Description
The objective of this research is to better understand the role that the accounting firm organization plays when
auditors make difficult client-acceptance decisions in the midst of conflicting influences—specifically between the professional
and commercial ‘‘logics of action’’. The investigation was conducted via a field study at three Big Six firms
located in Canada. The main argument that is developed in the paper is that the firm sets the stage for auditors’ decisionmaking
by making its formal organizational components (e.g., the firm’s partner-compensation scheme and decisionmaking
policies) more reflective of one of the two logics, thereby establishing and helping reproduce certain patterns of
order and consistency within the firm.
On the role of the organization in auditors’
client-acceptance decisions
Yves Gendron*
School of Business, University of Alberta, Edmonton, AB, Canada T6G 2R6
Abstract
The objective of this research is to better understand the role that the accounting ?rm organization plays when
auditors make di?cult client-acceptance decisions in the midst of con?icting in?uences—speci?cally between the pro-
fessional and commercial ‘‘logics of action’’. The investigation was conducted via a ?eld study at three Big Six ?rms
located in Canada. The main argument that is developed in the paper is that the ?rm sets the stage for auditors’ decision-
making by making its formal organizational components (e.g., the ?rm’s partner-compensation scheme and decision-
making policies) more re?ective of one of the two logics, thereby establishing and helping reproduce certain patterns of
order and consistency within the ?rm. However, the ?rm’s organizational components are also to some extent re?ective
of the other logic, thereby providing decision-makers with a legitimizing space to in?uence the decision process di?erently. I
present ?eldwork data that is consistent with the paper’s argument. # 2002 Elsevier Science Ltd. All rights reserved.
1. Introduction
Since the 1970s, decision-making research in
auditing has relied heavily on the laboratory
experimental method (Solomon & Shields, 1995,
p. 172). Ashton and Ashton (1995, p. 9) maintain
that this line of inquiry has documented short-
comings of human judgement in the auditing set-
ting, generated insights on how these
shortcomings may be reduced or eliminated, and
helped to develop a better understanding of the roles
of knowledge and memory in auditors’ decision-
making. Nevertheless, some auditing academics
have been critical of the general direction of this
line of inquiry, arguing that the ?ndings do not
re?ect signi?cantly actual practice. For example,
Gibbins and Swieringa (1995, p. 242) note that most
audit studies have treated judgement problems as
separable from the organization of the accounting
?rm, and research participants have been treated
as independent actors. These methodological
assumptions are problematic since decisions in
audit settings are made typically by hierarchically
structured groups whose work is closely guided or
constrained by professional standards, ?rm poli-
cies and procedures, and decision support systems
(Libby & Luft, 1993; Solomon, 1987). While
recent laboratory studies have begun to include
organizational components in their experimental
designs, such inclusions have usually been done on
a one-component-at-a-time basis (Ashton & Ash-
ton, 1995, p. 22). Little research has examined the
in?uence of the ?rm on auditors’ decision pro-
cesses from a broader perspective. The objective of
this study is to better understand this in?uence.
The organizational setting in which most audit
engagements are carried out is the large profes-
sional partnership (Greenwood, Hinings, &
Brown, 1990, p. 725). These partnerships are
0361-3682/02/$ - see front matter # 2002 Elsevier Science Ltd. All rights reserved.
PI I : S0361- 3682( 02) 00017- X
Accounting, Organizations and Society 27 (2002) 659–684
www.elsevier.com/locate/aos
* Tel.: +1-780-492-2517.
E-mail address: [email protected]
owned by a relatively large number of partners
who, in addition to having some voting power, are
the ?rms’ key production workers, in charge of
recruiting new clients and providing services.
Rank-and-?le partners working at a ?rm’s various
local o?ces therefore have signi?cant power over
their work (Barrett, Cooper, & Jamal, 2001;
Freidson, 1986, p. 213). For their part, admini-
strative partners at a ?rm’s national o?ce assume
the co-ordination and control of activities within
the ?rm through various organizational com-
ponents, such as the ?rm’s partner-compensation
scheme and decision-making policies. However,
local practitioners may resist administrative part-
ners’ e?orts at overseeing their practice (e.g., Car-
penter, Dirsmith, & Gupta, 1994). Local o?ces’
decisions therefore constitute an arena in which
the perspectives of local practitioners and those of
administrative partners may clash. In spite of
practitioners’ resistance, research has shown that
organizational components may have a long run
socializing impact on local practitioners’ mindsets
(Covaleski, Dirsmith, Heian, & Samuel, 1998).
For example, through devices such as time bud-
gets, local auditors tend to develop particular
forms of time-consciousness that signi?cantly
a?ect their identity and decision-making beha-
viour (Anderson-Gough, Grey, & Robson, 2001).
In brief, auditors’ decisions are made in a complex
organizational setting, in which issues of profes-
sional autonomy, career advancement, policy-
making, and socialization intermingle.
This paper examines the relationship between
the accounting ?rm organization and auditors’
decision-making within the context of a type of
decision that auditors claim is crucial to their
practice, namely, the di?cult client-acceptance
decision (e.g., CICA, 1996, p. 5). According to The
Economist (1995, p. 62), auditors tend to be selec-
tive about audit engagements, especially at the
time of initial acceptance, in an attempt to miti-
gate the potential for lawsuits that signi?cantly
increased since the turn of the 1990s. In this
atmosphere, auditors’ rationale when making the
client-acceptance decision is that they are better
able to avoid lawsuits when rejecting potential cli-
ents for which available information suggests high
potential for litigation (Hall & Renner, 1991).
However, the decision to reject a potential client
may be di?cult to make since this option contra-
dicts the pressures that are exerted upon partners
to contribute to the growth of their ?rm (Be´ rard,
1994; Dirsmith, Heian, & Covaleski, 1997, p. 12).
Among all client-acceptance decisions, this inves-
tigation was restricted to those that auditors con-
sider as di?cult. These decisions allegedly have the
potential to jeopardize the ?rms’ survival (e.g.,
Estey, 1996), thereby making the con?icting
aspects of the resolution process more salient.
It is widely recognized in professional and aca-
demic literature that audit decisions are subject to
con?icting in?uences, in particular between pro-
fessionalism and commercialism (e.g., Bailey,
1995). The present paper aims to better under-
stand the role that the ?rm plays when auditors
make di?cult client-acceptance decisions in the
midst of such con?icting in?uences. Each of these
in?uences is conceived of as carrying its own rea-
soning—or logic of action (de Gaulejac, 1987)—
regarding the way decisions have to be made.
Speci?cally, I examine how the ?rm a?ects the
way auditors reconcile the professional and com-
mercial logics of action when they make di?cult
client-acceptance decisions.
Adapted from a current of research in organi-
zational analysis, the thesis of the paper is that the
?rm sets the stage for auditors’ decision-making
by con?guring its organizational components
(e.g., the ?rm’s partner-compensation scheme and
client-acceptance policies) in such a way that the
professional and commercial logics are under a
moderate level of tension. That is, to sustain
internal cohesiveness and avoid anarchy in decision-
making, the ?rm makes its organizational compo-
nents more re?ective of one of the logics. In so
doing, the ?rm sends auditors the signal that it
expects the logic to be signi?cantly in?uential
during decision-making. However, to prevent the
favoured logic from having a disproportionately
large impact on decisions (which may, at times,
not be bene?cial to the ?rm), the ?rm’s organi-
zational components are also to some extent
re?ective of the other logic of action, whose role is
to mitigate and constrain the favoured logic. As a
result of the ?rm’s organizational con?guration,
claims made by participants to in?uence the
660 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
decision process will tend to have more legitimacy
when they resonate with the logic favoured by the
?rm. However, participants inevitably have some
leeway in attempting to in?uence the decision
process di?erently, and the ?rm’s organizational
components indeed provide participants with a
legitimizing space to in?uence the decision process
in accordance with the constraining logic of action.
To assess the extent to which the paper’s thesis
is re?ective of organizational behaviour within
large professional partnerships, I conducted a ?eld
study at three Big Six Canadian ?rms, herein
referred to as ?rms ‘‘A’’, ‘‘B’’, and ‘‘C’’. The ?eld
study was chosen as the preferred mode of inves-
tigation since this method allows the investigator
to examine the conditions in which a phenomenon
of interest occurs (Yin, 1993, p. xi). The ?eld study
method is also likely to enhance the researcher’s
ability to build relationships based on trust with
interviewees, thereby making them more willing to
freely respond to questions (Merchant, Chow, &
Wu, 1995, p. 625). Building trustworthy relation-
ships with interviewees was critical to the present
research since auditors may be reluctant to dis-
cuss sensitive issues such as the ?rm’s practice-
development strategy and partner-compensation
scheme, as well as the client-acceptance decision
per se (Gendron, 2000).
2. Prior studies on the client-acceptance decision
Prior studies on the topic indicate that the cli-
ent-acceptance decision process is likely to be
in?uenced by formal organizational components,
namely, the ?rm’s practice-development strategy,
partner-compensation scheme, system of manage-
ment by objectives, and client-acceptance policies.
On the basis of ?eldwork data gathered in the
United States in four large accounting ?rms,
Asare, Hackenbrack, and Knechel (1994, p. 169)
found that the ?rm’s practice-development strat-
egy plays a major role in the client-acceptance
decision process, in that the extent of data collec-
tion and analysis in a given situation is closely linked
to the way auditors initially perceive the potential
client vis-a` -vis the ?rm’s practice-development
strategy. Speci?cally, data collection and analysis
are likely to be more intense for potential clients
whose ‘‘?t’’ with the ?rm’s strategy is initially
unknown to auditors than for potential clients
that are immediately perceived as ?tting or un?t-
ting the ?rm’s strategy. Asare et al. (1994, p. 172)
also underline that a ?rm’s partner-compensation
scheme may in?uence the decision process. Some
of their interviewees indeed mentioned that turn-
ing away a potential client is a di?cult choice for
many partners to make since successful recruiting
of clients is a criterion often used to determine
partners’ pro?t share. For their part, Dirsmith et
al. (1997, p. 15) found that, through informal
mentoring processes, a ?rm’s formal system of
management by objectives in?uences the way in
which auditors attribute meaning to their every-
day existence. These meanings inevitably come
into play during the client-acceptance decision
process. Finally, Gendron (2001, p. 304) found
that a ?rm’s client-acceptance policies in?uence
decision processes, notably by providing auditors
with an interpretative scheme and a vocabulary that
they frequently refer to when making decisions.
