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Audit quality, auditor behaviour and the psychological contract

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  • Olivier Herrbach

Abstract

The quality of the opinion provided by audit firms is an important determinant of their long-term survival. However, audit quality is difficult to gauge, which makes it particularly sensitive to the behaviour of the individuals who carry on audit work. Differences of interest between partners and other firm members can then have adverse consequences on the work motivation of field auditors. In particular, audit quality reduction behaviours are defined as actions taken by an auditor during an engagement that reduce evidence-gathering effectiveness inappropriately. These acts can threaten audit quality or damage the reputation of the profession. This paper, which is based on a survey of 170 audit seniors working in large audit firms in France, uses a model based on 'psychological contract' assessment and affective commitment to account for audit quality reduction behaviours by the respondents. The results show that the psychological contract elements dealing with the professional aspect of auditing are the most influential, and that affective commitment is correlated to social but not to technical quality reduction behaviours. The perception, by the respondents, of the quality of the review process is also significant. Some implications of these results for the future of auditing are drawn.

Suggested Citation

  • Olivier Herrbach, 2001. "Audit quality, auditor behaviour and the psychological contract," European Accounting Review, Taylor & Francis Journals, vol. 10(4), pages 787-802.
    • Handle: RePEc:taf:euract:v:10:y:2001:i:4:p:787-802
    DOI: 10.1080/09638180127400
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    Cited by:

    1. Mohannad Obeid Al Shbail, 2018. "The Effect of Role Ambiguity and Role Conflict on Dysfunctional Audit Behaviour: Evidence from Jordan," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(3), pages 17-25, July.
    2. Olivier Charpateau, 2011. "Ethique et indépendance interne : une nouvelle dimension de l'indépendance de l'auditeur légal," Post-Print halshs-00613297, HAL.
    3. Smith, Kenneth J. & Emerson, David J., 2017. "An analysis of the relation between resilience and reduced audit quality within the role stress paradigm," Advances in accounting, Elsevier, vol. 37(C), pages 1-14.
    4. Tom Van Caneghem, 2004. "The impact of audit quality on earnings rounding-up behaviour: some UK evidence," European Accounting Review, Taylor & Francis Journals, vol. 13(4), pages 771-786.
    5. Pernilla Broberg & Torbjörn Tagesson & Timur Uman, 2020. "Antecedents of Psychological Well-Being among Swedish Audit Firm Employees," IJERPH, MDPI, vol. 17(10), pages 1-12, May.
    6. Olivier Charpateau, 2011. "Ethique et indépendance interne : une nouvelle dimension de l'indépendance de l'auditeur légal," Post-Print hal-00646835, HAL.
    7. Jorien L. Pruijssers & Pursey P. M. A. R. Heugens & J. Oosterhout, 2020. "Winning at a Losing Game? Side-Effects of Perceived Tournament Promotion Incentives in Audit Firms," Journal of Business Ethics, Springer, vol. 162(1), pages 149-167, February.
    8. Mbarka, Elghazali & Hicham, Drissi, 2018. "Internal Audit as a Lever For Governance: The Case of Firms in an Emerging Economy," 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change (Dubrovnik, 2018), in: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disrupt, pages 20-32, Governance Research and Development Centre (CIRU), Zagreb.
    9. Olivier Charpateau, 2007. "Ethique De L'Auditeur Et Capacite A Reveler Une Erreur : Comparaison Des Auditeurs Financiers Et Operationnels," Post-Print halshs-00543243, HAL.
    10. Alan Kilgore & Renee Radich & Graeme Harrison, 2011. "The Relative Importance of Audit Quality Attributes," Australian Accounting Review, CPA Australia, vol. 21(3), pages 253-265, September.
    11. Al Shbail, Mohannad & Salleh, Zalailah & Mohd Nor, M. N., 2018. "Antecedents of burnout and its relationship to internal audit quality," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(4), pages 789-817, August.
    12. Petrus Ridaryanto, 2020. "Organizational Commitments in Financial Service Audit With Antecedents of Organizational Justice and Job Satisfaction," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 86-95, July.
    13. Pernilla Broberg & Torbjörn Tagesson & Daniela Argento & Niclas Gyllengahm & Ola Mårtensson, 2017. "Explaining the influence of time budget pressure on audit quality in Sweden," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(2), pages 331-350, June.
    14. Laitinen, Erkki K. & Laitinen, Teija, 2015. "A probability tree model of audit quality," European Journal of Operational Research, Elsevier, vol. 243(2), pages 665-677.
    15. Espinosa-Pike, Marcela & Barrainkua, Itsaso, 2016. "An exploratory study of the pressures and ethical dilemmas in the audit conflict," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 19(1), pages 10-20.
    16. Chantal Mangion & Norbert Tabone & Peter J. Baldacchino & Simon Grima, 2021. "Audit Quality and Resilience beyond the Role Stress Model: A Maltese Perspective," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 11(3), pages 37-56.
    17. Christine Noël Le maitre & Cathy Krohmer, 2010. "L’éthique est-elle (vraiment) une compétence clef des auditeurs légaux?," Revue Finance Contrôle Stratégie, revues.org, vol. 13(4), pages 75-100., December.

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