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Using Cultural Mindsets to Reduce Cross‐National Auditor Judgment Differences

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  • Aaron Saiewitz
  • Elaine (Ying) Wang

Abstract

In a globalized audit environment, regulators and researchers have expressed concerns about inconsistent audit quality across nations, with a particular emphasis on Chinese audit quality. Prior research suggests Chinese audit quality may be lower than U.S. audit quality due to a weaker institutional environment (e.g., lower litigation and inspection risk) or cultural value differences (e.g., greater deference to authority). In this study, we propose that lower Chinese audit quality could also be due to Chinese auditors' different cognitive processing styles (i.e., cultural mindsets). We find U.S. auditors are more likely to engage in an analytic mindset approach, focusing on a subset of disconfirming information, whereas Chinese auditors are more likely to take a holistic mindset approach, focusing on a balanced set of confirming and disconfirming information. As a result, Chinese auditors make less skeptical judgments compared to U.S. auditors. We then propose an intervention in which we explicitly instruct auditors to consider using both a holistic and an analytic mindset approach when evaluating evidence. We find this intervention minimizes differences between Chinese and U.S. auditors' judgments by shifting Chinese auditors' attention more towards disconfirming evidence, improving their professional skepticism, while not causing U.S. auditors to become less skeptical. Our study contributes to the auditing literature by identifying cultural mindset differences as a causal mechanism underlying lower professional skepticism levels among Chinese auditors compared to U.S. auditors and providing standard setters and firms with a potential solution that can be adapted to improve Chinese auditors' professional skepticism and reduce cross‐national auditor judgment differences. Miser sur les modes de pensée culturels pour réduire les différences de jugement entre les auditeurs d'un pays à l'autre Dans un contexte d'audit mondialisé, les responsables de la réglementation et les chercheurs ont fait part de leurs préoccupations concernant la qualité inégale des audits d'un pays à l'autre, en s'attardant particulièrement à la qualité des audits effectués en Chine. Des études antérieures portent à croire que les audits faits en Chine sont peut‐être de moins bonne qualité que ceux menés aux États‐Unis, en raison d'un cadre institutionnel moins contraignant (p. ex., risques de litiges ou d'inspections moins élevés) ou de différences sur le plan culturel (p. ex., plus grande déférence à l’égard de l'autorité). Dans la présente étude, nous avançons que la qualité moindre des audits effectués en Chine pourrait également être attribuable aux styles de traitement cognitif différents (c.‐à‐d. les modes de pensée culturels) des auditeurs chinois. Nous croyons que les auditeurs des États‐Unis sont plus susceptibles d'adopter une approche de réflexion analytique qui s'attarde à un sous‐ensemble de renseignements infirmatoires, alors que les auditeurs de la Chine sont plus susceptibles de miser sur une approche de réflexion holistique qui prend en compte un ensemble équilibré de renseignements confirmatoires et infirmatoires. De ce fait, les auditeurs de la Chine portent moins de jugements sceptiques que ceux des États‐Unis. Nous proposons ensuite une intervention lors de laquelle nous demandons explicitement aux auditeurs d'envisager l'adoption d'une approche combinant la réflexion holistique et analytique pour évaluer l'information probante. Nous sommes d'avis que cette intervention réduit les différences entre les jugements des auditeurs des États‐Unis et ceux des auditeurs de la Chine en dirigeant davantage l'attention de ces derniers vers les renseignements infirmatoires, ce qui accroît leur scepticisme professionnel, tout en évitant d'atténuer le scepticisme des auditeurs des États‐Unis. Notre étude contribue à la littérature sur l'audit en présentant les différences entre les modes de pensée culturels comme un mécanisme causal sous‐jacent au scepticisme professionnel plus faible des auditeurs chinois par rapport à ceux des États‐Unis, et en offrant aux organismes de normalisation et aux cabinets une solution possible adaptable pour accroître le scepticisme professionnel des auditeurs chinois et réduire les différences de jugement entre les auditeurs à l’échelle transnationale.

Suggested Citation

  • Aaron Saiewitz & Elaine (Ying) Wang, 2020. "Using Cultural Mindsets to Reduce Cross‐National Auditor Judgment Differences," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1854-1881, September.
  • Handle: RePEc:wly:coacre:v:37:y:2020:i:3:p:1854-1881
    DOI: 10.1111/1911-3846.12566
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    2. Paul J. Coram & Noel Harding & David C. Hay & Jahanzeb Khan & Ashna Prasad, 2021. "Comments of the AFAANZ Auditing and Assurance Standards Committee on Proposed International Standard on Auditing 600 (ED 600)," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5879-5890, December.
    3. Kuselias, Stephen & Agoglia, Christopher P. & Wang, Elaine Ying, 2023. "The effect of team member proximity and assignment length on audit staff reliance on a supervisor's preferences," Accounting, Organizations and Society, Elsevier, vol. 105(C).
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