Prior research on client acceptance also indi-
cates that attitudes of decision-makers may in?u-
ence the decision process. In particular, Asare et
al. (1994) argue that partners who have recently
been involved in litigation may be more con-
servative when making decisions than they would
otherwise. In this paper, auditors’ attitudes are
considered to be an organizational component,
though attitudes do not have the same degree of
‘‘manageability’’ than the more formal organiza-
tional components, which can be shaped in spe-
ci?c ways. Indeed, the attitudes of a given
organizational member inevitably are a?ected by
the numerous interactions that s/he has with peo-
ple and texts, and many of these interactions
involve parties external to the organization (Cro-
zier & Friedberg, 1977, p. 210). However, the
organization is able to exert a certain in?uence on
the attitudes of its members, not least through
training and socialization procedures (Mintzberg,
1979), and through members’ continuous exposure
to the rhetoric underlying the ?rm’s formal organi-
zational components.
Prior studies therefore have brought to light
the possible e?ects of a series of organizational
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 661
components on the client-acceptance decision
process. We know very little, however, of the joint
in?uence that these components have on auditors’
decision processes (Zey, 1992, p. 24). Therefore,
the present paper sets out to contribute to the ?eld
of auditing research by investigating the following
research question:
What role does the accounting ?rm organi-
zation play in the occurrence of di?cult client-
acceptance decisions?
Although there are various ways to de?ne the
organization (Morgan, 1986), this paper assumes
that the ‘‘organization’’ comprises essentially
those organizational components that prior research
identi?ed as being likely to in?uence the client-
acceptance decision, namely, the ?rm’s practice-
development strategy, partner-compensation
scheme, system of management by objectives, client-
acceptance policies, and auditors’ attitudes.
3. The in?uence of the organization on decision-
making
To investigate the relationship between the
organization and auditors’ decision-making, I
draw on ideas developed by francophone
researchers in organizational analysis, who exam-
ined the in?uence of the organization on decision-
making in the context of business corporations
(e.g., de Gaulejac, 1987; Lemaitre-Rozencweig,
1986). Francophone organizational analysis is
basically aimed at developing a better under-
standing of the dynamics in organizations (Chan-
lat, 1994). It assumes that human action and
political processes play a key role in organi-
zational life, with activities and decisions within
the organization being subject to the in?uence of
organizational actors having di?erent interests
and adhering to di?erent logics. Also, these poli-
tical processes are viewed as being related to social
con?icts and ideological debates going on in the
surrounding world. These epistemological features
are signi?cantly distinct from those of other ?elds
of research in?uential in Anglo-Saxon organi-
zational analysis literature (Chanlat, 1994). For
example, by focusing on the idea that organi-
zations strive to adopt rituals and symbols widely
accepted in the institutional environment that
surrounds them, institutional theory neglects to a
signi?cant extent task accomplishment processes
within organizations (Donaldson, 1995, p. 119;
Perrow, 1985, p. 155).
1
In particular, francophone
organizational analysis provides a more compre-
hensive understanding of the role played by the
organization in decision processes.
According to this perspective, organizational
decisions bring into con?ict certain logics of
action that members have to reconcile during
decision-making, such as the ?nancial, commer-
cial, and technical logics (e.g., de Gaulejac, 1987,
p. 139). Each of these logics advocates a particular
way of making decisions. In this context, the term
‘‘logic of action’’ may be de?ned as a way of rea-
soning, or as an interpretative scheme that guides
organizational members when making decisions.
These schemes are conveyed and promulgated via
formal networks (e.g., the organization’s policy
manual, the press, the business literature) and
informal channels (e.g., discussions between col-
leagues). In particular, the logics of action are
produced and reproduced through organizational
members’ daily activities and decisions.
De Gaulejac (1987, p. 138) suggests that the
logics of action often con?ict regarding the manner
in which decisions are made, thereby generating
ambiguities within the organization. Organi-
zational members will tend to di?er in the way in
which the organization should respond and adapt
to these ambiguities—because of their diverse
experiences, cultures, and re?exive abilities
(Me´ le` se, 1990, p. 149). In this context, organi-
zational decisions may be conceived as arenas in
which organizational members seek to in?uence
the decision processes in accordance with the logic
they believe is proper to make decisions (Lemaitre-
Rozencweig, 1986). To that e?ect, organizational
members will use the resources at their disposal,
such as their own legitimated expertise to resolve
1
Institutional theory concepts and vocabulary have played
a signi?cant role in sociological studies of auditing—one of the
main theses developed by academics involved in this ?eld of
research being that auditing both imports and exports legiti-
macy (Power, 2000).
662 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
certain types of problems (Crozier & Friedberg,
1977, p. 83).
De Gaulejac (1987) also argues that if the logics
of action’s ambiguities were left unconstrained
within the organization, decision-making would
be characterized by intense and overt con?icts
between proponents of di?erent ways of reason-
ing. Internal con?icts would also be widespread if
the organization was providing members with
highly con?icting signals regarding the logics that
are expected to guide decision-making behaviour.
Ultimately, these con?icts could result in making
organizational activities di?cult to carry out and
ine?cient. Hence, to sustain internal cohesiveness,
the organization—through its organizational com-
ponents—may establish a system aimed at manag-
ing the contradictions between the logics of action.
De Gaulejac (1987) maintains that this system is
predicated on organizational components that are
being designed and shaped in a way that gives
prominence to certain logics of action. For exam-
ple, an organization’s information and control
system may emphasize certain types of data and
decisional criteria that are in accordance with a
given logic. By giving prominence to certain
logics, the organization signals that it expects
these favoured logics to be in?uential in decision-
making. This signal may become instilled over
time in members’ mind, through their frequent
exposure to the organization’s rhetoric. Instil-
lation also results from the routine act of making
decisions in accordance with the organization’s
favoured logics. In this manner, a signi?cant
number of organizational members come to share
a certain way of perceiving and understanding
events, thereby facilitating group decision-making
and reducing the likelihood of signi?cant con?ict
among decision-makers.
2
However, in giving prominence to certain logics
of action, the organization needs to be careful in
not completely overriding the other logics (de
Gaulejac, 1987, p. 132). Not only would it be illu-
sory to believe that members would comply in an
automatic way to the organization’s favoured
logics of action, but also, as argued by Lemaitre-
Rozencweig (1986, pp. 5 and 121), the organi-
zation may not bene?t in the long run when deci-
sions are made in a way that virtually leaves aside
certain logics. Through a detailed case study car-
ried out in a large European corporation involved
in the distribution industry, Lemaitre-Rozencweig
indeed shows how a speci?c logic of action (i.e.,
the purchasing logic) came to widely dominate
decision-making in the corporation. Her study also
brings to light some of the negative consequences of
this domination, such as sales data produced by the
company’s information system being scant, dis-
tributing warehouses becoming obsolete, and the
company’s ?nancial performance deteriorating.
The system that the organization may develop
to manage the logics of action therefore assumes
that the organization’s performance depends, to
some extent, on decisions being made under a
certain level of stress, that is, under tension. This is
why organizational components re?ect constrain-
ing logics of action, whose role is to limit, or
mitigate, the in?uence of the favoured logics. Cer-
tain ambiguities therefore are left hanging within
the organization. Although organizational mem-
bers may have di?culty to cope with ambiguity,
(a certain level of) ambiguity may bene?t the
organization. In other words, the contradictions
between logics of action do not constitute a dys-
function to eliminate (de Gaulejac, 1987, p. 141).
Rather they have to be mitigated.
The in?uence of the organization on decision
processes therefore is not deterministic. Crozier
and Friedberg (1977, p. 16) made it clear that
organizational members’ behaviour cannot be
dictated by the organization. It cannot be other-
wise since members are actors, autonomous agents
capable of calculation and manipulation, who can
adapt and invent responses depending on the cir-
cumstances (Crozier & Friedberg, 1977, p. 19).
In other words, members ineluctably have a cer-
tain room to manoeuvre in making decisions. As a
result, there is just simply no determinism between
the organization and the decisional processes. The
2
Of course, con?ict is not entirely controllable by the orga-
nization, and may erupt unexpectedly at any time (de Gaulejac,
1987, p. 138; Lemaitre-Rozencweig, 1986, p. 137; Me´ le` se, 1990,
p. 151). Nor would it be desirable for the organization to be
devoid of con?ict, since con?ict may be a source of renewed
leadership and ideas (de Gaulejac, 1987, p. 141). The point
made here is that attempts to circumscribe con?ict may bene?t
the organization.
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 663
organization rather a?ects the way in which organi-
zational members make decisions by de?ning the
context in which logics of action are reconciled
during decision-making (Lemaitre-Rozencweig,
1986). Speci?cally, the organization’s in?uence on
decisional processes is exerted through its organi-
zational components which, by being collectively
more or less supportive of a given logic of action,
a?ect the extent to which the logic may be sig-
ni?cant in decision-making. For example, claims
made during decision-making by participants are
likely to have more legitimacy when they resonate
with the logic(s) favoured by the set of organi-
zational components—although it is important to
note that participants have some leeway in
attempting to in?uence the decision process in
accordance with the other logics.
In short, the francophone organizational analy-
sis literature outlined above provides insights on
the in?uence of the organization on the way in
which actors make decisions in the midst of (often-
times) con?icting logics of action. This in?uence is
exerted through the organizational components,
which collectively constitute a champ de´ cisionnel
(Lemaitre-Rozencweig, 1986, p. 9), or decisional
?eld, that sets the stage for decision-making.
3
4. The in?uence of the ?rm on auditors’ client-
acceptance decisions
To better understand how the accounting ?rm
may a?ect auditors’ decision-making, I adapted
the theoretical developments described above to
re?ect the institutional environment of large pro-
fessional partnerships, as well as their actual
practices and formal structures (Ashton & Ash-
ton, 1995, p. 7; Greenwood et al., 1990). The
adaptation was mainly carried out by identifying
and de?ning, from a review of auditing literature,
two of the main logics of action that permeate
auditors’ activities, namely, the professional and
commercial logics.
For many years, perhaps indeed since the
beginning of the profession, tensions between the
professional and commercial logics of action have
been present within audit practice (Kirkham,
1992, p. 301; Radcli?e, Cooper, & Robson, 1994,
p. 602). The essence of the professional logic of
action may be inferred from Hall (1968), who
describes the set of attributes that generally are
considered in the sociology of professions as being
representative of ‘‘ideal’’ professionals. According
to this literature, ideal professionals strongly
identify with their profession, and consider the
main objective of their work to be that of serving
the public. Their driving source of motivation
when practising is the challenge to carry out
engagements. They also consider it important to
make decisions without external pressures from
clients or individuals outside of their profession.
