Analyzing the Effect of the Audit Supervisor's Team Orientation on the Behavioral Responses of Subordinate Auditors and Audit Quality

Document Type : Research Paper

Authors

Department of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

Abstract

Behavioral reactions of subordinate auditors as a result of the team-oriented nature of the audit supervisor can affect audit quality. The present study aims to identify challenges, provide guidelines, and improve audit quality by examining the reactions of subordinate auditors to the team-oriented nature of the audit supervisor. The statistical population of this study is auditors working in audit organizations and audit institutions. The required data was collected from 198 auditors by means of a questionnaire in 2025. The data analysis method is structural equation modeling using SmartPLSS software. The findings showed that the team-oriented nature of the audit supervisor has a positive and significant effect on the subordinate auditor's attitude towards the coaching relationship, knowledge sharing, and the willingness to raise audit issues by the subordinate auditor, leading to positive behavioral reactions from subordinate auditors and increasing audit quality. As a result, leadership styles, the management style of audit supervisors and communications between auditors affect audit quality. This research is valuable from a behavioral and communication perspective in auditing firms and contributes to the literature on supervisor-subordinate communication.

Keywords

Main Subjects


Allen, T. D., & Eby, L. T. (2007). The Blackwell Handbook of Mentoring: A Multiple Perspectives Approach. Blackwell Publishing.
Amy C., & Edmondson, A. C. (1999). Psychological Safety and Learning Behavior in Work Teams. Administrative Science Quarterly, 44(2), 350–383.
Andiola, L. M. (2024). How Do Reviewers’ Goal Framing and Novice Auditors’ Receptivity to Negative Feedback Affect Follow-Through Performance? Auditing: A Journal of Practice & Theory, 43(2), 19-41.
Andiola, L. M., Bedard, J. C., & Kremin, J. (2018). On-the-job coaching quality & turnover intentions in a multiple supervisor context: Does one bad apple spoil the barrel? Virginia Commonwealth University, Bentley University, & Portl & State University Working Paper.
Argote, L., & Ingram, P. (2000). Knowledge Transfer: A Basis for Competitive Advantage in Firms. Organizational Behavior & Human Decision Processes.
Asare, S. K., Messier, W. F., & Wright, A. (2014). The effects of team communication & team cohesion on audit quality. Accounting Horizons, 28(3), 513-532.
Athavale, M., Guo, Z., Meng, Y., & Zhang, T. (2022). Diversity of signing auditors & audit quality: evidence from capital market in China. International Review of Economics & Finance, 78(-), 554-571.
Bentler, P. M., & Bonett, D. G. (1980). Significance tests & goodness of fit in the analysis of covariance structures. Psychological Bulletin, 88(3), 588–606.
Blau, P. (1964). Exchange & Power in Social Life. New York: Wiley.
Bobek, D. D., Daugherty, B. E., & Radtke, R. R. )2012(. Resolving audit engagement challenges through communication. Auditing: A Journal of Practice & Theory, 31(4), 21–45.
Bouwman, M. J., & Bradley, W. E. )1997(. Judgment & decision making, Part II: Expertise, consensus & accuracy. In Behavioral Accounting Research: Foundations & Frontiers, edited by V. Arnold & S. G. Sutton. Sarasota, FL: American Accounting Association.
Brazel, J. F., Agoglia, C. P., & Hatfield, R. C. (2004). Electronic versus face-to-face review: the effects of alternative forms of review on auditors’ performance. The Accounting Review, 79(4), 949-966.
Budur, T. (2020). Effectiveness of transformational leadership among different cultures. International Journal of Social Sciences & Educational Studies, 7(3), 119-129.
Burris, E. B., Detert J. R., & Chiaburu, D. S. )2008(. Quitting before leaving: The mediating effects of psychological attachment & detachment on voice. Journal of Applied Psychology, 93(4), 912–922.
Carpenter, T., Christ, M. H., & Hugie, M. (2024). Stay In Your Own Lane: Navigating the Challenges of Upward Knowledge Sharing in Hierarchical Audit Teams. http://dx.doi.org/10.2139/ssrn.4466632
