Accounting literature has commonly judged the impact of regulation on auditors’ ethical commitment by studying daily audit practice. We argue that the content of the regulations themselves is an important determinant of such an impact. This paper evaluates the capacity of the content of regulation to promote audit ethics by reference to the European Union’s audit policy. Anchored in the extant conceptual perspectives on ethics, our analysis of relevant policy documents shows that the EU’s approach to audit ethics relates most (...) strongly to the deontological perspectives on ethics and leaves largely unexplored other means of promoting auditors’ ethical stance, such as by stimulating virtue ethics. We find that it is the EU regulators’ restricted view of the conceptual foundations of audit ethics that limits the capacity of their policy to effectively stimulate auditors’ ethical commitment. The paper also discusses the potential implications of our analysis for the design of future audit policy. (shrink)

Recent conceptualizations of auditors’ professional skepticism suggest the interplay between analytical and intuitive information processing. We conduct an in-depth empirical investigation to explore this relationship, drawing on 49 interviews with auditors from the Big Four audit firms in the UK. It reveals that auditors’ skepticism often emerges intuitively in response to interpersonal contexts, manifesting as feelings of discomfort. These intuitive responses guide subsequent, more deliberative processes of collecting and analyzing audit evidence. The research demonstrates that such intuitive feelings are integral (...) to auditors’ recognition of potential issues, thereby enhancing their cognitive evaluations. Additionally, the study explores how auditors’ skeptical judgments are continuously shaped by their social environments and the intuitions of other members of their audit teams. Ultimately, the findings affirm that the fusion of intuition and reasoning plays a crucial role in auditors’ practice of PS, with past practice experiences and social interactions enriching their intuitive assessments and contributing to developing their professional expertise. (shrink)

The growing reliance on non-governmental independent regulators in many social and economic domains, including corporate financial reporting, has brought to the fore concerns over their regulatory accountability. This study looks at one aspect of the regulatory due process-regulatory impact assessment (IA). Drawing on the analytical framework developed by Bovens (Public accountability: a framework for the analysis and assessment of accountability arrangements in the public domain. CONNEX papers, Research Group 2, Democracy and Accountability in the EU, 2006, Eur Law J 13(4): (...) 447–468, 2007), we evaluate the contribution of IA as an instrument for enhancing regulatory accountability in the context of the Financial Reporting Council, an independent regulator for the accountancy profession in the UK. The study’s findings suggest that, despite an increasing level of sophistication in the manner in which IA is used within FRC, the contribution of IA to regulatory accountability remains limited. Specifically, there are concerns as to whether IA is used to achieve a transparent and fair regulatory process or simply to maintain an image of good governance and justify policy decisions that would have been made even in the absence of IA. (shrink)