It is worth noting that in the audit setting, inde-
pendence and the protection of the public are
central jurisdictional claims articulated and
defended by the profession to establish and
maintain its public legitimacy (Sikka & Willmott,
1995, p. 554).
The commercial logic contradicts the profes-
sional logic on many points. Commercial auditors
are described in auditing literature as striving to
make audit activities pro?table within a short to
middle term horizon, their driving motivator in
the workplace being remuneration (Humphrey &
Moizer, 1990, p. 232; Willmott, 1986, p. 576). As a
result, commercial auditors are concerned about
their ability to satisfy the needs of company man-
agers, who are viewed as those who largely in?u-
ence audit renewals (Hanlon, 1996). Commercial
auditors therefore tend to favour auditees’ inter-
ests, striving to be considered in the eyes of
management as business advisors in order to
3
From a longer-term perspective, organizational compo-
nents constitute a stake that organizational members may seek
to modify in line with their preferred logic, in order to bene?t
from a more permanent capacity to in?uence decisions
(Lemaitre-Rozencweig, 1986, p. 10). For example, members of
the engineering department of a corporation may attempt to
change the organization’s information and control system to
give more visibility to non-?nancial performance measures. If
they are successful, these members will bene?t from additional
rhetorical ammunition to in?uence a variety of operational and
strategic decisions in accordance with their preferred logic.
Organizational components are not static, and are constantly
subjected to pressures toward change. The present study, how-
ever, examines from a shorter-term perspective of analysis the
in?uence of the accounting ?rm organization on auditors’
decision processes.
664 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
obtain audit renewal and consulting engagements
(Kaplan, 1987, pp. 6–7).
Several means are used in the profession to
initiate auditors to the professional logic, and
remind them of its dictates. For example, auditors’
codes of ethics generally emphasize the chief
notions upon which the legitimacy of the auditing
profession is predicated, namely, public service
and independence (e.g., ICAA, 1997). Con-
currently, auditors are exposed to the commercial
logic through several sources, such as the business
literature that constantly stresses the importance
of the ‘‘bottom line’’, as well as the ?rms’ perfor-
mance evaluation reports that typically are based
on indicators such as ‘‘pro?ts per partner’’ (Cova-
leski et al., 1998). Auditors therefore have to
operate and make decisions in the midst of the two
logics of action, each of them carrying its own
representation of decision-making. These repre-
sentations oftentimes result in points of tension in
day-to-day decision processes.
Drawing on the theoretical developments
described in the previous section, I argue that the
?rm will seek to manage the contradictions
between the professional and commercial logics—
speci?cally by con?guring its organizational com-
ponents in a way that emphasizes one of the logics
while not leaving the other aside.
4
The rationale is
that the ‘‘stream’’ of decisions within the ?rm may
be better when decisions are made under a mod-
erate level of tension. For example, it seems un-
likely that a ?rm would thrive if members behave
in a way that disregards professionalism. Should
the public begin to doubt the quality of the service
provided, the audit ?rm’s reputation would be
damaged and the ?rm’s client base would begin to
erode. It is worth noting that excessive commerci-
alism is frequently underlined as one of the factors
that contributed to the failure of the accounting
?rm Laventhol & Horwath at the turn of the
1990s (e.g. Benoit, 1991; Weber, 1990). In a simi-
lar way, an audit ?rm is unlikely to thrive if
members behave as being totally disinterested in
pro?t—a minimum pro?tability threshold being
required for the ?rm to be able to pay wages and
other operating expenses.
The ?rm’s organizational components therefore
will put emphasis on one of the logics without
ignoring the other. For example, in the context of
the client-acceptance decision, while the ?rm’s
practice-development strategy, system of manage-
ment by objectives and client-acceptance policies
may be more re?ective of the professional logic,
the ?rm’s partner-compensation scheme may give
more weight to commercial criteria. By being
exposed to these somewhat contradictory signals,
and through the various ways in which the ?rm
can discipline its members (Covaleski et al., 1998),
?rm auditors may develop attitudes more con-
sistent with the professional logic while maintain-
ing some sensitivity to commercialism.
5
As a
result, professional claims in the ?rm will tend to
be given a relatively high degree of legitimacy
during decision-making. However, the ?rm’s
organizational components, which are to some
extent supportive of commercialism, provide par-
ticipants with anchoring points that could help to
strengthen pro?t-orientated claims during the
decision process. Again, the in?uence of the ?rm
on auditors’ decision-making is not deterministic;
rather it is limited to setting the stage under which
decisions are made.
Before going further, it is worth noting that the
present paper does not seek to develop an under-
standing of the ways in which organizational
components may be used to legitimize audit activ-
ities in the eyes of external stakeholders and ?rm
auditors. In particular, the paper does not take as
its central concern the examination of how di?er-
ences in the professional and commercial logics
draw accounting ?rms into legitimating activities,
seeking to provide stakeholders with coherent
4
McNair (1991) developed a related argument. The ambi-
guity pertaining to the cost versus quality dilemma is passed
on, via the ?rms’ management control system, to the individual
auditor who is expected to resolve the dilemma on a case-by-
case basis. What the present paper adds to McNair’s argument
is that the ?rm seeks to manage the level of ambiguity that its
local practitioners have to cope with by con?guring its organi-
zational components in a certain way.
5
Of course, auditors’ attitudes are also in?uenced by dis-
courses conveyed outside of the ?rm. However, discourses
conveyed within the ?rm signi?cantly a?ect the construction of
their attitudes.
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 665
accounts of both their professional and commercial
activities (Radcli?e et al., 1994, p. 602). While a
growing body of research shows that formal audit
devices are used to connect the audit practice with
culturally central values (Power, 2000), I argue
that organizational components also ineluctably
exert in?uence on auditors’ day-to-day decision-
making.
6
As well, the present paper does not
examine the di?erent and oftentimes con?icting
ways in which ?rm auditors use the terms ‘‘pro-
fessional’’ and ‘‘professionalism’’ in their everyday
lives. As underlined by Cooper, Hinings, Green-
wood, and Brown (1996, p. 644), a number of
commercial auditors conceive of their activities as
being ‘‘professional’’, arguing that in today’s
competitive world the essence of professional
work is to be businesslike and responsive to audi-
tees’ needs. In contrast, in the present paper the
term ‘‘professional’’ refers to a logic based on an
idealized, coherent and organized set of values
and ideas centred on the notion of serving the
public—and not practitioners’ ?nancial self-inter-
ests. Decisions made in audit ?rms are subject to
the in?uence of this set of ideas (as well as com-
mercial ideas) through the participation of human
actors in decision processes, each actor favouring
one of the two sets or maybe a balanced combi-
nation of both.
5. Method
5.1. Ideal types
To assess the extent to which the adaptation
developed above is re?ective of the role of the ?rm
in actual client-acceptance decisions, data were
gathered at three Canadian Big Six ?rms on client-
acceptance decisions and those organizational
components that prior studies identi?ed as likely
to in?uence the client-acceptance decision pro-
cess.
7
Due to space limitations, this paper reports
data collected in ?rms A and B. Data from ?rm C
(where the professional logic of action is domi-
nant, likewise to ?rm B) also supports the study’s
theoretical adaptation (Gendron, 1997).
Fieldwork and analysis used ideal types. An
ideal type for every organizational component
(Table 1) and of the client-acceptance decision
process (Table 2) were developed a priori for each
logic of action by relying on auditing literature.
These ideal types, in turn, were used to develop
interview instruments, and provided benchmarks
to which empirical data were compared to ?nd
indications of the logics’ in?uence. Via this
benchmarking process, the extent to which
organizational components are shaped in accor-
dance with the logics of action was assessed as well
as the extent to which these logics are re?ected in
the decisional processes. I used these assessments
to evaluate whether the role played by the ?rm in
decisional processes is consistent with the theore-
tical perspective outlined previously.
5.2. Data collection
The sources of information used in each ?rm to
gather data on organizational components and
client-acceptance decisions are described in
Table 3. Data were gathered mainly through
6
It is also worth noting that the paper’s central thesis—that
the ?rm sets the stage for decision-making—is not inconsistent
with institutional theory that argues that formal organizational
components often are loosely coupled (but not totally dis-
connected) to activities that actually take place within the
organization (e.g., Meyer and Rowan, 1977).
7
Another paper also derived from this research project centres
not on the relationship between organizational components and
auditors’ decision-making but on the client-acceptance decision
process per se (Gendron, 2001). Speci?cally, this other paper relies
mainly on data gathered on client-acceptance decision processes to
assess the extent to which they are re?ective of the professional
and commercial logics of action, as well as of the mechanistic and
organic logics. Interpretation of the ?ndings focuses on within and
between-?rm similarities and di?erences in decision processes. In
contrast, the present paper aims to better understand how the ?rm
in?uences auditors’ decision processes through a theoretical
adaptation of a stream of organizational analysis research. Field-
work data on the ?rms’ organizational components and client-
acceptance decision processes is used to assess the empirical valid-
ity of the theoretical adaptation. It is also worth noting that the
present paper does not deal with the mechanistic and organic
logics due to space constraints, and because in recent years
accountants, accounting academics, regulators, and business
journalists generally seem to be much more interested in issues of
professionalism and commercialism (e.g., Glover, 2001; Hanlon,
1994; Levitt, 2000; The Globe and Mail, 2002).
