Professional skepticism: The combined effect of partner style and team identity salience

• Published date: 01 July 2019
• Date: 01 July 2019
• DOI: http://doi.org/10.1111/ijau.12161

ORIGINAL ARTICLE

Professional skepticism: The combined effect of partner style

and team identity salience

Edward Stevens

1

|Robyn Moroney

2

|John Webster

2

1

PwC Australia, Australia

2

Monash Business School, Monash University,

Melbourne, VIC, Australia

Correspondence

John Webster, Monash Business School,

Monash University, Melbourne, VIC, Australia.

Email: john.webster@monash.edu

Although essential in the delivery of a high‐quality audit, regulators report their con-

cerns about an apparent lack of professional skepticism exercised by auditors. In an

experiment, we use regulatory focus and social identity theories to examine how

the style used by a partner (supportive or unsupportive) when allocating a task and

team identity salience (high or low) combine to impact skepticism. We find that when

team identity salience is high, auditors demonstrate greater skepticism when a part-

ner's style is supportive rather than unsupportive. In additional analysis, we also con-

sider how motivation moderates the effect of partner style and team identity

salience on skepticism and retest our hypotheses using a different measure of skep-

ticism. Our results suggest that team identity salience is important when considering

the effect of partner style on professional skepticism.

KEYWORDS

partner style,professional skepticism, regulatory focus theory,social identity theory, team identity

salience

1|INTRODUCTION

Professional skepticism (hereafter skepticism) is essential in the deliv-

ery of a high‐quality audit (Kim & Trotman, 2015), and yet regulatory

and professional bodies raise concerns about the apparent lack of

skepticism exercised by auditors (Auditing and Assurance Standards

Board, 2012; Australian Securities and Investments Commission

[ASIC], 2016; Center for Audit Quality, 2016; International Auditing

and Assurance Standards Board [IAASB], 2015; International Forum

of Independent Audit Regulators, 2016; Public Company Accounting

Oversight Board [PCAOB], 2012). These concerns primarily relate to

a lack of documented evidence that auditors challenge, and not just

corroborate, management's assumptions (ASIC, 2016; IAASB, 2015;

Nolder & Kadous, 2018; PCAOB, 2012). Regulators consistently raise

concerns about the lack of skepticism demonstrated on audits (Inter-

national Forum of Independent Audit Regulators, 2016; PCAOB,

2012) and that auditors fail to be critical in their assessment of man-

agement's assertions and assumptions (ASIC, 2016). Motivated by

these concerns, as well as those raised by standard setters, academics,

and financial statement users (Boyle & Carpenter, 2015; Hurtt, Brown‐

Liburd, Earley, & Krishnamoorthy, 2013; IAASB, 2015; Nolder &

Kadous, 2018), our research is concerned with how partner style and

team identity salience combine to effect skepticism.

We examine partner style (supportive, unsupportive), as previous

research has shown that the way a message is delivered can influence

task performance in different ways (Higgins, 1997; Van Dijk & Kluger,

2004, 2011). According to regulatory focus theory, positive supportive

language motivates those with a promotion focus (i.e., a focus on goal

achievement), whereas negative unsupportive language motivates

those with a prevention focus (i.e., a focus on punishment avoidance)

(Higgins, 1997). As tasks that are complex and subjective induce a pro-

motion focus (Van Dijk & Kluger, 2011), we hold the task constant to

ascertain how partner style impacts demonstrated skepticism. In line

with regulatory focus theory, we argue that an auditor will demonstrate

Data availability: Nonpublicly available data were collected on the assurance that individuals

would not be identified.

Received: 26 March 2018 Revised: 29 March 2019 Accepted: 7 April 2019

DOI: 10.1111/ijau.12161

Int J Audit. 2019;23:279–291. © 2019 John Wiley & Sons Ltdwileyonlinelibrary.com/journal/ijau 279