Common Market Studies, Wiley Blackwell, vol. 42(1), pages 23-46, February.
    21. ., 1999. "The assessment of country risk," Chapters, in: Handbook of Banking Regulation and Supervision in the United Kingdom, chapter 22, Edward Elgar Publishing.
    22. Siliciano, John A., 1997. "Trends in independent auditor liability: The emergence of a sane consensus?," Journal of Accounting and Public Policy, Elsevier, vol. 16(4), pages 339-353.
    23. Christopher Humphrey, 2008. "Auditing research: a review across the disciplinary divide," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(2), pages 170-203, February.
    24. Ian P. Dewing & Peter Russell, 2002. "Regulation of statutory audit in the European Union: New developments," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 10(1), pages 68-78, March.
    25. Gietzmann, M. B. & Quick, R., 1998. "Capping auditor liability: The German experience," Accounting, Organizations and Society, Elsevier, vol. 23(1), pages 81-103, January.
    26. anonymous, 1999. "Models for valuing default-risky securities," Financial Update, Federal Reserve Bank of Atlanta, vol. 12(Jan), pages 1-3.
    27. Steven Maijoor & Willem Buijink & Roger Meuwissen & Arjen Van Witteloostuijn, 1998. "Towards the establishment of an internal market for audit services within the European Union," European Accounting Review, Taylor & Francis Journals, vol. 7(4), pages 655-673.
    28. Napier, Christopher J., 1998. "Intersections of law and accountancy: Unlimited auditor liability in the United Kingdom," Accounting, Organizations and Society, Elsevier, vol. 23(1), pages 105-128, January.
    29. Malsch, Bertrand & Gendron, Yves, 2011. "Reining in auditors: On the dynamics of power surrounding an “innovation” in the regulatory space," Accounting, Organizations and Society, Elsevier, vol. 36(7), pages 456-476.
    30. Sikka, Prem, 2009. "Financial crisis and the silence of the auditors," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 868-873, August.
    31. Power, Michael, 1998. "Auditor liability in context," Accounting, Organizations and Society, Elsevier, vol. 23(1), pages 77-79, January.
    32. Chung, Janne & Farrar, Jonathan & Puri, Poonam & Thorne, Linda, 2010. "Auditor liability to third parties after Sarbanes-Oxley: An international comparison of regulatory and legal reforms," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 19(1), pages 66-78.
    33. Humphrey, Christopher & Loft, Anne & Woods, Margaret, 2009. "The global audit profession and the international financial architecture: Understanding regulatory relationships at a time of financial crisis," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 810-825, August.
    34. Sebastian Botzem, 2012. "The Politics of Accounting Regulation," Books, Edward Elgar Publishing, number 13992.
    35. Arnold, Patricia J., 2009. "Global financial crisis: The challenge to accounting research," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 803-809, August.
    36. Prem Sikka, 2008. "Globalization and its discontents," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(3), pages 398-426, March.
    37. Ian Dewing & Peter O. Russell, 2008. "Financial Integration in the EU: the First Phase of EU Endorsement of International Accounting Standards," Journal of Common Market Studies, Wiley Blackwell, vol. 46(2), pages 243-264, March.
    38. Thornburg, Steven & Roberts, Robin W., 2008. "Money, politics, and the regulation of public accounting services: Evidence from the Sarbanes-Oxley Act of 2002," Accounting, Organizations and Society, Elsevier, vol. 33(2-3), pages 229-248.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Goodson, Brian M. & Grenier, Jonathan H. & Maksymov, Eldar, 2023. "When law students think like audit litigation attorneys: Implications for experimental research," Accounting, Organizations and Society, Elsevier, vol. 104(C).
    2. Canning, Mary & O'Dwyer, Brendan, 2016. "Institutional work and regulatory change in the accounting profession," Accounting, Organizations and Society, Elsevier, vol. 54(C), pages 1-21.
    3. Marius Cîmpan & Cătălin-Paul Păcuraru-Ionescu & Sorin Nicolae Borlea, 2023. "The value of public audit - theories and empirical evidence," Journal of Financial Studies, Institute of Financial Studies, vol. 8(14), pages 24-36, May.
    4. Löhlein, Lukas & Müßig, Anke, 2020. "At the boundaries of institutional theorizing: Individual entrepreneurship in episodes of regulatory change," Accounting, Organizations and Society, Elsevier, vol. 83(C).
    5. Ritzer-Angerer Petra, 2020. "Was bedeuten die Vertrauensguteigenschaften der Jahresabschlussprüfung für die Regulierung der Wirtschaftsprüferhaftung?," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 69(2), pages 89-119, August.
    6. Anna Samsonova-Taddei & Javed Siddiqui, 2016. "Regulation and the Promotion of Audit Ethics: Analysis of the Content of the EU’s Policy," Journal of Business Ethics, Springer, vol. 139(1), pages 183-195, November.
    7. Mouna Hazgui & Marion Brivot, 2022. "Debating Ethics or Risks? An Exploratory Study of Audit Partners’ Peer Consultations About Ethics," Journal of Business Ethics, Springer, vol. 175(4), pages 741-758, February.
