Auditing and the production of legitimacy

https://doi.org/10.1016/S0361-3682(01)00047-2Get rights and content

Abstract

This essay discusses an important series of formative contributions to contextualist and critical research in auditing. A small number of relatively recent papers question rationalized accounts of the audit process and explore the complex ‘back stage’ of practice. These papers are interpreted as contributions to our understanding of the production of legitimacy around four substantive themes: the audit process and formal structure; auditing as a business; working papers and image management; new audits. The papers also point to the socially constructed nature of professional inference and suggest a fruitful basis for taking these research efforts forward.

Section snippets

Structure, judgement and the legitimacy of the audit process

Despite programmes by firms and professional institutes to standardize the audit process, differences in the style and application of audit routines have been evident. Early research to characterize and explain these differences (e.g. Dirsmith & McAllister, 1982) crystallises the problem in terms of the difference between highly ‘structured’, formal approaches, and those that provide more space for individual judgement. Cushing and Loebbekke (1986) provide a content survey of audit approaches

The business of auditing

Auditing has always been a business. However, during the 1980s and 1990s the audit approaches of the large firms changed and evolved as the economics of auditing became more sensitive. Accordingly, the structure–judgement issue discussed above in terms of the managerial relations between the audit firm and its own members, is also in part about cost control and the management of audit as a business activity. McNair's (1991) study documents the ‘suppressed dilemma’ between cost and quality

Image management and working papers

Pentland's (1993) study provides an important contribution to our understanding of the social construction of the audit process. In essence, the argument is that macro-constructions of professionalism, auditor independence, and institutional trust in audit practice are accomplished, built up from, and reproduced by micro-interactions. As a team-based activity comprising ongoing interactions, auditing is a collective practice with important processual components. The study focuses on

Making new things auditable

The fourth and final substantive theme in this discussion concerns the extension of auditing practices to an increasing number of areas, something which has been evident in public sector administration in all developed countries (Power, 1994, Power, 1999), but which is particularly conspicuous as a ‘commonwealth’ effect in the UK, Australia, New Zealand and Canada. In essence, auditing has become a legitimate part of good management practice in a wide variety of domains. But if there is this

Discussion: the social construction of professional inference

Auditing is essentially an inferential practice, but there are different perspectives on the nature and quality of the inference process. The cognitive psychology approach, which dominates auditing research, concerns itself primarily with how auditors respond to cues in the environment, make decisions and perform techniques. Experimental studies investigate judgments in laboratory settings and examine the sources of stability and consensus of judgement over time and across different auditors. A

Producing legitimacy: some research issues

The introduction above hinted at some of the methodological issues raised by the papers reviewed, and the politics of auditing research within which they operate. Very few of these papers are really field studies and none is ethnographic in the anthropological sense of that term, despite Fogarty's (1996, p. 262) call for more ethnographic treatment of “The exchange processes that construct the transactional reality of regulation…”. A detailed discussion of the methodological strengths and

Conclusions: auditing and the production of legitimacy

Auditing practice can be regarded as a self-regulating system whose components (training programmes, professional standards, quality control sub-systems, disciplinary mechanisms) are an interacting, semi-institutionalized and loosely coupled whole, a structure that is constantly moving and subject to economic, regulatory and political pressures for change. This assembly of practices is pervaded by ideas about what auditing could and should be. Even at the level of technique and process

Acknowledgments

This paper was originally presented at the 25th anniversary conference for Accounting, Organizations and Society held in Oxford, July 2000. I would like to thank the Warden and Fellows of All Souls College, Oxford, where I was a visiting fellow in the Hilary and Trinity terms 2000, for providing the supportive environment within which this project was conceived. In addition, I gratefully acknowledge the financial support of the Economic and Social Research Council of the United Kingdom. I am

References (40)

  • B.T. Pentland

    Getting comfortable with the numbers: auditing and micro-production of macro order

    Accounting, Organizations and Society

    (1993)
  • B.T. Pentland

    Will auditors take over the world? Program, technique and the verification of everything

    Accounting, Organizations and Society

    (2000)
  • B.T. Pentland et al.

    Audit the taxpayer, not the return: tax auditing as an expression game

    Accounting, Organizations and Society

    (1996)
  • M. Power

    From common sense to expertise: reflections on the pre-history of audit sampling

    Accounting, Organizations and Society

    (1992)
  • M. Power

    Auditing, expertise and the sociology of technique

    Critical Perspectives on Accounting

    (1995)
  • M. Power

    Making things auditable

    Accounting, Organizations and Society

    (1996)
  • M. Power

    Expertise and the construction of relevance: accountants and environmental audit

    Accounting, Organizations and Society

    (1997)
  • V.S. Radcliffe

    Knowing efficiency: the enactment of efficiency in efficiency auditing

    Accounting, Organizations and Society

    (1999)
  • V.S. Radcliffe

    Efficiency audit: an assembly of rationalities and programmes

    Accounting, Organizations and Society

    (1998)
  • H. Willmott

    Organising the profession: a theoretical and historical examination of the development of the major accountancy bodies in the UK

    Accounting, Organizations and Society

    (1986)
  • Cited by (502)

    • Regulatory investigations, media coverage, and audit opinions

      2024, Journal of International Accounting, Auditing and Taxation
    View all citing articles on Scopus
    View full text