Forschung & Projekte

Leveraging Error to Improve Audit Quality – Towards a Socio-Cognitive Model

Audit quality has been subject to extensive research in the accounting field. Previous research in the field has mainly addressed questions of audit quality from either a macro perspective (e.g., legal environment, professional self-regulation) or a meso perspective (e.g., accounting firm size, non-audit services, industry specialization). However, few scholars have explored the production of audit quality from a micro perspective. Drawing on insights from the error management literature and an embedded case study design, we explore error management in accounting firms. Based on 24 months of participant observations, 41 interviews, and archival materials in a Big 4 accounting firm we suggest a socio-cognitive model that explains error management in accounting firms as a self-reinforcing system. We show how organizational structures, practices, and individual skills interact and jointly constitute and reconstitute each other. In particular, our study reveals how organizational error prevention practices shape resilient individuals which are the key for resilient error management practices in audit teams; and how these resilient error management practices are reflected in the organizational structures. Our socio-cognitive model contributes to literature by pushing the general research agenda on error management from either an error prevention approach or an error resilience approach towards an integrated view. Moreover, our socio-cognitive model of audit quality is the first comprehensive model to explain varying degrees of audit quality by taking a micro perspective.