    8. Kettunen, Jaana, 2017. "Interlingual translation of the International Financial Reporting Standards as institutional work," Accounting, Organizations and Society, Elsevier, vol. 56(C), pages 38-54.
    9. Ritzer-Angerer Petra, 2020. "Was bedeuten die Vertrauensguteigenschaften der Jahresabschlussprüfung für die Regulierung der Wirtschaftsprüferhaftung?," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 69(2), pages 89-119, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Canning, Mary & O’Dwyer, Brendan, 2013. "The dynamics of a regulatory space realignment: Strategic responses in a local context," Accounting, Organizations and Society, Elsevier, vol. 38(3), pages 169-194.
    2. Canning, Mary & O'Dwyer, Brendan, 2016. "Institutional work and regulatory change in the accounting profession," Accounting, Organizations and Society, Elsevier, vol. 54(C), pages 1-21.
    3. Alon, Anna & Dwyer, Peggy D., 2016. "SEC's acceptance of IFRS-based financial reporting: An examination based in institutional theory," Accounting, Organizations and Society, Elsevier, vol. 48(C), pages 1-16.
    4. Hopper, Trevor & Lassou, Philippe & Soobaroyen, Teerooven, 2017. "Globalisation, accounting and developing countries," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 43(C), pages 125-148.
    5. Malsch, Bertrand & Gendron, Yves, 2011. "Reining in auditors: On the dynamics of power surrounding an “innovation” in the regulatory space," Accounting, Organizations and Society, Elsevier, vol. 36(7), pages 456-476.
    6. Humphrey, Christopher & Loft, Anne & Woods, Margaret, 2009. "The global audit profession and the international financial architecture: Understanding regulatory relationships at a time of financial crisis," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 810-825, August.
    7. Smith-Lacroix, Jean-Hubert & Durocher, Sylvain & Gendron, Yves, 2012. "The erosion of jurisdiction: Auditing in a market value accounting regime," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 23(1), pages 36-53.
    8. Mihret, Dessalegn Getie & Mirshekary, Soheila & Yaftian, Ali, 2020. "Accounting professionalization, the state, and transnational capitalism: The case of Iran," Accounting, Organizations and Society, Elsevier, vol. 82(C).
    9. Baudot, Lisa & Cooper, David J., 2022. "Regulatory mandates and responses to uncomfortable knowledge: The case of country-by-country reporting in the extractive sector," Accounting, Organizations and Society, Elsevier, vol. 99(C).
    10. Samsonova, Anna, 2009. "Local sites of globalisation: A look at the development of a legislative framework for auditing in Russia," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(4), pages 528-552.
    11. Löhlein, Lukas, 2017. "Measuring the independence of audit oversight entities: a comparative empirical analysis," LSE Research Online Documents on Economics 65370, London School of Economics and Political Science, LSE Library.
    12. Caramanis, Constantinos & Dedoulis, Emmanouil & Leventis, Stergios, 2015. "Transplanting Anglo-American accounting oversight boards to a diverse institutional context," Accounting, Organizations and Society, Elsevier, vol. 42(C), pages 12-31.
    13. Xu, Shirley Geyi & Andrew, Brian, 2021. "Competing for the leading role: Trials in categorizing greenhouse and energy auditors," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 77(C).
    14. Ghattas, Peter & Soobaroyen, Teerooven & Marnet, Oliver, 2021. "Charting the development of the Egyptian accounting profession (1946–2016): An analysis of the State-Profession dynamics," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 78(C).
    15. Dunne, Neil J. & Brennan, Niamh M. & Kirwan, Collette E., 2021. "Impression management and Big Four auditors: Scrutiny at a public inquiry," Accounting, Organizations and Society, Elsevier, vol. 88(C).
    16. Christoph Pelger & Nicole Spieß, 2017. "On the IASB’s construction of legitimacy – the case of the agenda consultation project," Accounting and Business Research, Taylor & Francis Journals, vol. 47(1), pages 64-90, January.
    17. Kettunen, Jaana, 2017. "Interlingual translation of the International Financial Reporting Standards as institutional work," Accounting, Organizations and Society, Elsevier, vol. 56(C), pages 38-54.
    18. Krishnan, Sarada R., 2018. "Influence of transnational economic alliances on the IFRS convergence decision in India—Institutional perspectives," Accounting forum, Elsevier, vol. 42(4), pages 309-327.
    19. Bozanic, Zahn & Dirsmith, Mark W. & Huddart, Steven, 2012. "The social constitution of regulation: The endogenization of insider trading laws," Accounting, Organizations and Society, Elsevier, vol. 37(7), pages 461-481.
    20. Crawford, L. & Ferguson, J. & Helliar, C.V. & Power, D.M., 2014. "Control over accounting standards within the European Union: The political controversy surrounding the adoption of IFRS 8," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(4), pages 304-318.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:aosoci:v:41:y:2015:i:c:p:55-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/aos .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.