The formation of professional identity of auditors, and its bearing on their ethical conduct

Abstract

Audit professionals have faced fierce criticism and scrutiny due to scandals linked to corporate failures, accounting irregularities and unethical practices, bringing to question conduct by auditors. Prior studies conducted on professional identity in the audit profession examined the influence of an employer firm identity on auditors’ ethical conduct, with focus on firms in Europe and North America. Theoretical gaps from these studies were on understanding the multiplicity of auditor identities in diverse cultures, effects of conflicting identities, with recommendations to expand previous studies to under-researched geographical regions and inclusion of auditors in firms other than “Big 4”. This study advances debate through perspectives from the lived experiences of auditors working in firms of different sizes in South Africa, an emerging market context. Qualitative methods were used to explore how the professional identity of auditors is influenced by personal identity, the employer firm identity and other consequential influences on ethical behaviours. Semi-structured interviews were used to capture data from 15 participants of diverse nationalities and racial profiles with at least five years of auditing experience. The findings indicate that for auditors, professional identity has no exclusive and linear relationship with the firm identity, contributing to the understanding of the interrelation between professional identity and firm identity within the identity theory. Other social identities, namely academic training, professional standing and background contribute to auditor identity formation, demonstrating new insights on the influence of multiplicity of identities for auditors. Whilst firm identity exerts notable influence on the auditors’ professional identity, factors such as firm values and leadership have material effects. Relatedly, experiences of marginalisation of black professionals pose a high risk for identity conflict between firm identity and the professional identities of practitioners. The findings covered auditors from different size firms, responding to previous studies' recommendations. Overall, the study's findings show that professional standards have greater influence on professional identity and the ethical conduct of auditors than the firm identity, providing a contrasting insight to previous studies. Congruency was found between the respondents’ personal identities and professional standards rather than the firm identity. The findings challenge the level of influence firm identity has on professional identity and ethical conduct