How do Auditors Navigate Conflicting Logics in Everyday Practice?

Abstract

Historically professional logic has shaped accountancy, increasingly it has been shaped also by commercial logic. This study moves beyond these distinctions for a better and more nuanced analyses of how actors (Big 4 auditors) navigate conflicting logics in their everyday practice. The study follows a qualitative approach and is based on views of multiple role players in the audit process of complex companies in Australia, South Africa and the United Kingdom. The study examines auditors’ decision-making involving experts, rotating partners/firms and meeting regulatory inspection requirements. The study adds to the emerging debate around logic multiplicity at the institutional ‘coalface’ by showing that auditors use balancing mechanisms (segmenting, assimilating, bridging and demarcating) to navigate and make sense of coexisting (professional, commercial and accountability) logics. Views of non-auditor role players, mostly overlooked in by institutional research at micro-levels, challenge the institutionalisation of connected logics and question the influence on audit quality.

How could external auditors assess the rationalization of fraud?

“…Arguably, fraud-related knowledge is gained mainly through training and not through experience, as Hammersley (2011) pointed out. Besides, research indicates that continuing professional development should be used to develop analytical and forensic skills (Barac et al , 2016) and that fraud-related knowledge, training and experience are the most critical factors that help auditors detect fraud (Asare et al , 2015). The proposed guidance by this study could also be integrated into the auditing curriculum in higher education to train and educate future auditors on how to conduct a fraud risk assessment.…”

Enablers and Barriers: The Conflicting Role of Institutional Logics in Business Model Change for Sustainability

“… Source. Adapted from Barac et al (2019); Laasch (2018); Thornton (2004); and other sources as identified. …”

“…Our study reveals that whole logics may not be core in every part of the business model. Instead, characteristics of the logics, such as those described by institutional scholars (e.g., Barac et al, 2019;Laasch, 2018;Thornton, 2004), "lead" the expression of the logic. Furthermore, the core logics may not be evenly spread across the business model.…”

Identity performances on professional accounting association magazine covers

“…To maintain its dominance, the accounting establishment must preserve its apparatus of professional legitimation (professional logic) and seek to generate new sources of profit by stepping beyond the field's traditional boundaries (commercial logic). Indeed, Barac et al (2019) provided empirical evidence that professional accountants use balancing mechanisms to navigate between these two coexisting logics. In fact, from auditors' perspectives, there is no conflict between their public interest mission and the commercial values they might hold (Dermarkar and Hazgui, 2022), though some experienced practitioners can begin to exhibit disillusionment about their own professionalism (Caglio et al, 2019).…”

“…To maintain its dominance, the accounting establishment must preserve its apparatus of professional legitimation (professional logic) and seek to generate new sources of profit by stepping beyond the field's traditional boundaries (commercial logic). Indeed, Barac et al. (2019) provided empirical evidence that professional accountants use balancing mechanisms to navigate between these two coexisting logics.…”