666 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
Table 2
Ideal types: client-acceptance decision process
Dimension Professional logic Commercial logic
Dominant source(s) of motivation in
accepting new clients
Challenge to apply auditing expertise
to new situations, and the possibility
of (further) developing the ?rm’s
reputation
Remuneration
Emphasis on key issues that are
claimed to be central to the
profession in accepting new
clients (i.e., ?rm sta?ng, expertise,
and independence)
Higher Lower (since these issues are
perceived by commercial auditors
as not being closely related to
pro?tability)
Main audit stakeholders about whom
participants are concerned
Public and third parties Potential client’s management
(who largely in?uences audit
renewals and is in charge of giving
consulting engagements to the ?rm)
Importance given to spin-o? work Lower (in order not to compromise
independence)
Higher (since spin-o? work is very
lucrative)
Audit pricing Charge for audit services is similar to
standard price (it is considered that
discounts depreciate the value of
auditing in the eyes of clients and society)
Charge for audit services is signi?cantly
discounted (it is considered that being
auditor facilitates the sale of other
services to auditees)
Table 1
Ideal types: organizational components
Organizational component Professional logic Commercial logic
Practice-development strategy
Audit pricing strategy Charge for audit services is similar to
standard price (it is considered that
discounts depreciate the value of auditing
in the eyes of clients and society)
Charge for audit services is signi?cantly
discounted (it is considered that being
auditor facilitates the sale of other services
to auditees)
Service di?erentiation strategy Centred on the ?rm’s reputation of
expertise
Centred on the development of close
relationships with auditees
Partner-compensation scheme
Main aspect emphasized in
determining partner compensation
Expertise (practice-development performance
is not emphasized in order not to compromise
partners’ independence)
Practice-development performance
(it is believed that emphasis on this aspect
increases partners’ sensitivity to pro?tability)
Main aspect emphasized in
promoting managers
Ability to apply knowledge Practice-development performance
System of management by objectives
Nature of objectives taken into account A broad range of long-term objectives are
?rstly considered
Short-term objectives related to pro?tability
and growth are ?rstly considered
Client-acceptance policies Centred on collegiality and protection of
third parties’ interests
Centred on pro?t considerations
Attitudes of participants
Identi?cation with the profession Higher Lower
Main objective of audit work Serving the public Making pro?ts within a short to middle
term horizon
Main source of motivation when practising Challenge to carry out audit engagements Remuneration
Importance given to independence Higher Lower
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 667
interviews, which are recognized as particularly
e?ective when the researcher is interested in in-
depth responses from a relatively small number of
interviewees (Palys, 1992, p. 166). The interviews
were semi-structured to allow interviewees to
express themselves according to their own systems
of meaning (Deslauriers, 1991, p. 36). Internal
documents describing the client-acceptance poli-
cies and decision aids were also examined, as well
as the ?rms’ descriptive brochures.
Tactics to reduce response bias and overcome
interviewees’ potential reluctance to freely provide
information were incorporated in the interviews.
Each interview began by describing the broad
objective of the research (i.e., to study the client-
acceptance decision). It was then mentioned that
complete anonymity would be provided to the
interviewee and to the ?rm, and that no other ?rm
member would examine the notes taken during the
interview. Importantly, interviewees were not
made aware that the professional and commercial
logics were being investigated. For example, inter-
viewees were not asked directly if the engage-
ment’s pro?tability mattered in making the
decision. Rather, indirect questions were asked,
such as what their dominant sources of motivation
were in accepting potential clients.
Also, the interviews were not tape-recorded since
the presence of a tape-recorder may have induced
interviewees not to provide certain information.
Rather the ‘‘memory-transcript method’’ was used
to record data (Deslauriers, 1991, p. 65). That is,
key aspects of the interviewee’s answers were noted
during each interview. Then, drawing on these notes,
a detailed recollection of the interviewwas written no
later than 12 hours after the interview.
An additional argument needs to be made in
order to establish further the validity of the data
provided by the interviewees. That is, it is nowa-
days not obvious that auditors will be system-
atically biased in interviews towards
demonstrating that their behaviour is consistent
with the professional logic. Today’s auditors are
continuously exposed to discourses of profession-
alism and commercialism. For example, several
recent documents from the Canadian Institute of
Chartered Accountants support auditors’ involve-
ment in providing management advisory services
to auditees, while stressing the importance of
the professional core values of objectivity and
integrity (Greenwood, Suddaby, & Hinings, in
press). Auditors may therefore be confused
about ‘‘appropriate’’ decision-making behaviour
with regard to issues of professionalism and
Table 3
Data-collection procedures (in each ?rm)
a
Component Source(s) of information
Practice-development strategy Interviews, with at least two individuals
Audit ?rm’s descriptive brochures
b
Partner-compensation scheme Interviews, with at least two individuals
System of management by objectives Interviews, with at least two individuals
Client-acceptance policies Chapter of the ?rm’s manual describing the
client-acceptance policies
Firm’s decision aid and corresponding instructions
Interviews, with at least two individuals
Attitudes of participants Interviews, with six or seven individuals
Client-acceptance decision process Interviews, with six or seven individuals
Background information on di?cult decisions, such as their main
characteristics and annual frequency
Decision process followed in a di?cult situation
a
In all, seven interviews were conducted in ?rm A and six in ?rm B. Most interviewees were partners. All interviewees were asked to
describe the client-acceptance process followed in a di?cult situation. All interviewees were also asked about their professional and commercial
attitudes. Some of the interviewees additionally were asked to provide information on the other organizational components.
b
In addition, ?rm B allowed me to examine the 1995 report of a consultative committee in charge of examining the operations of the ?rm.
668 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
commercialism. Furthermore, as shown later, the
results in ?rm A—where the decisional situations
are mainly consistent with the commercial logic—
demonstrate that contemporary auditors are not
systematically biased toward professionalism
when being interviewed.
Seven and six individuals were interviewed
respectively in ?rms A and B, most of them being
partners experienced in client-acceptance decisions.
In each ?rm, the contact partner selected the
interviewees. However, to mitigate selection-bias
risk, both contact partners were asked to provide
interviewees that varied in their length of service
with the ?rm. The interviews were conducted
mainly in o?ces located in Montre´ al and Toronto,
and their length varied from one to three hours. In
particular, each interviewee was asked to describe
the typical decision process that auditors follow
when facing a di?cult situation—both contact
partners being reluctant for me to examine speci?c
decisions. This requirement did not signi?cantly
a?ect the results since most interviewees answered
by describing a speci?c situation. Each interviewee
also was asked about her/his attitudes pertaining
to the professional and commercial logics of
action. Professional and commercial attitudes
were mainly drawn from the interviewees’ discus-
sion of the most important issues that characterize
contemporary auditing. Finally, in each ?rm at
least two of the interviewees were asked addition-
ally to provide information on the other organi-
zational components.
5.3. Data analysis
Data was analyzed by relying on qualitative
procedures (Huberman & Miles, 1991; Patton,
1990). Descriptions of decisions and other docu-
ments were coded to identify the main theme(s) of
each segment of data. Tables and ?gures were
developed to display data in a compressed and
ordered form. Conclusions emerged from com-
parisons of decisions and sites, and were veri?ed
by searching for contradictory data.
Speci?cally, qualitative procedures began during
?eldwork. Methodological notes were taken to
keep a record of the research procedures, the prob-
lems encountered and their solution. Theoretical
notes were made when transcribing interviews by
writing down ideas that might later be useful in
making sense of data (Deslauriers, 1991, p. 62).
Once data collection was almost completed, quali-
tative analysis focused on developing, for each
?rm, a site report describing the client-acceptance
decision process within its organizational context.
To that e?ect, all interview recollection notes and
other documents were coded to identify the main
theme(s) of each segment of data (Huberman &
Miles, 1991). Afterwards, to assess the extent to
which the organizational components and decisio-
nal situations are re?ective of the logics of action,
the coded material was examined and compared
with the ideal types to identify words, expressions
or ideas that are indicative of the logics’ in?uence.
Of course, the site reports were compared fre-
quently during their development to make sure
that there were no inconsistencies between them.
After being completed, each ?rm’s site report
was sent to the corresponding contact partner to
make sure that the anonymity of the ?rm and its
potential clients was protected. Each contact
partner was given one month to communicate any
concerns to me; no concerns were communicated
within the one-month period. Finally, the site
reports served as the basis for preparing a com-
parative report aimed at examining the issues
investigated from a between-?rm perspective (Yin,
1989, p. 134).
6. Fieldwork evidence
This section presents evidence gathered to assess
the extent to which the study’s theoretical adapta-
tion outlined in Section 4 is supported. Emphasis
is on ?eldwork data collected in ?rms B (where the
professional logic is dominant) and A (where the
commercial logic is mainly in?uential).
6.1. Firm B: being professionally orientated
Overall, ?rm B’s formal organizational compo-
nents are mostly in accordance with the profes-
sional logic—although these components are also
re?ective, to a certain extent, of the commercial
logic. In accordance with the professional logic,
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 669
the ?rm’s practice-development strategy does not
promote discounted audit fees. For example, one
interviewee mentioned that ?rm partners tend not
to tender for audit engagements when they believe
that the main reason for which the potential client
wants to change auditor is to reduce audit fees:
Auditing increasingly is perceived as a com-
modity. It is now seen like a can of soup;
people decide to purchase it by looking only
at the selling price. [. . .] The audit market is
now characterized by a lot of low-balling.
What a pity. In our ?rm, we don’t tender
when it’s obvious that the potential client
only wants to low-ball
8
(Partner).
Likewise, several interviewees underlined that
the ?rm strives not to charge audit fees that would
contribute to depreciate the value of auditing in
the eyes of clients and society. It therefore seems
that ?rm B auditors see adequate compensation as
a signi?cant attribute of professionalism. Accord-
ing to participants, an appropriate level of audit
fees signals to clients the quality of audit work; it
is also indicative of the extent to which society
recognizes the value of auditing. This perception
contrasts with classic literature on the sociology of
professions, which assumes that professionals are
dedicated to their work, in terms of accepting to
carry out professional tasks even when fewer
extrinsic rewards are available (Hall, 1968, p. 93).
The professional logic of action therefore is not
homogeneous across professions; it rather adapts
to individual contexts.
Interviewees also pointed out that the ?rm’s
strategy aims to make audit stakeholders aware of
its intention to develop audit practice by adhering
to standards that go beyond those of the profes-
sion—that ?rm partners actually are able to say
‘‘no’’ to management in order to protect share-
holders’ and third parties’ interests. In particular,
one interviewee mentioned that partners were
seeking to establish the ?rm’s reputation of rigor-
ousness in the eyes of lawyers and bankers, in
order for them to recommend the ?rm to busi-
nesses as a potential auditor when the opportunity
arises. It should be noted, however, that the ?rm’s
strategy is characterized by one particular com-
mercialistic aspect: the ?rm’s e?orts at di?er-
entiating itself from its competitors by providing
auditees with value-added services, such as man-
agement advisory services. One interviewee pointed
out that di?erentiation in the eyes of business
managers is almost inevitable given the competi-
tive environment in which audits take place:
In a competitive audit market, ?rms don’t
have the choice. They either low-ball or
emphasize di?erentiation. We do the latter.
Our growth is coming from the fact that we
strive to keep our existing clients; we want to
make them happy by going beyond their
expectations. We want to make our clients
aware that we are di?erent, thereby prevent-
ing them from making invitations to tender
(Partner).