Cepeda-Carrion, G., Cegarra-Navarro, J. G., & Cillo, V. (2018). Tips to use partial least squares structural equation modelling (PLS-SEM) in knowledge management. Journal of Knowledge Management, 23(1), 67-89.
Chin, W. W. (1998). The partial least squares approach to structural equation modeling. Modern methods for business research, 295(2), 295-336.
Clor-Proell, S. M., Kadous, K., & Proell, C. A. )2023(. Do as I say: A look at the supervisor behaviors that encourage upward communication on audit teams. Accounting Horizons, 37(1), 15-24.
De Stobbeleir, K., Ashford, S., & Zhang, C. )2020(. Shifting focus: Antecedents & outcomes of proactive feedback seeking from peers. Human Relations, 73(3), 303-325.
DeAngelo, L. (1981). Auditor size & auditor quality. Journal of Accounting & Economics, 3(3), 183–199.
Detzen, D., & Gold, A. (2021). The auditor’s voice: Speaking up in audit firms. Accounting, Organizations & Society.
DeZoort, F. T., & Harrison, P. D. (2018). Understanding Auditors’ Sense of Responsibility for Detecting Fraud Within Organizations. Journal of Business Ethics, 149(4), 857–874.
Duh, R.R., Knechel, W. R., & Lin, C. C. (2020). The Effects of Audit Firms’ Knowledge Sharing on Audit Quality & Efficiency. A Journal of Practice & Theory, 39(2), 51–79.
Ebrahimi, F., & Rostami, A. (2024). The Impact of Personal and Organizational Variables on the Predisposition of Independent Auditors toward Handling Self-made Errors. Journal of Accounting Advances, 16(1), 1-28. (In Persian).
Edmondson, A. C. (1999). Psychological Safety & Learning Behavior in Work Teams. Administrative Science Quarterly, 44(2), 35-38
George, D., & Mallery, P. (2019). IBM SPSS Statistics 25 Step by Step: A Simple Guide & Reference (15th ed.). New York, NY: Routledge.
Giessner, S. R., Van Knippenberg, D., Van Ginkel, W., & Sleebos, E. )2013(. Team-oriented leadership: The interactive effects of leader group prototypicality, accountability, & team identification. Journal of Applied Psychology, 98(4), 658–667.
Gregory, J. B., & Levy, P. E. (2012). Employee feedback orientation: Implications for effective coaching relationships. Coaching: An International Journal of Theory, Research & Practice, 5(2), 86–99.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2022). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). Sage publications.
Henseler, J., Hubona, G., & Ray, P. A. (2016). Using PLS path modeling in new technology research: updated guidelines. Industrial Management & Data Systems, 116(1), 2–20.
Herda, D.N., Cannon, N.H., & Young, R.F. (2019). Workplace mindfulness & its effect on staff auditors’ audit quality-threatening behavior. Behavioral Research in Accounting, 31(1), 55-64.
Hu, L. T., & Bentler, P. M. (1999). Cutoff criteria for fit indices in covariance structure analysis: conventional criteria versus new alternatives. In Structural Equation Modelling, 6 (1), 1-55.
Iranian Society of Certified Public Accountants. (1402). Quality Control Regulations for Audit Firms and Quality Management Requirements. Tehran. (In Persian)
Jabbari, M. R., Dorrani, K., & Rahiminezhad, A. (2020). Relationships of Managers’ Leadership Styles & Communication Skills via Cognitive Maladaptive Schemas. Journal of Management Studies in Development & Evaluation, 28(94), 109-136. (In Persian)
Jefferson, D. (2024). Supervisor-subordinate communication in the audit environment: a review & synthesis of contextual factors affecting subordinate behavior. Journal of Accounting Literature. DOI 10.1108/JAL-01-2023-0011
Khudhair, D., Al-Zubaidi, F., & Raji, A. (2019). The effect of board characteristics & audit committee characteristics on audit quality. Management Science Letters, (9)2, 271-282.
Kline, R. B. (2016). Principles & Practice of Structural Equation Modeling. Guilford Press.
Kock, N., & Hadaya, P. (2018). Minimum sample size estimation in PLS‐SEM: The inverse square root & gamma‐exponential methods. Information Systems Journal, 28(1), 227-261.
Kuselias, S., Agoglia, C. P., & Wang, E. (2024). Coaching Today's Auditors: What Causes Reviewers to Adopt a More Developmental Approach? Accounting, Organizations and Society, 115, 101549. https://doi.org/10.1016/j.aos.2024.101549
