We provide evidence that regulatory guidance aimed at improving audit efficiency and effectiveness—allowing auditor reliance on a multi‐location client's competent and objective internal audit function (IAF)—can unintentionally increase auditors' litigation risk. Our research is important in demonstrating how client characteristics and juror cognitive processing, such as the number of client locations and jurors' susceptibility to the numerosity heuristic, factors beyond auditors' control, can exacerbate their litigation exposure. Consistent with theoretical predictions, we find that susceptibility to the numerosity heuristic contributes to jurors assessing an increased likelihood of misstatement on multi‐location compared to single‐location audits. Furthermore, these assessments of higher misstatement risk on multi‐location audits lead jurors to perceive that auditor reliance on the client's IAF in multi‐location audits is less appropriate (i.e., not normal). Accordingly, jurors judge that auditors are more negligent when they rely on the IAF during multi‐location audits than when they do not, but IAF reliance does not impact auditor negligence on single‐location audits. Our results suggest auditor reluctance to use a qualified IAF, despite client pressure and regulatory allowance, can provide potential benefits to firms in terms of reduced litigation exposure. Thus, we demonstrate the legal regime can undermine the objectives of regulators' guidance to enhance audit efficiency and corporate governance.

Recent AICPA surveys indicate disproportionate attrition among Black professionals attaining partnership in US public accounting firms, underscoring the need to better understand their experiences. Despite repeated calls for examination, understanding of these experiences remains limited, partly due to the difficulty in accessing the few Black partners in public accounting. To address this gap in the literature, we interview 26 Black professionals (20 partners and 6 aspirants) to explore how they navigate their journey to partnership in predominantly White firms. We identify three key milestones necessary for partnership: finding mentors who provide honest feedback, gaining career‐building experiences, and being seen as a culturally legitimate leader who aligns with organizational norms. By recalibrating their practices, Black professionals achieve partnership by decoding unwritten rules of the organization to build relationships with decision‐makers, obtain developmental feedback, access challenging assignments, and carefully balance the organization's cultural fit requirements with their personal identity. While these practices help some professionals reach partnership, the path remains uncertain, emotionally taxing, and often shaped by sponsorship, timing, and luck. Our findings suggest that firms can streamline the path to partnership by formalizing mentoring and sponsorship, distributing candid feedback and high‐visibility assignments more equitably, and making promotion criteria transparent—so that advancement depends less on luck and on the ability to decode unwritten rules. More broadly, our findings indicate that lasting change rests with organizations reshaping these conditions, rather than with individuals' efforts alone.

This study examines how tenured BAF experience and navigate institutional structures while advancing their careers. Leveraging a qualitative approach, we find BAF encounter recurring forms of marginalization embedded in organizational structures that lead to social identity threats that destabilize their identities as scholars and teachers. BAF respond to these threats by employing agentic and self-preserving coping responses designed to affirm identity and negotiate career advancement. Although coping responses can be effective on an individual level, they do not transform institutional structures and can provoke pushback that reinscribes marginalization. The findings unsettle common assumptions that effort in conditions marked by objectivity and neutrality drives career advancement and highlight the institutional structures and invisible labor that BAF navigate to achieve career advancement. We fill the void in the literature examining how career advancement unfolds within racialized conditions of academic institutions and advance research on minoritized group status in accounting academia.