Another interviewee speci?ed the nature of
those di?erentiating services:
Clients who want something more than
?nancial statements want advice. They want
us to help them with regard to their business
opportunities. For example, the ?rm may help
a client to develop activities in Asia by identi-
fying potential partners for a joint venture.
Clients such as this one want to bene?t from
our international network (Audit manager).
Firm B auditors therefore appear to give busi-
ness advice that go far beyond accountants’ typi-
cal jurisdiction. It is as if ?rm auditors were
seeking to persuade management that the audit
?rm is an obligatory passage point to business
success (Latour, 1987). Of course, as underlined
by Daly and Schuler (1998), independence con-
cerns about the ?rm’s dual role of auditor and
business advisor are ignored in participants’
discourse.
The ?rm’s strategy is also more re?ective of the
professional logic. Each partner’s compensation is
8
Quotations in this section should not be assimilated to
excerpts from verbatim interview transcripts. Rather, the quo-
tations are excerpted from the detailed recollections of the
interviews, which I wrote by drawing on ?eld notes taken dur-
ing the interviews.
670 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
tied to her/his performance with regard to four
criteria, namely, integrity, technical knowledge,
risk management, and practice development. One
interviewee mentioned that the weight given to the
fourth criterion is moderate: ‘‘Practice develop-
ment is not the most important variable.’’ Further,
to decide on the promotion of audit managers to
the rank of partner, decision-makers reportedly
take mainly into account the candidate’s record
with regard to risk management, human resources
management, and capacity to satisfy clients’ needs.
Practice-development performance plays only a
minor role in promoting audit managers since, as
mentioned by one interviewee, the ?rm expects
new business to be mostly generated by ‘‘white-
hair partners’’. However, the same interviewee
added that ‘‘It’s a plus when partner candidates
already have an ability to recruit new clients.’’ The
commercial logic therefore is not left aside from
the ?rm’s promotional practices.
Similarly, the ?rm’s system of management by
objectives is more in accordance with the profes-
sional logic. The ?rm’s system is predicated on the
same performance dimensions than the partner-
compensation scheme. Pro?tability and growth
objectives are not emphasized at the level of the
individual partner. As mentioned by one of them:
‘‘I don’t have a speci?c growth objective to meet
each year.’’ Although each o?ce has to meet
pro?tability and general growth targets, o?ces
play a signi?cant role in determining their targets
by ‘‘taking into account’’ general strategic guide-
lines provided by the national o?ce. It also seems
that the national o?ce is ‘‘relatively tolerant’’
when a local o?ce does not meet its annual
growth and pro?tability targets.
9
In terms of policy, about eleven pages of the
?rm’s manual are related to client acceptance, in
addition to the exhaustive policy documentation
relative to the ?rm’s computerized decision aid for
client acceptance.
10
Essentially, these policies spe-
cify that before the ?rm accepts new clients, part-
ners have to identify risks related to acceptance as
well as con?icts of interests with existing clients,
and take these risks and con?icts into consider-
ation when making a decision. In accordance with
the professional logic, client-acceptance policies
lay stress on the notions of peer consultation and
protection of third parties’ interests. Pro?t con-
siderations generally are not emphasized, although
policies require partners in charge of acceptance to
assess the projected economics of potential
engagements (e.g., overall recovery rate).
In summary, ?rm B’s formal organizational
components are more re?ective of the professional
logic, while still putting some weight on the com-
mercial one. Over time, by being exposed to the
?rm’s rhetoric, practitioners may develop attitudes
that re?ect the weight given by the ?rm to each of
the logics—although it is important to recognize
Table 4
Firm B: professional and commercial attitudes of interviewees
a
Dimension Interviewee
I II III IV V VI Total
P C P C P C P C P C P C P C
Identi?cation with the profession 5 1 1 1 1 1 2 10 2
Main objective of audit work 3 1 3 1 1 1 1 1 8 4
Main source of motivation 4 1 1 3 2 1 1 2 2 13 4
Independence 1 1 2 1 1 1 2 5
Total 13 4 5 1 4 2 5 3 4 2 2 3 33 15
a
Table 4 displays the number of indications of professional (P) and commercial (C) attitudes found in the transcript of each of the six
interviewees.
9
This high level of tolerance needs to be interpreted in the
context of the ?rm having grown substantially in the last few
years before ?eldwork—implying that the number of occur-
rences in which local o?ces actually did not meet their objec-
tives may have been relatively low.
10
More detail about the ?rm’s decision aid is provided in
Gendron (2001, p. 301).
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 671
that attitudes are subject to a variety of other
in?uences.
Tables 4 and 5 provide detail on interviewees’
attitudes, showing the number of professional and
commercial attitudinal indications that I found in
the interview recollection notes (Table 4), as well
as examples of attitudinal indications excerpted
from these notes (Table 5). Overall, interviewees’
attitudes are signi?cantly more indicative of pro-
fessionalism than commercialism. In accordance
with the professional logic, participants tended to
identify with the profession, for example by refer-
ring to the ‘‘good old days’’ when the profession
was predicated on the notion of character rather
than economic opportunism. Participants also
tended not to consider remuneration as the main
objective of audit work. In particular, several of
them were strongly disapproving of the practice of
low-balling. As well, most interviewees appeared
to be motivated by the challenge to carry out audit
engagements. However, participants showed sen-
sitivity to pro?t considerations a few times. For
example, one interviewee underlined the extent to
which consulting services are pro?table. Commer-
cial attitudes also were conveyed in sentences that
lay stress on the development of close relation-
ships with auditees, and the appropriateness of
becoming a good consultant in their eyes.
It therefore appears that ?rm B auditors have two
di?erent sets of attitudes. The ?rst attitudinal set,
which is dominant, conceives of audit clients as
shareholders and third parties who rely on ?nancial
statements. The second set—whose weight is lower
but nonetheless signi?cant—assumes that the cli-
ent is the auditee’s management team. Interest-
ingly enough, ?rm auditors seem to be able to go
back and forth easily between these two sets of
attitudes, without having signi?cant dissonance
feelings. Several interviewees indeed highlighted
that they are both independent and close to man-
agement. For example, one partner mentioned:
I think that I’ve always been able to be inde-
pendent. I’ve often told my clients things that
they don’t want to hear. However, at the
same time, I need to be relatively close to
management. For example, a CEO may think
of something at night in his living room. He
may then decide to call me immediately to
discuss it during one hour. You know, CEOs,
at their hierarchical level, often don’t have
anybody to discuss things with apart from
their auditors (Partner).
This quote suggests that this partner’s com-
mitment to the ?rm extends beyond the spatial
Table 5
Firm B: examples of attitudinal indications found in the interviews
Dimension Professional indication Commercial indication
Identi?cation with the profession ‘‘Firm X is not wholly responsible for the
billion(s) of dollars that plainti?s ask in
Court. There are users who did not read the
?nancial statements.’’ (defends another ?rm)
‘‘Unfortunately, it seems that all
the other large accounting ?rms
are low-balling.’’ (denigrates other
members of the profession)
‘‘When I began to work, we were really a
profession, very British indeed. Pro?t
considerations were important but not
dominant.’’ (conceives a ‘‘real’’ profession
as one that emphasizes character)
Main objective of audit work ‘‘The audit market is now characterized by a
lot of low-balling. What a pity.’’ (suggests that
pro?ts are not the main objective of audit work)
‘‘An important part of an auditor’s
professional life is to generate pro?ts.’’
Main source of motivation ‘‘I need to be proud of what I do in my
professional life.’’
‘‘You can’t imagine how consulting
is pro?table.’’
Independence ‘‘I’ve often told my clients things that they
don’t want to hear.’’
‘‘We emphasize the needs of
management. I think this is a
good thing to do.’’
672 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
premises of her/his o?ce, as well as beyond the
typical white collars’ working schedule. This is in
accordance with the ?ndings of Anderson-Gough
et al.’s (2001) study, which indicate that
auditors’ private-time boundaries are relatively
?exible and open to the ?rm’s in?uence. What
also emerges from this partner’s comments is a
peculiar self-conception of her/his identity, in
which s/he is provided with an ability to shift
roles, to change hats depending on the nature of
the circumstances that s/he faces. This ability to
shift roles may explain why auditors typically are
unlikely to agree with criticisms addressed by aca-
demics and other parties towards their indepen-
dence (e.g., Sikka & Willmott, 1995). Auditors
actually may believe that they are able to be inde-
pendent when providing signi?cant levels of man-
agement advisory services to auditees, and that
people who criticize them are not su?ciently
knowledgeable about the realities of audit practice
(Humphrey, Moizer, & Turley, 1992)—including
their ability to shift roles (allegedly) unprob-
lematically. This ability is re?ective of what Beck
(2000, p. 75) calls ‘‘inner mobility’’, that is to say
the capacity of individuals in today’s society to be
able to alter social roles easily, to be ‘‘both here
and there across frontiers at the same time’’.
It is therefore within an organizational context
that favours the professional logic of action, but is
to some extent supportive of commercialism, that
?rm B auditors make client-acceptance decisions.
Overall, data gathered in ?rm B on client-accep-
tance decisional processes supports the view that
the organization in?uences auditors’ decision-
making. Firm B interviewees provided descrip-
tions of six di?cult client-acceptance situations. In
general, these situations are more re?ective of the
professional logic—though the commercial logic
exerted in?uence on the decisional process. Two
situations are described below to provide more
detail on the nature of the decisional process, and
the in?uence of the logics of action.
11
These two
situations were chosen because they both ended in
rejection, and vary on the extent of prior knowl-
edge that participants had about the potential cli-
ent. Both situations occurred in Toronto.
According to the partner in charge of accep-
tance in the ?rst situation, ?rm partners already
had a relatively good knowledge of the potential
audit client. The ?rm had provided in the prior
years some non-audit services to the company,
and partners already were con?dent that the com-
pany’s top managers were ‘‘honest’’. The audit
engagement would have consisted of giving an
opinion on some information provided to the
company by another corporation, which was
already an audit client of the ?rm. The partner in
charge highlighted that the related annual fees
were signi?cant, and provided an indication of
their magnitude.
The partner in charge rapidly became concerned
of a possible con?ict of interest if the audit
engagement was accepted:
The problem is that if we found anything
wrong in the information provided by our
existing client—for example if we found that
the information provided is not reliable—
we’d feel very uncomfortable with our exist-
ing client. We’d be in a position where we
disagree with our own client. However, what
complicated the case is that we thought that
the possibility that something’s wrong in the
information provided was quite low, perhaps
only 1%. I was un-decided (Partner in charge
of acceptance).
