Digitalization is transforming the audit profession. Apprenticeship norms prescribe that knowledge flows down from supervisors to subordinates, but digitalization increasingly positions junior auditors as experts in emerging technology. Consequently, supervisors can learn from subordinates. This reversal challenges long-standing apprenticeship expectations, yet little is known about how it unfolds or the tensions it creates. Against this backdrop, we examine tensions that can arise when subordinate auditors share their knowledge with supervisors. Drawing on 51 semistructured interviews and guided by theory, we identify four recurring roadblocks to upward knowledge sharing: junior auditors' status motives, “same as last year” routines, status insecurity among immediate supervisors, and defensiveness when juniors cross perceived knowledge “lanes.” We also find a rare, countervailing pathway: the emergence of informal champions who legitimize junior auditors' contributions. Our study deepens understanding of how digitalization transforms team learning in audits and shows how historical structures and norms evolve under new conditions. Data Availability: Data were obtained from interviews.

In this study, we examine the effect of incentive contract framing on agent effort in an incomplete contract setting. Prior research suggests that when governed by complete incentive contracts, agents exert greater effort under penalty contracts relative to bonus contracts. However, in an incomplete contract setting, in which the incentive contract does not govern all tasks for which the agent is responsible, the agent's trust in the principal is relevant. In this setting, we predict that bonus contracts create a more trusting environment, and this effect spills over to tasks not governed by the incentive contract, such that bonus contracts elicit greater effort on these tasks as compared to penalty contracts. We develop and experimentally validate a theoretical model of the effects of contract frame on trust and effort in this incomplete contract setting. The main intuition behind the model is that the framing of an incentive contract affects the degree to which the contract terms are interpreted by the agent as a signal of mistrust. More specifically, penalty contracts engender greater distrust than do bonus contracts and, therefore, when contracts are incomplete, penalty contracts lead to lower effort on tasks not governed by the contract than do bonus contracts.

Data analytics is transforming our global markets and significantly impacting the financial reporting environment. We investigate how auditors, company managers, and regulation interact with data analytics and one another to affect the diffusion (i.e., development and spread) of data analytics throughout the financial reporting environment. We interview company managers and their audit partners, as well as additional stakeholders, including regulators. We interpret findings from our interviews using theory that highlights the importance of dynamic interactions between people and their environments, which include the prevailing rules (e.g., regulatory guidance). Our findings contribute to the accounting literature and practice by revealing three areas of conflict emerging from stakeholders' disparate preferences for data analytics. First, we uncover growing tensions between managers and audit partners regarding audit fees. Second, we find that managers and auditors believe the lack of accounting regulation specific to data analytics causes confusion and frustration. Finally, auditors report that they strategically leverage data analytics to provide clients with business‐related insights. However, regulators voice concerns that this practice might impair auditor independence and reduce audit quality. These areas of conflict suggest a need to revisit key tensions surrounding the audit function in a contemporary context characterized with significant technological shift.

We examine how two attributes of preventive and detective controls affect employee performance and employee motivation. Specifically, we examine how the extent to which controls (1) restrict employees’ autonomy, and (2) provide more or less timely feedback impacts employees’ performance and intrinsic motivation. These characteristics are the defining differences between preventive and detective controls in that preventive controls restrict employee autonomy relative to detective controls and preventive controls always provide immediate feedback; whereas, detective controls can provide either immediate feedback or delayed feedback. We conduct an experiment to examine how and why these two types of formal controls impact employees’ performance in an incomplete contract setting in which one dimension of the employees’ task is compensated and one dimension is controlled. The results show that detective controls with more timely feedback improve employees’ performance toward the control objective, without affecting their intrinsic motivation. In contrast, the restriction of autonomy associated with preventive controls, has no additional effect on employees’ performance toward the control objective over detective controls with timely feedback but significantly reduces employees’ motivation. Neither control characteristic has a significant effect on employees’ performance on the compensated dimension of the task, suggesting that monetary incentives continue to provide an effective motivation. Our results reveal the importance of designing and implementing controls that provide timely feedback but do not restrict autonomy.