Knowledge Sharing in Auditor-Provided Tax Services: Experiences of Audit and Tax Personnel

Abstract

Research generally finds positive audit and tax outcomes associated with auditor-provided tax services (APTS), attributing knowledge sharing (KS) between tax and audit as the underlying cause, but not observing it. This study contributes to the APTS literature by investigating experienced audit and tax professionals’ perspectives about when and how KS occurs. Results imply that KS occurs in two phases, and is enhanced or inhibited by multiple factors related to knowledge relevance, motivation, opportunities, and culture. First, audit and tax personnel often share client information and their domain expertise while interacting during the audit, which enables identifying potentially valuable APTS. Second, further KS can occur during/following APTS performance, and APTS results may be shared back to benefit the audit. Our evidence shows that key factors may vary across phases, underscoring the importance of considering the full APTS process. Based on our findings, we suggest a number of future research opportunities.

Book-tax conformity and the demand for auditor-provided tax services: European evidence

“…Thus, the simultaneous purchase of audit and tax services by audit clients might allow auditors to develop vastly different and more effective audit approaches (e.g. Joe and Vandervelde, 2007), thereby increasing audit quality (Hux et al. , 2022).…”

“…3. Gleason and Mills (2011) suggest that one-way knowledge sharing from tax partners to audit partners existed before the passage of SOX, based upon discussions with tax and audit partners across Big 4 firms. By conducting interviews with 33 highly ranked and experienced audit and tax personnel from two Big 4 firms and one mid-tier accounting firm, Hux et al . (2022) confirm two-way knowledge sharing between audit and tax professionals before or during performing audit and tax engagements, which significantly increases the quality of audit and tax services.…”

“…The primary benefit of the joint purchase of audit services and APTS is the knowledge spillover effect. Sharing client-specific knowledge between auditors' tax and audit teams might help auditors increase audit quality and/or help clients achieve certain tax-and non-tax-related benefits (Hux et al, 2022;Sun and Habib, 2021) [3]. First, purchasing APTS could generate direct benefits to audit clients' tax accounts.…”

“…Since APTS take place across the fiscal year, auditors could obtain extensive knowledge of clients' operations, which helps auditors detect and remedy clients' internal control weaknesses as well as understand clients' attitudes towards financial reporting and tax reporting aggressiveness (e.g. De Simone et al, 2015;Frank et al, 2009;Hux et al, 2022). Thus, the simultaneous purchase of audit and tax services by audit clients might allow auditors to develop vastly different and more effective audit approaches (e.g.…”

The impact of audit members' self-esteem and narcissism on organizational knowledge sharing among audit firms

“…For instance, it is evidenced that the personality trait of CEOs may significantly influence organizational outcomes (Hambrick and Mason, 1984; Zhu and Chen, 2015). On the one hand, previous audit research has focused primarily on the determinants of knowledge sharing in an audit firm (Vera‐Mun˜oz et al ., 2006; Candice et al ., 2022). For instance, some dimensions of individual characteristics influencing knowledge-sharing behaviors, including an intention to share knowledge, interpersonal trust, interaction and personal motivation, are studied in the audit literature (Seba et al ., 2012; Holste and Fields, 2010).…”