The partner in charge then ‘‘needed to see what
others thought’’. S/he discussed the matter with
two other partners, one of them being in charge of
approving acceptance of risky clients in Canada.
They discussed whether it would be appropriate to
contact a top manager of their existing client to
see whether the corporation had any concerns
about the potential engagement. This scenario was
not pursued because partners felt that even if they
obtained approval from one of the corporation’s
top managers, the other top managers might not
become aware of her/his approval. In subsequent
discussions, the partner in charge raised the point
that although the likelihood of ?nding de?ciencies
in the information provided by the existing client
11
Some information is not disclosed in order to protect
anonymity of the potential clients.
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 673
was very small, the related consequences of ?nding
such de?ciencies would be signi?cant and detri-
mental to the ?rm. Agreeing on the signi?cance of
these consequences, the partners ?nally decided to
reject the engagement: ‘‘We thought and came to
the conclusion together to reject the engagement.’’
The partner in change emphasized that nobody in
the ?rm questioned ex post this decision.
In the other situation, an accountant who
worked previously for the ?rm contacted the
partner in charge of acceptance to assess whether
s/he would be interested in being appointed as
external auditor of a joint-venture business, in
which the ?rm’s ex-employee was part of the
management team. The joint venture was at the
developmental stage; it would have consisted of
using a new technology to transform a used pro-
duct into several components in the USA, to be
sold on the market. Market demand for these
components already was ?rmly established. The
company’s managers wanted to fund the project
through an initial public o?ering. The partner in
charge highlighted that reputable lawyers and
brokers were involved in the equity-?nancing pro-
ject, and that the ?rm’s ex-employee also had a
good reputation. No other accounting ?rm had
been approached by the joint-venture managers.
The partner in charge’s initial reaction about the
project was quite positive: ‘‘It was something I
wanted to do.’’ S/he and another audit partner
then began to collect information on the joint-
venture project to evaluate acceptance. Speci?-
cally, they had a meeting and follow-up discus-
sions with the joint-venture managers. They also
reviewed the feasibility study prepared by these
managers, and concluded that the underlying
assumptions were reasonable. However, they were
concerned about the extent to which the new
technology was reliable, and asked the joint-ven-
ture managers whether they would accept inde-
pendent engineers to evaluate the technology.
Managers agreed to the partners’ request.
The partner in charge then brie?y discussed the
potential engagement with the audit division head
partner. A few days later, the latter informed the
former that the ?rm’s partner in charge of
approving acceptance of risky clients in Canada
strongly objected to the engagement:
The audit division head partner told me [i.e. the
partner in charge of acceptance] that [s/he] [i.e.
the partner in charge of approving acceptance
of risky clients in Canada] exploded. The
technology was unproven, we were sure to be
sued if the business failed, the business did
not yet have environmental clearance to build
a plant—who would like to have this kind of
business in their backyard? No amount of
fees would be enough for that. No way
(Partner in charge of acceptance).
The partner in charge responded that s/he and
the other audit partner were still in the process of
collecting data and that their decision was not
made yet. The partner in charge then phoned the
partner in charge of approving acceptance of risky
clients in Canada:
Then I realized that there was nothing to do.
When the highest says no, it’s no. Having
contested [her/his] decision would have been
detrimental to my career. It’s interesting, a
professional decision then became a very
good illustration of organizational behaviour
(Partner in charge of acceptance).
The partner in charge then phoned the ?rm’s ex-
employee to make her/him aware of the ?rm’s
decision. One of the lawyers involved in the
equity-?nancing project, as well as a partner of a
smaller audit ?rm, later called the partner in
charge to inquire about the reasons for the ?rm’s
decision. The partner in charge concluded the
interview by underlining that—according to her/
his knowledge—the joint-venture project never
became reality.
12
Several indications of the in?uence of the pro-
fessional logic are found in the two situations. In
the second one, the partner in charge’s enthusiasm
12
This decisional situation seems to lend support to one of
the main arguments made by audit ?rms in attempting to per-
suade politicians of the need to change litigation legislation. It
is claimed that fear of litigation often prevents large audit ?rms
from accepting nominations as auditors of start-up businesses,
thereby making it di?cult for these businesses to ?nd ?nancing
to start their activities—even when these activities are likely to
be bene?cial to society (e.g., Estey, 1996, p. 9).
674 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
in describing the peculiar activities of the joint-
venture project suggests that a key motivator for
client acceptance was the challenge to carry out
new audit work. In the ?rst situation, decision-
makers gave prominence to a potential con?ict of
interest, which is an issue claimed to be central to
the auditing profession (e.g., CICA, 1996). Deci-
sion-makers in the ?rst situation also showed
concerns about the interests of a third party (i.e.,
the ?rm’s existing client). Furthermore, in both
situations, spin-o? work was not explicitly
brought up in the interviews, thereby suggesting
that participants did not emphasize it during the
decisional process. Pro?t considerations therefore
seem to have played a minor role in both deci-
sions. Nevertheless, in the ?rst situation, the part-
ner in charge showed some sensitivity to pro?t
considerations by referring on her/his own initi-
ative to the amount of fees that the engagement
would possibly generate each year to the ?rm,
thereby suggesting that the commercial logic of
action played a certain role in decision-making.
6.2. Firm A: emphasizing commercialism
In contrast with ?rm B, ?rm A’s formal organi-
zational components are mostly in accordance
with the commercial logic—though components
are to some extent re?ective of the professional
logic. The ?rm’s practice-development strategy is
centred on the development of close relationships
with auditees—the ?rm seeking to provide value-
added services from the point of view of corporate
managers. Also, the ?rm allows partners to dis-
count signi?cantly audit fees, particularly when a
potential client is perceived as having important
needs in terms of management advisory services.
The practice of low-balling is therefore ?rmly
established in the ?rm. However, the ?rm’s strat-
egy comprises one professional aspect, which is
that of seeking to establish the ?rm’s reputation of
expertise in a number of industries in the eyes of
other professionals (e.g., bankers and brokers)
and in?uential businesspeople. The expectation is
that these individuals will recommend the ?rm to
businesses searching for a new auditor.
The ?rm’s partner-compensation scheme also is
more re?ective of commercialism. The three most
important criteria used to determine partner com-
pensation are: ability to recruit new clients; prof-
itability of engagements carried out during the
year; and expertise (the latter being consistent with
professionalism, though). Further, promotion
from manager to partner depends signi?cantly on
the candidate’s record concerning practice devel-
opment. As mentioned by one interviewee recently
promoted to the partner status:
Recruiting new clients is an important pro-
motion criterion. I provided a lot of informa-
tion on it. You know, a manager cannot be
promoted if he is only a good auditor, sitting
most of the time in his o?ce. The ?rm wants
its partners capable of recruiting new clients
and selling a variety of services to existing
clients (Audit partner).
The ?rm’s system of management by objectives
also is more consistent with commercialism. As
highlighted by interviewees, annual objectives
related to growth and pro?tability play an impor-
tant role in managing local o?ces and in evaluat-
ing o?ce partners. Nevertheless, in accordance
with professionalism, partners are allowed to
invest time and resources to reach longer-term
objectives, which are not necessarily quanti?able.
Similarly, the ?rm’s client-acceptance policies
are more re?ective of the commercial logic.
Essentially, these policies—as well as the corre-
sponding assessment form that partners need to
complete before accepting any new client—specify
that decision-makers need to compare the risks
related to the acceptance of the client with the
economic bene?ts that acceptance would generate.
The assessment form requires partners to assess
the amount of audit and non-audit fees that would
be charged to the client if the audit engagement were
accepted. The form also comprises about 10 yes/no
questions aimed at assessing acceptance risks—
some of the questions are related to auditor inde-
pendence, in accordance with the professional logic.
Overall, ?rm A’s formal organizational compo-
nents are con?gured in a way that emphasizes
commercialism, without completely leaving aside
professionalism. The extent to which auditors’
attitudes are consistent with these con?gurative
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 675
signals is shown in Table 6. In accordance with the
commercial logic, interviewees generally con-
sidered that the provision of management advi-
sory services to auditees is not problematic, and
does not impair independence. As underlined by
one interviewee: ‘‘The closer the relationship with
the client, the better we can serve the client.’’
Another argued that the market would ‘‘know’’ it
if the extent of non-audit services provided by the
?rm to auditees was not acceptable, and penalize
the ?rm accordingly—the interviewee implicitly
assuming that the market is omniscient, infallible,
and able to exert in an unconstrained way dis-
ciplinary forces on economic entities. Several par-
ticipants also tended to consider remuneration as
their main workplace motivator, for example
when mentioning that: ‘‘The ideal CA needs to be
a good seller.’’ However, in accordance with the
professional logic, participants tended to identify
with the profession. For example, some inter-
viewees deplored that the cornerstone of the pro-
fession, ?nancial auditing, seems not to be valued
anymore by clients. Others highlighted that colle-
giality is an essential part of their practice.
Thus, auditors’ attitudes in ?rm A are sig-
ni?cantly in accordance with the ?rm’s formal
organizational components—being largely re?ec-
tive of the commercial logic, and to a minor extent
of the professional one. Drawing on the study’s
theoretical adaptation, it is expected that decisions
will re?ect to a large degree these con?gurative
and attitudinal weights. Data gathered in the ?rm
on client-acceptance decisional processes indeed
supports the view that the ?rm in?uences auditors’
decision-making. In general, the four descriptions
of di?cult client-acceptance situations that ?rm
A’s interviewees provided are more in accordance
with the commercial logic—though some indica-
tions of professional in?uences were found in the
data. Two of these situations—which occurred in
Montre´ al—are described below. Both situations
ended in acceptance, and vary on the extent of
prior knowledge that participants had about the
potential client.
In the ?rst situation, the CEO of a relatively
large manufacturing corporation informed the
partner in charge of acceptance that the corpor-
ation decided to change auditor, being unsatis?ed
with the range of services provided by its former
small accounting ?rm. Firm A was invited to sub-
mit a proposal, as well as two other accounting
?rms. The partner in charge already knew the CEO,
who was on the mailing list of ?rm A’s brochures.
The company was in a ‘‘turbulent’’ situation:
?nancial condition was ‘‘unstable’’; labour–man-
agement relations were strained; and operations
were in the process of being restructured. All these
features, according to the partner in charge, poin-
ted to the company having ‘‘enormous’’ needs in
terms of non-audit services. One tax and one con-
sulting partner subsequently validated this initial
assessment. The discussions they had with com-
pany managers shortly after contacts were estab-
lished showed that the company had
‘‘considerable’’ needs—notably in terms of process
reengineering and product re-orientation.
