Making Sense and Learning from Errors in the Auditing Environment
68 Pages Posted: 17 Jun 2019 Last revised: 9 Feb 2021
Date Written: December 22, 2020
Auditor errors are of concern since they reflect deviations from expectations, plans or goals and can thereby potentially impair audit quality. Audit firms have powerful mechanisms in place to prevent errors from occurring, such as the review process. However, all errors cannot be prevented; thus, it is important to make sense of errors — i.e., identify, analyze, and learn from errors — to prevent them from re-occurring. The overriding research question we address is: how do the sensemaking processes of error cognition, emotions, and culture along with the tenets of error management affect the ways in which auditors learn from errors? We integrate the sensemaking framework advanced by Catino and Patriotta (2013) along with the tenets from error management. Our analysis of 22 semi-structured interviews with auditors at multiple ranks reveals that auditors recognize the importance of openness; in practice, however, communication and sharing of errors is rare and there is an inadequate understanding of what constitutes an error. Further, several organizational barriers limit openness and consequential learning from errors such as the negative emotions associated with errors, organizational factors (e.g., excessive focus on error prevention), and the looming presence of audit regulatory oversight.
Keywords: auditor errors; learning from errors; sensemaking; error management; cognition; emotions; culture
JEL Classification: M14, M42, M44
Suggested Citation: Suggested Citation