Examining Climate and Culture in Audit Firms: Insights, Practice Implications, and Future Research Directions

• Published in: Auditing : a journal of practice and theory 2020-11, Vol.39 (4), p.1-29
• Main Authors: Andiola, Lindsay M., Downey, Denise Hanes, Westermann, Kimberly D.
• Format: Article
• Language: English
• Subjects: Accounting firms; Auditing; Auditing standards; Auditors; Audits; Corporate culture; Work environment
• ISSN: 0278-0380; 1558-7991
• DOI: 10.2308/AJPT-19-107

This paper synthesizes research related to audit firm climate and culture. Organizational climate and culture are important to any organization but are particularly important in auditing because of the unique tension among being a regulated profession, a for-profit organization, and performing independent audits on behalf of the public interest. This paper's objectives include introducing the constructs of organizational climate and culture and their application to audit research, reviewing the audit literature to synthesize climate and culture findings, and suggesting future research opportunities. We find that the audit literature on firm climate and culture is vast but fragmented. We identify and discuss seven climate and culture themes (organizational control, leadership, ethical, regulatory, professionalism, commercialism, and socialization) rooted within audit firms and studied by audit academics. Beyond informing academics, our paper has implications for audit practitioners and regulators as they seek to manage auditors' behavior and audit quality through quality control initiatives.