However, the partner in charge was initially sig-
ni?cantly concerned about the company’s ?nancial
Table 6
Firm A: professional and commercial attitudes of interviewees
a
Dimension Interviewee
I II III IV V VI VII Total
P C P C P C P C P C P C P C P C
Identi?cation with the profession 1 1 1 1 1 1 1 2 1 1 8 3
Main objective of audit work 1 2 1 1 3
Main source of motivation 2 1 1 1 2 3
Independence 2 1 1 1 2 1 1 1 1 9
Total 1 3 3 2 1 3 1 2 1 3 3 2 2 3 12 18
a
Table 6 displays the number of indications of professional (P) and commercial (C) attitudes found in the transcript of each of the seven interviewees.
676 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
condition, and decided to investigate further the
matter with another audit partner. They both
went several times to the premises of the potential
client to inquire about the company’s strategic
plans. During their investigation, the role of the
second partner consisted of playing the devil’s
advocate, examining the situation at hand from a
sceptical point of view, questioning the emerging
conclusions, and making sure that all signi?cant
aspects of the company’s ?nancial condition were
considered. The two partners eventually con-
cluded that the risk of ?nancial distress was
acceptable, given the limited number of investors
involved, the extent of non-audit services to be
provided, and partners’ con?dence that these
services would ultimately translate into the
company’s viability being improved.
In addition, the company’s bankers and lawyers
were also asked about top managers’ reputation.
Their comments provided the partner in charge
with the comfort that top managers were not
‘‘crooks’’. The partner in charge also made sure
that acceptance of the engagement would not cre-
ate a con?ict of interest at the ?rm level. A pro-
posal was sent to the potential client once the two
audit partners decided to accept the potential cli-
ent, and obtained the approval of higher-ranking
partners. The audit fee included in the proposal
was signi?cantly discounted given the extent of
non-audit services involved, and also ‘‘to signal
top managers that the ?rm wanted the engage-
ment’’. The company eventually selected ?rm A as
external auditor. Informally, the partner in charge
then came to a fee arrangement with the CEO: the
partner would be available almost anytime to the
client but, in return, fees would be paid promptly.
Again, this arrangement suggests that private-time
boundaries of partners’ life are permeable to
working imperatives—here, in the name of client
service and ?rm A’s pro?tability.
In the second situation, ?rm A already had prior
knowledge of the potential client, having provided
services to improve the ?nancial condition of one
of its subsidiaries. The potential client was a pri-
vately owned corporate group, involved in the
real-estate business. The opportunity for the ?rm
to be nominated auditor occurred when the parent
company appointed a new board director—a top
manager in another (unrelated) corporation whose
external auditor was ?rm A. The audit partner
already in charge of this unrelated corporation
eventually asked the new director whether the
real-estate corporate group would be interested in
changing auditors; the director appeared receptive
to the idea. Therefore, the client-acceptance deci-
sion process in this situation took place con-
currently with auditee’s top managers making the
decision to appoint new auditors.
The partner in charge underlined that accep-
tance initially was ‘‘tempting’’ since the corporate
group had signi?cant liquidities; the situation was
characterized by a ‘‘red ?ag’’, though, since most
liquidities had been transferred to a Caribbean
country. ‘‘Were the transfers legal?’’ The partner
began the decision process by obtaining a copy of
the ?nancial statements of all business units
belonging to the corporate group. He found that
the audit would involve many corporations with
di?erent ends of ?nancial year, concluding that:
‘‘Acceptance was very tempting since the audit
fees would be very high.’’ Also, one of the ?rm’s
higher-ranking partners asked the banker of the
potential client (whom he knew personally) about
the transfers of money. The banker speci?ed that
the transfers were legal, being part of an estate
planning strategy.
As a result of these preliminary investigations,
the partner in charge was ‘‘pre-committed’’ to
accept the potential client. A meeting was then
organized with the parent company’s top man-
agers to present the ?rm, in which ?rm partners
asked managers whether they agreed for the ?rm
to make a formal inquiry about the company
‘‘since we [i.e., ?rm partners] would like to work
with you [i.e., top managers]’’. This subsequent
inquiry did not generate any worrying ?nding in
spite of the numerous discussions that took place
among ?rm partners regarding, for example, the
credibility of their sources of information. It was
?nally decided to make a formal proposal to the
real-estate corporate group (which top managers
eventually accepted).
Several commercial in?uences characterize these
two situations. Decision-makers in the ?rst situ-
ation were in?uenced by the extent of non-audit
services that they expected the ?rmto provide to the
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 677
company. During the interview, the partner in
charge showed empathy with the company’s
?nancial problems, being committed to respond to
its (consulting) needs. Investors’ interests do not
appear to have played any signi?cant role in the
decision process. On the contrary, the partner in
charge referred only once to investors during the
interview, conceiving them as a threat to the ?rm,
that is to say as potential plainti?s that could sue
the ?rm in the event of the company’s bankruptcy.
Also, the proposed audit fees were signi?cantly
discounted, in the hope that it would increase the
likelihood of being appointed both auditor and
provider of non-audit services. In the second
situation, the extent of audit fees that the partner
in charge expected to collect from the corporate
group played a major role in the decision process.
Pro?t considerations therefore appear to be sig-
ni?cantly in?uential in ?rm A’s client-acceptance
decision processes. Nonetheless, in the ?rst situa-
tion, the partner in charge made sure that accep-
tance of the engagement would not place the ?rm
in a con?ict of interest, thereby suggesting that
professionalism also in?uences decision-makers.
It is also worth noting that in the ?rst situation
non-audit partners were involved before the client
was accepted to identify opportunities to provide
non-audit services. Their involvement was moti-
vated by the aim of di?erentiating the ?rm from
competitors and, of course, of sustaining the
accounting ?rm’s growth and pro?tability. How-
ever, involvement of non-audit partners at such an
early stage should not be interpreted as an indica-
tion that the ?rm was already committed to accept
the client. As mentioned by the partner in charge:
‘‘If I’d believe that the company would have failed
within the next few months, I’d never have
embarked in this.’’ Rather, early involvement of
non-audit partners is indicative of the extent to
which non-audit services play a signi?cant role—
but not an absolute one—in the ?rm’s client-
acceptance decision processes (and in the ?rm’s
service di?erentiation strategy).
6.3. Discussion
The four speci?c situations described above sug-
gest that in both ?rms di?cult client-acceptance
decisions are more than rituals aimed at legitimiz-
ing choices already made in advance. In every one
of these situations, decision-makers were con-
cerned signi?cantly by at least one issue at a cer-
tain point during the decision process. In addition,
when reconstructing the series of events that took
place in accepting or rejecting the potential client,
some interviewees mentioned on their own initia-
tive that they initially were uncertain about the
decision to make (as in ?rm B’s ?rst situation), or
that the engagement would have been rejected if
the information collected had indicated a sig-
ni?cant risk of ?nancial distress (as in ?rm A’s
?rst situation). Furthermore, as shown in ?rm B’s
second situation, high-ranking partners may
bypass local practitioners’ decisional process to
unilaterally impose their point of view. Thus, in
both ?rms, it was not obvious to participants at
the beginning of the decision process that the
potential client would ultimately be accepted or
rejected.
13
Firm A’s and B’s situations also provide insights
on the extent to which auditors rely on reputation
assessments in making the client-acceptance deci-
sion. As highlighted by Asare et al. (1994), these
assessments are mainly driven by auditors’ sensi-
tivity to the impact that clients may have on their
own ?rm’s reputation. For example, in ?rm B’s
second situation, participants relied on the repu-
tation of promoters’ lawyers and brokers to assess
the promoters’ reputation. In the other ?rm (?rst
situation), participants made phone calls to the
bankers and lawyers of the potential client to
assess integrity of management. This referential
network seems to be well developed as one inter-
viewee mentioned that it generally takes her/him
about 25 min to obtain information on the repu-
tation of a businessperson. Also, auditors in both
?rms sometimes hire investigating agencies to
enquire about the reputation of management—
especially when auditors have serious reputation
13
However, decisional situations that participants consider
easy may be more ritualistic. Several interviewees—especially in
?rm C—described situations that point to the ritualistic and
ceremonial nature of the decision process—which was mainly
aimed at documenting and justifying decisions already made in
advance. These ritualistic situations are not considered in this
paper.
678 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
concerns or when their referential network is
unable to provide su?cient information.
Not only do auditors draw on reputation infor-
mation to make client-acceptance decisions, but
they also construct reputations by accepting or
rejecting potential clients—as shown in ?rm B’s
second situation where a lawyer and an auditor
from another ?rm asked about the reasons that
led ?rm B to reject the engagement. As argued by
Sztompka (1999, p. 73), individuals often confer
trust or distrust to targets of trust (such as other
individuals, groups or systems) merely by imitat-
ing others’ trust decisions, especially when ‘‘sig-
ni?cant others’’ (i.e., individuals and groups that
are well considered) make these decisions. Not
being deemed trustworthy enough by a large audit
?rm to be admitted into its client base therefore
may have far-reaching consequences for a poten-
tial client. Auditors are thus involved actively in
what may be called a market for reputations. One
interviewee underlined that this market is becom-
ing increasingly complex with most potential cli-
ents being aware of the ?rms’ screening processes
and their reputational consequences, thereby
motivating a number of them to enter into
manipulative behaviour. For example, the same
interviewee added that potential clients sometimes
present the ?rm with false—though apparently
reliable—claims of trustworthiness, such as falsi-
?ed curriculum vitas and letters of reference.
My analysis also shows that in ?rm A, auditors’
decision-making behaviour is largely consistent
with the commercialization of accountancy thesis
developed and defended by several academics
(e.g., Brilo?, 1993; Cousins, Mitchell, Sikka, &
Willmott, 1998; Hanlon, 1994). In short, these
authors argue that auditors are now mainly com-
mercially driven, and that their commercial stance
is at the heart of several audit failures—auditors
being not powerful enough to oppose auditees’ top
managers for fear of losing audit and non-audit
fees. However, ?rm B’s client-acceptance decision
processes are inconsistent with the commercializa-
tion thesis. In this ?rm, auditors did not give a
signi?cant weight to pro?t considerations. Though
it remains to be seen whether ?rm B auditors are
still committed to professionalism once a new cli-
ent is accepted (Gendron, 2001, p. 306), ?rm B’s
client-acceptance decision processes cast doubt on
the generalizability of the commercialization thesis.
