Cultural Differences in Auditors' Compliance with Audit Firm Policy on Fraud Risk Assessment Procedures

• DOI: 10.2308/ajpt-51998
• Publication Date: 2018-01-24T18:07:58Z
• Authors: Olof Bik; Reggy Hooghiemstra
• Keywords: Uncertainty avoidance; Quality audit; Audit risk; Globe

SUMMARY Internationally operating audit firms rely heavily on global firm policies and methodologies to ensure consistency of audits across the globe. However, cultural differences are likely affect auditors' compliance with such firm-wide systems control. In this study we use proprietary data from a Big 4's internal quality reviews, involving 1,152 engagements 29 countries, assess impact cross-national (or not) firm's policy in specific yet crucial culturally susceptible area process: fraud risk assessment procedures. We find that collectivism societal trust negatively associated, while religiosity is positively associated policy. do not evidence power distance associated. Overall, our findings suggest methodology differences. An implication uniform local application may remain an illusion unless different, targeted approaches for different regions world considered.