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SUMMARY This article summarizes and outlines practical implications from the findings of “It Goes Without Saying: The Effects of Intrinsic Motivational Orientation, Leadership Emphasis of Intrinsic Goals, and Audit Issue Ambiguity on Speaking Up” (Kadous, Proell, Rich, and Zhou 2019). Through a series of experiments and surveys, the initial paper tests the effect that leadership focus on intrinsic motivation of auditors can have on their willingness to “speak up” with audit issues. Furthermore, they introduce the effects that ambiguity and source of motivation have on their initial findings. We expand this original work by summarizing the empirical findings and elaborating on the practical implications for auditors, managers, academics, and regulators. Applying these findings in practice could be a cost effective and efficient way to operationalize PCAOB AS 1201 and improve audit quality.

Regulation requires auditors to raise significant audit issues and concerns to the attention of audit engagement leadership and requires leadership to encourage such communication. This research demonstrates, using an experiment and a survey, that audit team members' willingness to speak up about such issues is associated with their intrinsic motivational orientation. Based on this result, we test whether audit leadership can leverage this relationship to increase speaking up, particularly when audit issues are more ambiguous, by emphasizing intrinsic goals. Results across three additional experiments indicate that auditors whose leaders emphasize intrinsic goals, whether directly or through tone at the top and firm culture, are more likely to speak up than are other auditors. We also find that auditors are more likely to speak up when an audit issue is less versus more ambiguous. We conclude that leadership can fulfill their obligation to encourage upward communication by emphasizing intrinsic versus extrinsic goals, regardless of the level of ambiguity surrounding the audit issue. Les repercussions de l'orientation des motivations intrinseques, de l'insistance des responsables sur les buts intrinseques et de l'ambiguite des problemes d'audit sur le choix de signaler ces problemes La reglementation exige des auditeurs qu'ils portent les preoccupations et les problemes souleves par l'audit a l'attention des responsables de la mission d'audit et que ces responsables les encouragent a le faire. Les auteurs demontrent, a l'aide d'une experience et d'un sondage, que la propension des membres de l’equipe d'audit a signaler ces problemes est associee a l'orientation de leurs motivations intrinseques. Etant donne ce constat, ils verifient si les responsables de l'audit peuvent exploiter cette relation de maniere a cultiver cette attitude d'ouverture, en particulier lorsque les problemes d'audit sont plus ambigus, en mettant l'accent sur les buts intrinseques. Les resultats de trois experiences supplementaires indiquent que les auditeurs relevant de responsables qui mettent l'accent sur les buts intrinseques, que ce soit directement ou par l'exemple et la culture d'entreprise, sont davantage susceptibles que les autres auditeurs de signaler les problemes d'audit. Les auteurs constatent egalement que les auditeurs tendent plus souvent a signaler un probleme d'audit lorsque le degre d'ambiguite qui y est associe est moindre. Les auteurs concluent que les responsables peuvent s'acquitter de leur obligation d'encourager les auditeurs a signaler les problemes d'audit a leurs superieurs en mettant l'accent sur les buts intrinseques plutot que les buts extrinseques, peu importe le degre d'ambiguite associe au probleme d'audit.

Intrinsic motivation is generally thought to be positively associated with performance on a variety of tasks. However, there is only sparse experimental evidence supporting this idea and we know little about the specific mechanisms behind any effect. We develop theory about how auditors’ intrinsic motivation for their jobs can improve their judgments about complex accounting estimates. We experimentally test whether a prompt to make auditors’ intrinsic motivation for their jobs salient improves the specific information processing behaviors necessary for high‐quality judgments in complex audit tasks. It does: Prompted auditors attend to a broader set of information, process information more deeply, and request more relevant additional evidence. Supplemental analyses show that these processing behaviors mediate between salient intrinsic motivation and an improved ability to identify a biased complex estimate. Our theory and analyses indicate that auditors’ intrinsic motivation for their work provides unique value for improving judgment quality, particularly in the context of performing complex audit tasks. Our study supports the view that high‐quality cognitive processing can improve auditors’ professional skepticism by providing a foundation for skeptical judgments. Comment la motivation intrinseque ameliore‐t‐elle le jugement des auditeurs dans les tâches d'audit complexes? L'on s'entend generalement sur l'existence d'un lien positif entre la motivation intrinseque et le rendement dans l'execution de diverses tâches ; les donnees experimentales confirmant la presence de ce lien sont toutefois peu nombreuses, et nous connaissons mal les mecanismes precis qui lui servent de vecteur. Les auteurs elaborent une theorie quant aux modalites selon lesquelles la motivation intrinseque des auditeurs, dans l'exercice de leurs fonctions, peut ameliorer leur jugement a l’egard des estimations comptables complexes. Ils procedent a un test experimental afin de determiner si un encouragement visant a stimuler la motivation intrinseque des auditeurs dans leur travail ameliore les comportements specifiques de traitement de l'information necessaires a la formulation de jugements de qualite dans des tâches d'audit complexes. Les resultats du test se revelent positifs : les auditeurs dont la motivation intrinseque est stimulee s'interessent a un eventail plus large d'informations, approfondissent davantage le traitement de ces informations et reclament des elements probants supplementaires plus pertinents. Des analyses complementaires indiquent que ces comportements a l’egard du traitement de l'information ont un effet de mediation entre la motivation intrinseque stimulee et une capacite accrue de percevoir les estimations complexes peu fiables. Selon la theorie et les analyses des auteurs, la motivation intrinseque des auditeurs dans leur travail joue un role exclusif dans l'amelioration de la qualite du jugement, en particulier dans le contexte de tâches d'audit complexes. L’etude confirme l'idee selon laquelle un traitement cognitif de qualite superieure peut nourrir l'esprit critique des auditeurs en servant de base a des jugements circonspects.

