Observations on the Role of Commodification, Independence and Governance in the Accounting Industry

Macey, Jonathan R.; Sale, Hillary A.

doi:10.2139/ssrn.474741

Cited by 19 publications

(14 citation statements)

References 2 publications

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“…An increased emphasis on auditors building and maintaining a close, or even intimate, relationship with auditees indicates an increased need for auditors to be familiar with customers and their activities (cf. Macey and Sale, 2003;Carrington et al, 2011;Broberg, 2013;Svanberg and Öhman, 2015). It has been claimed that, in addition to carrying out auditing activities, auditors need to get involved in activities such as communication, marketing, public relations, and networking (Sweeney and McGarry, 2011;Broberg et al, 2013).…”

Section: Professional and Organizational Identities And Customer Oriementioning

confidence: 99%

Auditors’ professional and organizational identities and commercialization in audit firms

Broberg

Umans

Skog³

et al. 2018

AAAJ

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Purpose: This paper seeks to explain how auditors' professional and organizational identities are associated with commercialization in audit firms. Unlike previous studies exploring the consequences of commercialization in the firms, our study directs its attention toward the potential driver of commercialization, which we argue to be the identities of the auditors. Design/methodology/approach: The paper is based on 374 responses to a survey distributed to 3588 members of FAR, the professional association of accountants, auditors and advisors in Sweden. The study used established measures of organizational and professional identity and introduced market, customer and firm process orientation as aspects of commercialization. The study explored the data through descriptive statistics, principle component analysis and correlation analysis and tested the hypotheses with multiple linear regression analysis. Findings: The findings indicated that the organizational identity of auditors has a positive association with three aspects of commercialization: market orientation, customer orientation and firm process orientation. Contrary to the arguments based on prior literature, our study has found that the professional identity of auditors is also a positively associated with commercialization. This indicates a change of the role of professional identity vis-à-vis commercialization of audit firms. The positive association between professional identity and commercial orientation could indicate the development of "organizational professionalism." The study also found differences between the association between professional identity and commercialization in Big 4 and non-Big 4 firms. While in Big 4 firms, professional identity is positively associated only with the firm's process orientation, in non-Big 4 firms, professional identity has a positive association with all three aspects of commercialization. Originality/value: The paper provides insight into how auditors' identities have influenced commercialization of audit firms and into the normalizing of commercialization within auditing. The study also developed a new instrument for measuring commercialization, one based on market, customer and firm process orientation concepts. This paper suggests that this instrument is an alternative to the observation through proxies.

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Section: Professional and Organizational Identities And Customer Oriementioning

confidence: 99%

Auditors’ professional and organizational identities and commercialization in audit firms

Broberg

Umans

Skog³

et al. 2018

AAAJ

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show abstract

“…In determining whether an accountant is independent, the Commission is entitled to examine all relevant circumstances, including all relationships between the accountant and the audit client.'' (Macey andSale, 2003, p. 1167). North American courts have, over time, clarified the types of relationships between auditor and client that compromise auditor independence.…”

Section: Auditor Independence and Independence Commitmentmentioning

confidence: 99%

“…Many critics have pointed to the growing influence of commercial greed over professional objectivity as a key reason for the ethical lapses in accounting. Macey andSale (2003, p. 1167), for example, argue that the internal governance structures of large accounting firms made the ''modern accounting industry […] more like a business than a profession.'' Arthur Wyatt, a former managing partner of Arthur Andersen and now a prominent critic of the accounting profession, maintains that ''simple greed'' can explain the observed deviation from core ethical values among accountants (e.g.…”

Section: Introductionmentioning

confidence: 99%

‘An Examination of the Ethical Commitment of Professional Accountants to Auditor Independence’

2006

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This research explores the relationship between work context and professional ethics. Specifically, we analyze through an online survey of professional accountants the degree to which changing work conditions have altered individual accountants' commitment to the core professional value of auditor independence. We argue that certain changes in the condition of work have made some categories of accountants more susceptible to the logic of commercialism rather than the logic of professionalism. We find general support for this argument. We observe that accountants working outside of public accounting have a higher commitment to independence than do accountants working in the context of public accounting firms. We further observe that accountants in large international accounting firms (i.e. the ''Big Four'') report lower commitment to auditor independence than do others in public accounting. And we observe that older accountants report stronger commitment to auditor independence. One finding, however, contradicts our general thesis. We find that commitment to one's client does not necessarily result in a loss of commitment to the core professional value of independence. We conclude that changes in the context of work have contributed to the demise of ethics among professional accountants and suggest that further research be done to elaborate the relationship between client commitment and independence commitment.

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“…Arthur Andersen's downfall owed a great deal to the fact that the 'engagement partner' for Enron had no other clients, and indeed Enron was seen by Arthur Andersen as strategically vital to the accounting firm's future (Ley Toffler, 2003). This situation has been labelled 'client capture' (Leicht and Fennell, 2001;Macey, 2004;Macey and Sale, 2003;Prakash, 2004), and Daniels (1975, p. 323) argues that the potential for what she calls ''client control'' is endemic to any professional relationship. Although client capture has been used to explain many of the recent high-profile governance failures in which legal and accounting advisors were prominent (Coffee, 2003;Leicht and 940 Sally Gunz and Hugh Gunz Fennell, 2001;Macey, 2004;Macey and Sale, 2003;Prakash, 2004), at present we know little about how general a problem it is.…”

Section: Ethical Decision Making and The Employed Lawyermentioning

confidence: 99%

Ethical Decision Making and the Employed Lawyer

Gunz

2007

J Bus Ethics

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Observations on the Role of Commodification, Independence and Governance in the Accounting Industry

Cited by 19 publications

References 2 publications

Auditors’ professional and organizational identities and commercialization in audit firms

Auditors’ professional and organizational identities and commercialization in audit firms

‘An Examination of the Ethical Commitment of Professional Accountants to Auditor Independence’

Ethical Decision Making and the Employed Lawyer

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