Revealing Oz: Institutional Work Shaping Auditors’ National Office Consultations

Abstract

National office consultations (NOCs) are a mechanism intended to enhance audit quality, consistent with the logic of professionalism inherent in the audit profession. Yet, research indicates that the competing logic of commercialism has become institutionalized in audit firms. We examine how the coexisting and conflicting logics of professionalism and commercialism manifest themselves in the current NOC dynamic. Specifically, we interview 22 highly experienced Big 4 audit firm partners to investigate how key actors engage in institutional work that creates, maintains, and disrupts the influence of professionalism and commercialism in NOC practices. We observe a swing of the pendulum: in the wake of SOX, audit firms adopted professionalism-based practices which involved creating a more authoritative, “Oz”-like national office identity; while in recent years, key actors’ institutional work reconfigured NOC practices and placed a renewed focus on commercialism. Our findings bring to light a number of implications and opportunities for future research.

Keywords: National office consultations; professionalism; commercialism; institutional work; auditor-client relationship; interview method

JEL Classification: M42