An Exploratory Analysis of Auditors’ Perceptions of the Firms’ Tone at the Top
65 Pages Posted: 19 Jun 2020 Last revised: 14 Aug 2020
Date Written: May 22, 2020
This study examines public accounting firms’ “tone at the top” with respect to audit quality initiatives from the perspectives of both firm leaders (those who set the tone) and engagement level auditors (non-leaders). Specifically, we
(1) solicit the perceptions of audit firm culture and leadership from the perspectives of audit personnel at the partner and non-partner levels,
(2) assess how firm leaders communicate tone at the top through formal and informal communications,
(3) examine the firm work environment and its relation to perceived tone at the top.
We interviewed audit partners and auditors below partner rank to address our research questions. Participants were from regional and local public accounting firms that audit primarily non-public entities (although some of the firms are also registered with the PCAOB). Results indicate that although most firms characterize their tone as being strongly employee- or team-focused, the way firm leaders communicate with and support employees varies across firms. In addition, firms focus on innovation or other values, such as superior client service. Our results have implications for firms, regulators and academics interested in examining the link between tone at the top and audit quality.
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