Audit practitioners, standards, and regulators continually emphasize the importance of professional judgment in the audit of complex processes and financial estimates. Despite this increasing call for more thoughtful analysis, research and inspection reports seem to suggest that auditors tend to make mechanistic audit decisions in such situations. This experiment evaluates auditor participants' improved application of professional judgment in the audit of complex estimates when taught a specific critical thinking methodology from system dynamics. Results indicate that emphasizing the use of professional judgment is not sufficient to decrease auditors' mechanistic mentality. As expected, however, auditors primed to take a systems-thinking perspective are better able to evaluate the complexity of the situation and to more effectively apply professional judgment. These results suggest that the goal of improving professional judgment can be achieved with an underlying change to the way auditors think.

This paper mobilises a governmentality framing drawing on Miller and Rose (1990) and Rose and Miller (1992) to examine how fluctuating rationalities and programmes of government shaped the construction of accountability over several decades in the relationship between Dutch development NGOs and their governmental funder. It unveils a dynamic, mutually constitutive interrelationship between an assortment of NGO accountability technologies and the shifting rationalities and programmes that underpinned their emergence and adoption. We show how a rationale idealising improved NGO accountability through quality improvement underwent constant modification in a context where programmes seeking to facilitate this ideal were congenitally failing and continually altered. Within these efforts to shape the conduct of NGOs we call attention to the constitutive role of NGO ‘counter-conduct’ – conduct by NGOs motivated by a desire to be governed differently (Foucault, 2007). We uncover what Foucault (2007) refers to as the “correlation between conduct and counter-conduct” (p. 196) in the process through which accountability technologies were mutually moulded in the interactions between NGOs and their governmental funder; a correlation frequently overlooked in analyses of governmentality. We unearth five interrelated forms of NGO counter-conduct - associating self-governance with good governance; concentrating engagement at the programmatic level; pre-emption; ‘working around’ core programmatic aims; and aligning the ‘rules of competition’ with existing expertise. We illustrate how this counter-conduct was initially, albeit not ultimately, constitutive of governmentality as it stimulated shifts towards programmatic aims of cost consciousness, increased professionalisation, and enhanced NGO cooperation. Within this process, the creation of competition for funding among NGOs emerged as an objective of accountability thereby offering a counterpoint to prior research which frequently perceives competition for funding as an explanation for increased attention to NGO accountability

This study investigates how accountability type (process or outcome) and causal chain framing influence information search processes and decision-making quality. Drawing on the accountability literature and causal reasoning theory, we predict that process accountability stimulates information search effort and enhances decision quality. Additionally, we posit that causal chain usage enhances focus on relevant cues, and increases search effort and decision quality under outcome accountability. In contrast, we argue that employing a causal chain under process accountability decreases search efforts and does not spur a similar increase in decision quality. We conduct an eye-tracking experiment in which participants decide on the amount of funding for a value-creating project after observing prior balanced scorecard performance data. Our results are consistent with our expectations and reveal that accountability type and causal chain framing interact. Under outcome accountability, providing a causal chain is paramount to achieve high decision quality. When process accountability is employed, however, providing a causal chain reduces information search effort and does not improve decision-making. We discuss important implications of our findings for management accounting research and practice.

Tacit coordination is a pervasive aspect of accounting practice. This paper teases out insights on tacit coordination from existing scholarship, starting with studies of everyday life accounting, then turning to professional practice. It develops an understanding that, in the application of rules and accounting standards, in producing, framing, auditing and using statements, records, apologies or excuses, accounting practitioners tacitly coordinate towards the passing of accounts. This passing can be articulated in terms of structures, agencies and processes of tacit coordination involved in making accounting happen. The implications of this understanding of accounting practice and the importance of the wider domain of enquiry it is indicating are discussed with respect to the stewardship position of accounting professionals and the further development of accounting theory. The passing of accounts charges accounting practitioners with the stewardship of silence and indicates a broader case for accounting theory to address the full continuum of accounting practices. One vital role of such theory is to offer antidotes against the idea that any account, any slice of information, or any amount of ‘big data’, could speak for itself – or that it should

This study examines the joint effect of investor sophistication and the prospect of critical audit matter (CAM) disclosure on experienced audit committee members' propensity to ask challenging questions about management's significant accounting estimates. Using the theory of helping behavior and social responsibility norm, I predict that audit committee members will ask more challenging questions given a more unsophisticated investor base, particularly when there is a prospect of additional CAM disclosures in the audit report. I test my hypotheses using highly experienced audit committee members in an experimental setting. The results are supportive of my hypotheses. Additional analysis indicates the results are driven by audit committee members perceiving greater oversight duty in the presence of a more unsophisticated investor base and when there is the prospect of additional CAM disclosures. Overall, my findings shed light on factors that affect audit committee members' questioning behavior in the oversight process and are likely of interest to regulators and standard setters given their traditional emphasis on protecting unsophisticated investors as well as the current move towards expanding the audit report to include CAMs.

This historically informed field study examines a period of budget process change at the University of Wisconsin-Madison. In so doing, it provides an in-depth examination of the ability of budget process to serve as a forum for debate and compromise between disparate logics for action, and to manage periods of change within institutionally complex environments. Our analysis addresses two primary concerns: 1) the nature of divergent institutional logics and resulting pressure for heterogeneous institutional change; and 2) formal and informal budget process change as a tool to successfully manage institutional complexity through time. This study echoes those of hybrid organizations generally, where the ability to selectively draw upon multiple logics for action is a significant asset in managing the coexistence of competing logics through time. Our focus on budget processes builds upon these results by emphasizing the distinction between formal and informal logics and highlighting the gradual nature of institutional change.

Because of changes in tax regulations and increased political pressure, firms are reconsidering their practices of shifting manufacturing operations offshore to lower wage countries. Although outsourcing has been well researched, few studies examine managerial practices that influence offshore operations. We investigate the effects of choices regarding labor, suppliers, and outsourcing that influence firm longevity in the maquiladora industry in Mexico. We argue that firms are exposed to labor frictions, supply-chain constraints, and compliance and regulatory risks that if left unresolved can lead to plant closure attributable to labor or regulatory frictions and rising costs. We consider specific actions pursued by managers at maquiladora plants to mitigate the underlying constraints and then analyze factors that affect the likelihood of continuing operations, that is, the longevity of the plants. We find a positive relation between the likelihood of longevity in operations and the following plant characteristics: hourly wages, workforce stability, skill, and the decision to outsource regulatory compliance functions. We document a negative relation between longevity and total labor cost as a percent of total costs as well as using suppliers based in Mexico. We also find that high-tech plants have higher stability, pay higher wages, and experience greater longevity than low-tech plants. Overall, we identify key managerial choices that are related to longevity in offshoring production.