High self-esteem can enhance the effectiveness of group auditors, reveals study

Auditors who have high self-esteem or can effectively put themselves in someone else’s shoes provide higher quality in multinational group audits, new research from Nyenrode Business University reveals.

The research conducted by Professor Herman van Brenk and his coauthors, aimed to examine the effects of self-esteem and perspective-taking, both separately and jointly, on group auditors’ selection of the ‘next steps’.

In an experiment with over 100 audit partners and managers, the researchers measured self-esteem and manipulated a perspective-taking prompt.

They found that group auditors who have high self-esteem, or who are prompted to take the regulator’s perspective, plan more effective next steps than those with low self-esteem or who are unprompted to take this prospective.

There is no evidence that there is any interaction between self-esteem and perspective-taking in the context of the study. Therefore, both mechanisms of self-esteem and perspective-taking can be used separately to enhance audit quality in multinational group audits.

Professor van Brenk says “when considering this implication, audit firms need to be aware of the upside potential (increased scepticism), as well as the downside potential (overconfidence). With respect to the practical implications of perspective-taking, audit firms can consider including training on ‘perspective-taking’ in their curricula.”

Audit firms can use the insights from the study in selecting group auditors based on self-esteem and developing firm policies to consider the regulator’s perspective when reviewing the findings of component auditors to enhance audit quality in multinational group audits.

This research was published in the “International Journal of Auditing”. https://doi.org/10.1111/ijau.12250

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Lisa Baker is the Editor of Always Finance, and writes about Business, Finance Technology and Healthcare. Lisa is also the owner of Need to See IT Publishing.