The dominant senior manager and the reasonably careful, skilful, and cautious auditor

Lee, T.A.; Clarke, Frank; Dean, Graeme

doi:10.1016/j.cpa.2006.12.001

Cited by 17 publications

(22 citation statements)

References 26 publications

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“…The greater is group cohesion, the more prevalent are problems related to group decision-making (Janis, 1972(Janis, , 1989. In the boardroom, this can be reflected in pressure towards conformity, rationalization of decisions taken, inappropriate loyalties towards a longserving CEO, and a reluctance to raise critical concerns (Lee et al, 2008;Forbes and Watson, 2010). Forbes and Watson (2010) note that organizations characterised by "strong managers and weak owners" (Roe, 1994) expose themselves to "destructive leadership" risks (Padilla et al, 2007) due to inappropriate board loyalty biases, little mitigated by current corporate governance codes.…”

Section: Discussionmentioning

confidence: 99%

“…This can allow a board to change from a largely passive recipient of information (Peck, 1995) to one which challenges executive presentations in the discharge of responsibilities (Langevoort, 2001a;Parker, 2008). To create an additional counterweight to a dominant senior manager (Lee et al, 2008), boards may wish to make greater use of a senior independent director to regularly discuss important decisions and proposals with other independent directors (FRC, 2011). Critically, boards are encouraged to adopt processes aimed at preventing the approval of proposals without due diligence, and a subsequent escalation of commitment (Staw, 1976), by, for example: Splitting the decision process into separate discussions on concept, proposal for discussion, and a proposal for decision (ICSA, 2010); commissioning independent reports; seeking the advice of outsiders; requiring decision makers to justify their information choices;…”

Section: Discussionmentioning

confidence: 99%

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Explaining governance failure: accountability spaces in-between and bias

Marnet

2014

IJCA

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The paper is based on a two-year participant observer study of the governance failures in a UK housing association that experienced significant adverse performance resulting in its near collapse. Concerned with the accountability of boards of directors, the study extends research by Roberts (1991Roberts ( , 1996Roberts ( , 2001) who distinguishes between formal and informal forms of accountability, and Collier (2005) who identifies accountability spaces in-between where governance may be lost. The present research builds on this discussion by introducing socio-psychological factors underlying a reluctance of boards to adequately explore governance issues hidden in these spaces. As informal reporting systems are increasingly important drivers of the control role of boards (Parker, 2008), the paper emphasizes the need for boards to adopt procedures aimed at mitigating the effects of bias on the quality of board decision-making.Keywords: Quasi-public sector; governance; accountability; boardroom decisionmaking; bias mitigation; new public management;. 2 IntroductionThe paper explores limitations of formal, accounting-based systems of accountability and inadequacies of informal, sense-making narrative systems (Roberts, 1991(Roberts, , 1996(Roberts, , 2001Collier, 2005). The sense-making narrative terminology builds on the contrast made by Roberts (1991) between a formal, hierarchical system of accountability based on calculative accounting, and an informal, socialising form, which in boardroom discussions increasingly replaces the focus on the technical and rulebased (Parker, 2008). Hidden between the two systems, Collier (2005) identifies accountability spaces in-between where neither the formal nor the informal ensures that issues important to the organization are sufficiently explored and where governance can be neglected and lost. The present research inquires into sociopsychological causes for the reluctance of boards to investigate these spaces. The paper suggests that cognitive bias in judgment frequently inhibits an adequate articulation and exploration of issues critical to the governance of organizations, thereby undermining the value of the narrative form of accountability (Langevoort, 2001a,b;Prentice, 2003;Bazerman and Malhotra, 2006;Forbes and Watson, 2010;FRC, 2011; APB, 2012).With the rise of New Public Management (NPM) and the subsequent increase in the use of performance measurement in the quasi-public sector (Collier, 2005;Bogt and Scapens, 2012), a discussion on bias in the boardroom provides useful insights on potential problems and dysfunctional consequences of the adoption of this model in the public sector (see, e.g., Hood, 2007;McLean et al., 2007;Broadbent and Guthrie, 2008;Lapsley, 2008). New Public Management, although changing over time and from country to country, stresses the use of explicit quantitative performance 3 measures and external audits, output controls, and private sector management methods to advance public sector performance and accountability (Hood, 1995(Hood, ,...

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Section: Discussionmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

Explaining governance failure: accountability spaces in-between and bias

Marnet

2014

IJCA

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“…Since the launch of CPA, regularly occurring scandals especially in the financial sector have prompted claims that the accounting profession has abdicated its responsibility to act in the public interest (Briloff, 1990), siding with their clients (Briloff, 1993;Lee, Clarke & Dean, 2008) and promoting their own and their clients' self-interest over public interest (Mitchell & Sikka, 1993;Dellaportas & Davenport, 2008). Critical commentaries have also addressed the accounting profession's quest to reduce their own risks (Miller, 1999) or their liability, a topic which was devoted a Special Issue in 1999 (Vol.…”

