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Purpose -The purpose of the paper is to develop, test, and improve a structural equation model (SEM) of client satisfaction with the audit, and of client perception of the usefulness of the audit to external stakeholders. Design/methodology/approach -A questionnaire was mailed to audit clients, i.e. managers of Swedish limited companies with 50 or more employees; 627 useable questionnaires were returned, giving a response rate of 43 percent. Data were processed using the SEM software LISREL. Findings -The data suggest that auditors face difficulties in handling divided loyalties, as audit clients perceive a strong relationship between client satisfaction and usefulness to external stakeholders. Signing auditor competence is positively and auditor skepticism negatively related to both client satisfaction and usefulness to external stakeholders.Research limitations/implications -The paper focuses solely on the auditor and audit team levels and uses a limited number of independent variables. Practical implications -The findings extend previous results, indicating that client relationships with both signing auditors and audit assistants affect client satisfaction positively, but have no significant connection with usefulness to external stakeholders. Consequently, it would be useful to consider organizing audit teams in which the various members have distinct roles. Originality/value -The study addresses an issue most auditing research has not explicitly considered: the distinction between client satisfaction with the audit and client perceptions of the usefulness of the audit to external stakeholders.

This paper aims to describe and analyse the thought patterns of Swedish auditors with regard to the way in which they audit information provided by listed companies, and possible changes in their duties. Eighty-two auditors were interviewed using the repertory grid technique and open-ended interview questions. To check the stability in the thought patterns of the respondents, six retests were made and, to validate the findings, an expert panel and two reference groups consisting of auditors and other representatives of the accounting and auditing professions were consulted. Distinct patterns emerged in the mean grid of the thought patterns of all the respondents. One dimension was related to the time perspective, past versus future, and another to auditing practice. Auditors devote a relatively long time and considerable effort to objects that can be satisfactorily verified, but not to objects that they perceive as being of primary importance to investors and other stakeholders. This inconsistency in the thought patterns of the auditors is similar to the gap between auditing in practice and stakeholders' expectations of auditing, which is a phenomenon frequently found in previous research. Moreover, the auditors were very reluctant to make statements about any information except that elicited according to current practice. In addition to this traditional view, the auditors appear to be more concerned about their own situation than that of the parties they are meant to be protecting. Doing things right seems to be more important than doing the right things. That the auditors spend much time on objects that they themselves do not consider to be of primary importance for the investors and other stakeholders, and their unwillingness to change current practice is of great concern in Sweden, where there is a strong belief in self-regulation of the auditing profession.

The research questions concern the possible link between Accounting Information Systems (AIS) and profitability in small and medium-sized firms (SMEs). "Instrumental" functions of AIS are compared with profitability for 24SMEs in the Swedish prefab housing industry. Data were collected by extensive, structured interviews with firm CEOs and CFOs. Results are interpreted in the context of the "sense-making process". AIS parts include: budgets, cash management, calculations, accounting and reports. The instrumental functions are evaluated in terms of completeness, complexity, logic, consistency and timeliness. The findings indicate that instrumental features of calculations and reporting do matter and are related to profitability in the business. Well designed features of these parts of an AIS seemed to be necessary but not sufficient prerequisites for profitability. It is suggested that the relationships can be better understood in the light of sense-making aspects. On the basis of the findings a framework of decision models is proposed. The framework is based on two dimensions of a problematic situation: degree of structure and complexity.

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