We introduce the construct of auditor proactivity to the accounting literature. Since auditors work in complex, dynamic environments where complete directives are often unavailable, auditors need to be proactive to achieve quality audit outcomes. However, proactivity is often lacking in practice. Thus, we position auditor proactivity as a valuable but scarce determinant of audit quality. Drawing on theory from management, accounting, and psychology, we test hypotheses about how environmental and dispositional factors interact to encourage proactive auditing behaviors. Using an experiment, we find that auditors are more proactive when they have both higher autonomy and higher tacit knowledge compared to when either or both of these factors are absent. Our theory and findings inform academics, regulators, and practitioners about how work environments and policies could be modified to promote proactive auditing behaviors.

Prior research is unclear on the role of case merits in resolution of legal audit disputes. Using the Elaboration Likelihood Model (ELM) as a lens, we examine their role based on interviews of 42 audit litigation attorneys and trial consultants. Our results indicate that the role of case merits systematically differs between the two sides of audit litigation. Auditors’ (plaintiffs’) litigators believe they can achieve favorable outcomes by increasing the role of merit-relevant (merit-irrelevant) information in juror resolutions using trial venues, jurors, arguments, and argument delivery tactics. Litigators emphasize that this difference arises from the unique features of audit litigation. Our results validate a framework we developed based on ELM. The framework outlines how litigators believe they could increase the likelihood that jurors will use merit-relevant (merit-irrelevant) information in case resolutions. We discuss implications and suggest multiple venues for future research.

Auditing standards require auditors to be objective in their judgment. However, certain incentives inherent in the auditing environment motivate auditors to adopt a directional goal and to prefer incentive-consistent audit conclusions over others, undermining auditor objectivity. I predict and find that making auditors’ intrinsic motivation for their work salient counteracts the directional influence of incentives on auditor judgment. I show that the counteracting effects are achieved by salient intrinsic motivation prompting auditors to search for relatively more evidence that contradicts their incentive-consistent audit conclusion, to evaluate acquired evidence as being less supportive of their incentive-consistent conclusion, and to integrate the evidence into their judgment to a greater extent. The results indicate that salient intrinsic motivation that focuses auditors on the intrinsic rewards of a task can mitigate the negative impact of motivated reasoning on audit quality, a challenging issue that has constantly concerned regulators, practitioners, and academics.

Regulators require auditors to raise significant audit issues and concerns to the attention of audit engagement leadership and requires leadership to encourage such communication. This paper demonstrates, using an experiment and a survey, that audit team members’ willingness to speak up about such issues is associated with their intrinsic motivational orientation. Based on this result, we test whether audit leadership can leverage this relationship to increase speaking up, particularly when audit issues are more ambiguous, by emphasizing intrinsic goals. Results across three additional experiments indicate that auditors whose leaders emphasize intrinsic goals, whether directly or through tone at the top and firm culture, are more likely to speak up than are other auditors. We also find that auditors are more likely to speak up when an audit issue is less versus more ambiguous. We conclude that leadership can fulfill their obligation to encourage upward communication by emphasizing intrinsic versus extrinsic goals, regardless of the level of ambiguity surrounding the audit issue.

Despite a lack of evidence and theory about specific mechanisms, intrinsic motivation is generally thought to be associated with increased performance on a variety of tasks. We develop theory in this important area and test whether prompting auditors’ intrinsic motivation can solve a critical problem in financial reporting — insufficient auditor skepticism about management estimates. We find that prompting auditors’ intrinsic motivation enhances skepticism by improving auditors’ information processing strategies: prompted auditors attend to a broader set of information, process information at a deeper level, and request more relevant additional evidence. Supplemental analyses show that prompted auditors improve decision effectiveness without sacrificing efficiency and that auditors’ improved skepticism comes mainly from their use of information cues that require higher levels of processing. In sum, we find that prompting auditors’ intrinsic motivation causes auditors to engage in complex cognition that facilitates improved skepticism and improved financial reports.