Section: Accounting Accountants and The Public Interestmentioning

confidence: 99%

“…Standard-setting Theories Ideologies NPM Briloff, 1990 Ponemon, 1990Mitchell & Sikka, 1993Briloff, 1993 Walker, 1993 Davis & Strawser, 1993 Hooks & Moon, 1993Briloff, 1993 Hanlon, 1996 Seal et al, 1996 Briloff, 1999Cousins et al, 1999 Fuerman, 1999 Green,1999Miller, 1999 Peck, 1999 Ward, 1999 Catchpowle & Cooper, 1999 Cullinan & Sutton, 2002 Baker & Owsen, 2002Everett et al, 2005 Bakre, 2005 DiGabriele, 2008 Radcliffe, 2008Lee et al, 2008 Newberry & Robb, 2008Dellaportas & Davenport, 2008 McKinstry, 2008 Funnell, 2011 Hasseldine, Holland & van der Rij, 2011 Radcliffe , 2011Boyce, 2014Lehman, 2014Nickell & Roberts, 2014 Everett & Tremblay, 2014 Edgle, 2014 Dellaportas, 2014 Hunt & Holger, 1990 Committe, 1990 Robson, 1993Cousins & Sikka, 1993 Ohsawa & Tinker, 1993Bryer, 1999 Macve, 1999 Robson, 1999 Samuelson, 1999 Whittington, 1999Bryer, 1999Shapiro, 2002 Coleman, 2014 Froud et al, 2014Mihret, 2014Soufian et al, 2014 Dillard & Nehmer, 1990 Murray & Knights, 1990 Humphrey & Moizer, 1990 Lukka, 1990 Funnell, 1990Bryer, 1993 Hooper & Pratt, 1993 Munro & Hatherly, 1993 Chwastiak, 1996Neu & Taylor, 1996 Fogarty & Ruhl, 1996 Dempsey, 1996Lee, 1999Chwastiak, 1999Lee & Williams, 1999 Baker, 2002 Humphrey, 2002 Filling et al, 2002 Armstrong, 2002 Drennan & Kelly, 2002 Ezzamel & Hoskin, 2002Oguri. 2005 Jinnai, 2005 Chand, 2005 Shapiro, 2005Schwartz et al, 2005Bourguignon, 2005 Pesqueux, 2005Lehman, 2005 Broadbent et al, 2008Alawattage & Wickramasinghe, 2008Cronin, 2008Bakre, 2008 Murphy, 2008 Everett, 2008Gleadle & Cornelius, 2008 Jeacle, 2008 Nagy &am...…”

Section: Appendix Thematic Categorization Of Selected Cpa Articles 19mentioning

confidence: 99%

A case study of critique: Critical perspectives on critical accounting

Dillard

Vinnari

2017

Critical Perspectives on Accounting

111

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As accounting academics, we have a responsibility to act in the public interest as conscience, critic and counselor of society regarding economic, social and environmental justice. In fulfilling this responsibility, we are concerned with how accounting, accountants, and accountability regimes can facilitate democracy by serving the needs of pluralistic communities, giving particular attention to the various underserved constituencies. Informed by Flyvbjerg's (2001) notion of phronetic social science research that matters, we reviewed 353 articles published in Critical Perspectives on Accounting from 1990 to 2014 identifying the focal constituency(s), the injustice(s) addressed, the groups or institutions responsible for the injustice as well as the proposals for social and political praxis outlined in the studies. Our review indicates that generally the studies identify a somewhat focused, though salient and appropriate, set of economic, social and/or environmental injustices experienced by various constituencies, and to some extent, the studies consider the context and conditions that perpetuate the inequality and injustices. However, as the field matures, there is a need for more robust development of the social and political implications of critical accounting research and for articulating the ideas and implications as action programs. Further, our review suggests that several relevant constituencies such as non-human animals, children, future generations, developing nations, and gender and sex/uality minorities have received little or no attention in the current literature.

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“…Evidence to this effect emerges from the Financial Reporting dominant senior manager who took advantage of poor systems of internal control and weak supervision (see further Lee et al, 2008;Vinten and Greening, 2001). External auditors were criticised for failing to use their influence far more effectively to set up more robust internal control systems and also prevent individuals overriding these controls (Davison and Stuart-Smith, 1979;Vinten and Greening, 2001).…”

Section: Introductionmentioning

confidence: 99%

Auditors and the supervision of retail finance: Evidence from two small-sized building societies, 1976–1978

Bátiz‐Lazo

Noguchi

2013

Accounting History

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This study adds to the accounting history literature by looking at features common to major defalcations in two small-sized building societies (namely the Wakefield and the Grays). These features were the dominance of an individual over a building society's systems, and poor systems of internal control and supervision. Because they failed to recognise the significance of these factors sufficiently, auditors of both societies were criticised for failing to discharge their duties as expected under the Building Societies Act 1960 (BSA60) (which had introduced a new auditing regime by requiring the auditors to examine whether the directors of a society complied with its requirement to establish and maintain a system of internal control and, if not, to report thereon). The cases of the Wakefield and the Grays were a turning point in the supervision of retail financial intermediaries. Prior to them the Chief Registrar of Friendly Societies (CRFS) had adopted a reactive approach to supervision, which effectively delegated the monitoring of the societies to external auditors. After the defalcations were uncovered, they showed there was a lack of productive communication between the Registry and external auditors. As a result, it was felt there was a need to reform and adopt a proactive approach to supervision of the societies under which the CRFS was to directly examine the quality of the auditor's work. The professional accountants, as represented by the Institute of Chartered Accountants of England and Wales, initially resisted such reform.But ultimately, accountants could not help but to accept it.

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The dominant senior manager and the reasonably careful, skilful, and cautious auditor

Cited by 17 publications

References 26 publications

Explaining governance failure: accountability spaces in-between and bias

Explaining governance failure: accountability spaces in-between and bias

A case study of critique: Critical perspectives on critical accounting

Auditors and the supervision of retail finance: Evidence from two small-sized building societies, 1976–1978

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