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Field Research in Auditing

Field Research in Auditing. Auditing Section Doctoral Consortium 2011. Jean Bédard, CA, Ph.d. Definitions. Case Study

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Field Research in Auditing

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  1. Field Research in Auditing Auditing Section Doctoral Consortium 2011 Jean Bédard, CA, Ph.d

  2. Definitions • Case Study • ‘.. an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between the phenomenon and context are not clearly evident’ (Yin, 2003, 13) •  Field research studies • in-depth study of real-world phenomena through direct contact with the organizational participants (Merchant & Van derStede BAR 2006) • Seek to provide deep and rich understanding of the social structure of auditing practices and attempts to locate these practices in their organizational, economics and social context (Ryan, Scapens and Thobald 2002)

  3. Methods and questions Source: Yin (2003)

  4. Exemples of questions (1) • How new, proprietary audit technologies come to produce efficiencies in audit practice? (Fisher, AOS,1996) • How auditors perform analytical procedures at the planning, substantive testing, and overall review stages of the audit (Hirst & Koonce, CAR 1996) • How CFOs and auditors negotiate a substantive accounting issue (McCracken, Salterio & Gibbins, AOS, 2008)

  5. Exemples of questions (2) • How the business risk audit model impacted an actual audit engagement? (Eilifsen, Knechel, & Wallage, AH 2001) • How the Business Risk Audit (BRA)resulted in changes (if any) in auditing evidence techniques employed by practicing auditors? (Curtis & Turley, AOS 2007) • Why was the Business Risk Audit (BRA) methodology developed and implemented by audit firms (Robson, Humphrey, Khalifa, & Jones, AOS 2007)

  6. Exemples of questions (3) • What are the practices that audit committees members carry out in meetings? (Gendron, Bédard, & Gosselin, AJPT 2004) • How do individuals who attend ACs meetings develop their belief about their audit committee effectiveness? (Gendron & Bédard, AOS, 2006) • How the workings of an audit committees affect organizational outcomes? (Turley & Zaman, AAAJ, 2007) • Do audit committees appear to provide substantive oversight of financial reporting, or do they appear to be primarily ceremonial bodies designed to create legitimacy? (Beasley, Carcello, Hermanson, & Neal, CAR, 2009)

  7. Field Research in Auditing Merchant & Van derStede (2006) • Review of all major English-languageaccounting research journals in the1981-2004 time period • 318 articles with a field studycomponent to them • Only 27 (8 percent) were auditingarticles • 261 (82 percent) were managementaccounting articles • 20% of the were managementaccounting articles had a field study component

  8. When to use field research • Complex and dynamic phenomenon where many variables (including variables that are not quantifiable) are involved (Cooper and Morgan, 2008) • Phenomenon in which the context is crucial because the context affects the phenomena being studied (and where the phenomena may also interact with and influence its context) (Cooper and Morgan, 2008) • Phenomenon needs to be understood because little research has been done (Creswell 2009)

  9. New Light SOURCE: Final report of the quality assurance for the higher education change agenda (QAHECA) project

  10. Comparative advantages • Theories • involves the study of auditing practices in their natural setting, which facilitates the generation of relevant theory • effective for building theory, richer explanations of why or how certain phenomena occur, or explanations as to why outcomes will differ in a new setting that has never before been carefullystudied. • testing and refining existing theories • Practice • Field studies provide rich descriptions of practice; they put rich data sets, useful stories and examples, and teaching cases into the public domain (Merchant & Van derStede 2006) • Unique data set • Compared to archival data such as Compustat & Audit Analytics, the data set is unique and only you have access to it!

  11. Type of research (Tradition) Adpatedfrom Patton (1990, p. 37)

  12. Role of theory in Field Research • Hypothesis to be “tested” • Broad explanation for a phenomenon use to study the phenomenon • Orienting lens for the study (question, analysis) • End point – data may build, develop or expand theory about a phenomenon (Adapted from Creswell 2009)

  13. Hypotheses to be “tested” Eilifsen, Knechel, & Wallage (2001) • Expectations about business-risk based audit: • Risk Assessment, • Audit evidence • Audit administration • Audit team structure • Value-Added Assurance • Expanded Service Opportunities Beasley, Carcello, Hermanson, & Neal (2009) • [W]e expect the audit committee to be most heavily focused on actual monitoring (agency theory) or on creating legitimacy by engaging in appropriate ceremony and ritual (institutional theory)

  14. Orienting Lens PSYCHOLOGY SOCIOLOGY ECONOMICS ReseachProblem

  15. Broad explanation/orienting lens Robson, Humphrey, Khalifa, & Jones (2007) • Neo-institutional theories of organizational legitimacy (DiMaggio & Powell, 1991; Suchman, 1995) • Sociology of professions (Abbott, 1988; Freidson, 1986) • Sociology of translation (Latour, 1987). • Turley & Zaman (2007) • Institutional theory (Scott, 2001) • Power theory (Clegg, 1989) • Gendron & Bédard (2006) • Phenomenology ( Schutz, 1967)

  16. Reliability, validity and generalizibility • Reliability • Case study protocol, procedural reliability (audit trail) • Validity • Data triangulation : use of a variety of data sources in a study • Investigator triangulation : use of several different researchers • Theory triangulation : use of multiple perspectives to interpret a single set of data (Patton 1990, p. 187) • Generalizability (external validity) • Analytic generalization – generalize to theories • elaborate on the empirical attributes of existing theoretical constructs • illustrate the application of theory in an interesting practical setting • identify potential new linkages between constructs that are not yet evident in extant theory (Lilis 2006)

  17. Researchercompetencies • Competencies • Interpersonal skills (interviewing) • Comfort with lack of specific rules and procedures for conducting research • High tolerance for ambiguity • Literacy writing skills • Training • Qualitative research methods course • Practice

  18. References Cooper, D. J., and W. Morgan. 2008. Case Study Research in Accounting. Accounting Horizons 22 (2):159-178. Creswell, J. W. 2009. Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. Sage. Lilis, A. M. 2006. Reliability and Validity in Field Study Research, in Methodological Issues in Accounting Research: Theories and Methods, Hoqueed. London: SpiramusPress. Merchant, K. A., and W. A. V. d. Stede. 2006. Field-Based Research in Accounting: Accomplishments and Prospects. Behavioral Research In Accounting 18 (1):117-134. Ryan, B, R. W. Scapens and M. Thobald. 2002. Research Method & methodology in Finance & Accounting. Thomson. Yin, R. K. 2003 Case Study Research: Design and Methods, Third Edition, Applied Social Research Methods Series, Vol 5. Sage Others Lincoln Y. S. and E. G. Guba. 1985. NaturalisticInquiry. Sage. Rubin, H. J. and I. S. Rubin. 1995. Qualitative Interviewing: The Art of Hearing Data. Sage.

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