LePine J. A., & L. Van Dyne. )1998(. Predicting voice behavior in work groups. Journal of Applied Psychology, 83 (6), 853–868.
Mojtahedzadeh, V., & Aghaei, P. (2004). Factors affecting the quality of independent audit from the perspective of independent auditors & users. Accounting & Auditing Studies, 11(38), 53-76. (In Persian)
Mullins, L. J. (2007). Management & Organisational Behaviour, Pearson Education, London.
Nelson, M. W., Proell, C. A., & Randel, A. E. (2016). Team-Oriented Leadership & Auditors’ Willingness to Raise Audit Issues. The Accounting Review, 91(6), 1781–1805.
Nunnally, J. C., & Bernstein, I. (1994). The assessment of reliability Psychometric  Theory. New York: Mcgraw-Hill.
Paino, H., Smith, M., & Ismail, Z. (2012). Auditor acceptance of dysfunctional behavior: An explanatory model using individual factors. Journal of Applied Accounting Research, 13(1), 37–55.
Parker, S. K., & Collins, C. G. )2010(. Taking stock: Integrating & differentiating multiple proactive behaviors. Journal of Management, 36 (3), 633-662.
Parker, S., & Wang, L. )2015(. Helping people to make things happen: A framework for proactivity at work. International Coaching Psychology Review, 10 (1), 62-75.
Probst, G., Raub, S., & Romhardt, K. (2000). Managing Knowledge: Building Blocks for Success. John Wiley & Sons.
Proell, C, A., Zhou, Y., & Nelson, M. W. (2022). It's Not Only What You Say, How Communication Style and Team Culture Affects Audit Issue Follow-Up and Auditor Performance Evaluations. The Accounting Review, 97(2), 373-395.
Public Company Accounting Oversight Board (PCAOB). )2010(. Supervising the Audit Engagement. Auditing St & ard. Washington, DC: PCAOB.
Public Company Accounting Oversight Board (PCAOB). )2020(. Data & technology research project update spotlight, available at: https://pcaob-assets.azureedge.net/pcaobdev/docs/default-source/documents/data-technology-project.
Razak, A., Sarpan, S., & Ramlan, R. (2018). Effect of leadership style, motivation & work discipline on employee performance in PT. ABC Makassar. International Review of Management & Marketing, 8(6), 67-71.
Read, W., & Thibodeau, J. (1999). Knowledge from within. Practical Accountant, 32 (12), 59–61.
Rezaian, Ali. (2024). Fundamentals of Organizational Behavior Management. Tehran: Samt Publications. (In Persian).
Robbins, S. P., & Judge, T. A. (2023). Organizational Behavior (19th ed.). Pearson.
Ruggles, R. (1998). The state of the notion: knowledge management in practice. California Management Review, 40(3), 80-89.
Sergeeva, A., & Andreeva, T. (2016). Knowledge sharing research: Bringing context back in. Journal of Management Inquiry, 25 (3), 240–261
Umphress, E. E., Bingham, J. B., & Mitchell, M. S. (2010). Unethical behavior in the name of the company: the moderating effect of organizational identification & positive reciprocity beliefs on unethical proorganizational behavior. Journal of applied psychology, 95(4), 769-780.
Viator, R. E. (2001). The association of formal & informal public accounting mentoring with role stress & related job outcomes. Accounting, Organizations & Society, 26(1), 73–93.
Westermann, K. D., Cohen, J., & Trompeter, G. (2017). PCAOB inspections: Public accounting firms on “trial”. California Polytechnic State University at San Luis Obispo. Boston College & University of Central Florida Working Paper.
Yin, J., Ma, Z., Yu, H., Jia, M., & Liao, G. (2019). Transformational leadership & employee knowledge sharing: explore the mediating roles of psychological safety & team efficacy. Journal of Knowledge Management, 24(2), 150-171.
Zamani, R., Lari Dashtbayaz, M., & Hesarzadeh, R. (2023). Transformational Leadership of Audit Managers and Supervisors on the Quality of Team Interactions of Independent Auditors. Journal of Accounting Knowledge, 14(4), 31-51. (In Persian).
Zarefar, A., & Zarefar, A.  (2016). Paper of the Influence of Ethics, Experience & competency toward the Quality of Auditing with Professional Auditor Skepticism as a Moderating Variable .3rd Global Conference on Business & Social Science 219, 828-832.
Zhang, Y., Wang, H., & Liu, Y. (2015). The impact of leadership style on knowledge sharing in teams: A study of the moderating role of team cohesion. Journal of Knowledge Management, 19(4), 712-728.