Audit quality, auditor behaviour and the psychological contract

Abstract

The quality of the opinion provided by audit firms is an important determinant of their long-term survival. However, audit quality is difficult to gauge, which makes it particularly sensitive to the behaviour of the individuals who carry on audit work. Differences of interest between partners and other firm members can then have adverse consequences on the work motivation of field auditors. In particular, audit quality reduction behaviours are defined as actions taken by an auditor during an engagement that reduce evidence-gathering effectiveness inappropriately. These acts can threaten audit quality or damage the reputation of the profession. This paper, which is based on a survey of 170 audit seniors working in large audit firms in France, uses a model based on 'psychological contract' assessment and affective commitment to account for audit quality reduction behaviours by the respondents. The results show that the psychological contract elements dealing with the professional aspect of auditing are the most influential, and that affective commitment is correlated to social but not to technical quality reduction behaviours. The perception, by the respondents, of the quality of the review process is also significant. Some implications of these results for the future of auditing are drawn.