The Beautiful Audit and the Useful Audit Systems of Worth: The Viewpoints of Big Four and Non-Big Four Audit Firms on Audit Quality

Friday, 3 July 2015: 8:30 AM-10:00 AM
TW1.1.02 (Tower One)
Marion Brivot, Université Laval, Quebec city, QC, Canada
Mélanie Roussy, Université Laval, Quebec city, QC, Canada
This research is informed by Boltanksi and Thévenot’s (2006) sociology of worth and is predicated on an in-depth analysis of 24 interviews with partners of big, small, and medium-size financial audit firms in Canada. It focuses on their definition of “audit quality.” We identify and document two distinct regimes of audit quality: the “beautiful audit” regime and the “useful audit” regime.

We show that each system of worth resonates with distinct philosophical debates. The Beautiful Audit system of worth echoes the classic conception of beauty, which treats beauty in terms of universally recognizable perfection and mathematically demonstrable adherence to canons defined a priory (e.g., the golden ratio). Likewise, beautiful audits are perfectly documented and can pass various quality inspections successfully. Distinct constituencies (the professional association, independent audit regulators and peers within the audit firm) can all concur in judging that an audit was beautifully done and documented. Beauty is thus not a matter of subjective taste; it is obvious to all.

The Useful Audit system of worth echoes other philosophical debates, concerned with (i) the importance of the useful (instrumentally valuable) in relation to the good (intrinsically valuable); (ii) the link between usefulness and truth, and (iii) the link between utility and morality. First, useful audits are not intrinsically good; they lead to a greater good, comfort among business partners and better informed decisions by clients. Second, useful audits are understood as leading to “truer” financial statements and third, usefulness is viewed as an ethical imperative: it would not be “right” to do a simple compliance type of audit without trying, simultaneously, to add value to the client.

We also explain that none of these regimes of audit quality fully qualifies as a legitimate system of worth in Boltanski and Thévenot’s (2006) terms, because  a)the “common humanity axiom” is not established in the Beautiful Audit regime (non-Big Four firms are collectively excluded, a priori, from the highest levels of worth) and b) the “common good” principle (the public’s interest) is partially reframed as a “private good” (the client’s interest) in the Useful Audit regime.

This study contributes to enhancing our understanding of audit quality by going beyond the traditional competence-and-independence formulation of this notion, and by documenting the so far largely neglected perspective of small and medium-size audit partners, which we contrast with that of “Big Four” partners.  In addition, we contribute to further unpacking the complexity of the audit quality black box (Francis 2011) and reinforce Knechel et al.’s (2013) claim that there is value in notapproaching audit quality as a continuum (from low to high quality) but as a multifaceted construct. Although it is useful to identify the determinants and consequences of audit quality (which has been the focus of much of the audit quality literature so far), we suggest that it is equally important to improve our understanding of what audit quality means to different stakeholders.