The paper’s main argument is that the ?rm sets
the stage for decision-making by con?guring its
formal organizational components in such a way
that the professional and commercial logics are
under a moderate level of tension. The data gath-
ered in ?rms A and B support this argument. In
each ?rm, the formal organizational components
give more weight to one of the logics, while being
to some extent re?ective of the other. Given the
paper’s theoretical adaptation about the role of
the ?rm in decision-making, these structural
weights are expected to have a corresponding
impact on auditors’ attitudes and decisions—
though it is important to recognize that the in?u-
ence of the ?rm is inevitably modulated by audi-
tors’ agency. Indeed, interviewees’ attitudes in
each ?rm are consistent with the structural weight
given to each of the logics, thereby suggesting that
the ?rm’s socialization process is particularly
e?ective at instilling ways of reasoning in auditors’
frames of reference. Also, client-acceptance deci-
sions in both ?rms tend to be re?ective of the
organizational components’ structural weights.
These ?ndings suggest that by giving promi-
nence to one logic of action, the ?rm’s formal
organizational components ultimately have had an
impact not only on auditors’ attitudes, but also on
decisional processes. By being exposed to the
components’ rhetoric, auditors may have devel-
oped interpretative schemes that are more con-
sistent with the ?rm’s favoured logic. Auditors
may also be aware that, if they want to succeed
within the ?rm, they should tend to make deci-
sions in accordance with the favoured logic.
However, the in?uence of the latter on client-
acceptance decisions is not absolute; indications of
the in?uence of the constraining logic indeed were
found in a number of situations. As such, the
in?uence of the constraining logic may be facili-
tated by the ?rm’s organizational components,
which provide some anchoring points for partici-
pants to advance claims that are consistent with
the constraining logic.
Finally, given the stakes related to di?cult client-
acceptance decisions, one may believe that the
decisional situations would have been characterized
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 679
by signi?cant con?icts between proponents of the
professional and commercial logics of action.
Management research on strategic decisions
indeed shows that strategic decision-making typi-
cally is a messy activity around which multiple
groups with con?icting interests tend to content
(Dent, 1990, p. 8). However, the interviewees pro-
vided me with descriptions of decisional situations
that do not bring to light signi?cant con?icts
between decision-makers—?rm B’s second situ-
ation being the exception. Rather, the descriptions
of decisional situations tend to be consistent with
a representation of decision-making in which
decisions are made in a relatively harmonious
way, and in which the search and collective
assessment of information play a central role. I
argue that this low level of con?ict is in accor-
dance with the paper’s theoretical argument con-
cerning the role of the ?rm in auditors’ decisions.
Indeed, if the ?rm is e?ective through its organi-
zational components at shaping auditors’ mindset,
then it is sensible to believe that decision-making
will not be an arena permeated with intense con-
?icts between upholders of di?erent logics. That
is, by being exposed to organizational components
that give a major weight to one logic and a minor
weight to the other, ?rm auditors may have come
through socialization processes to share the same
ways of reasoning, thereby limiting the emergence
of con?icts between decision-makers.
14
7. Conclusion
According to Power (1995, p. 317), we know
very little about auditing in its organizational
context. However, a growing number of studies
that seek to probe into the organizational func-
tioning of audit ?rms have been published recently
(Hopwood, 1996, p. 218). My research lies within
this research tradition, seeking to better under-
stand the role of the accounting ?rm organization
in decision processes, more speci?cally how the
?rm a?ects the way in which the professional and
commercial logics of action are mediated and
re?ected in client-acceptance decision processes.
Large Canadian accounting ?rms agreed to parti-
cipate in the ?eld research, thereby allowing me to
look beneath the surface of audit practice into the
‘‘black box’’ (Power, 1994, p. 304).
Of course, this study is inevitably characterized
by limitations. First, the ideal-type apparatus used
to analyze interview transcripts and documents is
predicated on a series of dimensions aimed at
putting into light di?erences—not similarities—in
the in?uence exerted by the logics of action on
organizational components and decisional pro-
cesses. The data displayed in the tables may
therefore overstate di?erences about the impact
that logics of action have on organizational com-
ponents and decisional processes. The results
should be interpreted in a relative rather than
absolute way. Second, the ?ndings are inescapably
reliant on the quality and comprehensiveness of
the data collected. In this respect, it is worth
underlining that data collection was limited due to
the ?rms’ participation requirements. The ?rms
did not allow me to interview all decision-makers
involved in each client-acceptance situation, nor to
examine the corresponding documentation. The
descriptions of decisional situations therefore are
unlikely to be as comprehensive as they could have
been. Nonetheless, several steps were taken to
increase the reliability of the ?eld study. Complete
anonymity was provided to the ?rm and the
interviewees who, furthermore, were not made
aware that the professional and commercial logics
of action were being investigated. Interviews also
were not recorded. Third, since data collection
was completed in Big Six o?ces located in the two
largest cities of Canada, readers should be careful
before generalizing the results to other settings.
For example, in Big Six o?ces located in smaller
cities, signals from the ?rm’s organizational com-
ponents may a?ect auditors’ mindset di?erently
(e.g., ?rm policies issued by the national o?ce
may be perceived as being more applicable to
practitioners in large-city o?ces). Smaller-city
auditors may also have a relatively distinct under-
standing of their market environment, thereby
14
The signi?cant lack of comfort that auditors frequently
feel when faced with a di?cult situation is also likely to facil-
itate group decision-making, the position of each participant
being, to a certain extent, negotiable. Interviewees indeed often
mentioned that they were undecided and signi?cantly uncom-
fortable at the beginning of the decisional process.
680 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
possibly altering the client-acceptance decision
process. Future research may investigate the extent
to which the theoretical adaptation developed in
the present study is applicable to other settings.
Generally speaking, this paper provides insights
into the ?rms’ organizational processes used to
accommodate the con?icts and contradictions that
permeate auditors’ environment (Humphrey &
Moizer, 1990, p. 235). It is especially shown that
the ?rm’s discretion in in?uencing behaviour is
limited to setting the stage where decisions are
made, the ?rm’s organizational components
jointly operating as a system aimed at putting the
professional and commercial logics of action
under a moderate level of tension. By favouring
one of the logics when structuring its organi-
zational parameters, the ?rm aims to prevent
decision-making from being erratic and punc-
tuated with many con?icts between participants.
However, organizational components also re?ect
to some extent the other logic since the ‘‘stream’’
of decisions within the ?rm may be better when
the other logic constrains the in?uence of the
dominant one. Thus, although the two logics of
action con?ict over many points, they are para-
doxically complementary, since it is from their
(moderate) opposition that balance may be
reached during decision-making.
In fact, an important implication of this paper is
to highlight the principle of ‘‘complementarity
within contradiction’’, and to illustrate how it is
re?ected in the ?rms’ decisional processes and
organizational components. In an Accounting,
Organizations and Society’s special issue devoted
to auditing, Hopwood (1996, p. 217) wonders why
the rhetorics of commercialism and professional-
ism are still promoted side by side in many parts
of the world. In this paper, I argue that it is to the
advantage of the ?rm to perpetuate such contra-
dictory rhetorics via its organizational compo-
nents, which are precisely aimed at (loosely)
regulating the coexistence of the rhetorics.
The principle of complementarity within con-
tradiction is in accordance with a theme that has
begun to appear in the professional and academic
literature, that is to say, that con?icting logics are
probably unavoidable in any human organization,
and are not necessarily unhealthy since, when
properly played out, they provide an additional
opportunity to challenge decisions (e.g., Indepen-
dent Review Panel on Modernization of Comp-
trollership in the Government of Canada, 1997,
p. 32; Van de Ven, Polley, Garud, & Venkatara-
man, 1999). Future research could further investi-
gate this theme, exploring in more detail, for
example, the relationship between a ?rm’s perfor-
mance and decisional processes being made under
a moderate level of stress between logics of action.
Future research could also examine, via histor-
ical analysis, the process in which the ?rms’ organi-
zational components are shaped with regard to the
two logics of action. Although data collection in
the present study concentrated on the in?uence of
organizational components on recent and speci?c
decisions, indications were found that the weight
given to each logic by the ?rm’s organizational
components varies over time.
15
Organizational
components are not static and members may
attempt to change the structural weight given to
the logics to bene?t from a longer-term capacity to
in?uence decisions. Future research could examine
the conditions under which transformations of an
audit ?rm’s organizational components took
place, and investigate how actors tried to modify
components in accordance with their own situated
interests. Further research also is needed on the
?rms’ socialization processes. The present paper
indeed shows that attitudes of ?rm auditors are
largely re?ective of the respective weights given to
the professional and commercial logics of action
by the ?rm’s formal organizational components,
thereby pointing to the e?ectiveness of the ?rm’s
socialization processes. Although some research
has been conducted on large ?rms’ socialization
processes (e.g., Anderson-Gough et al., 1998; Dir-
smith & Covaleski, 1985), much more work is
needed to develop a thorough understanding of
the processes used to construct identities of ?rm
auditors (Fogarty, 1992).
15
For example, some interviewees in ?rm C mentioned that
many partners, especially those who were promoted to partner
status long ago (when the partner-compensation scheme was
di?erent and more professionally orientated), ?nd it di?cult
to meet the commercial requirements of the current partner-
compensation scheme.
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 681
Moreover, audit researchers could use the ideal
types developed in the present paper to examine
how logics of action are mediated and re?ected in
other types of audit decisions, and the role that the
?rm plays in the decisional process. In particular,
some interviewees underlined that retention deci-
sions should be the subject of more academic
investigations since these decisions are often more
di?cult to make than client-acceptance decisions.
As underlined by one partner:
One needs to have balls to say to a current
client, ‘‘No, I don’t want to audit your cor-
poration anymore.’’ In contrast, when it
comes to the initial client-acceptance decision,
it is not di?cult to turn away a potential cli-
ent. I just have to say: ‘‘I don’t have the
time,’’ or ‘‘I don’t have the speci?c expertise.’’
I can’t say this when I want to turn away an
existing client. I think that one of the main
challenges of the profession in the following
years is to cope adequately with the retention
decision (Firm B audit partner).
Therefore, concerns related to justifying rejec-
tions—not only in the eyes of the client but also in
the eyes of peers of the partners who initially
accepted the client—may play a signi?cant role in
the retention decision, thereby possibly a?ecting
the ?rms’ organizational components and the
ways in which logics of action exert in?uence on
decision-making. The ideal types may also be used
to examine decisions made within the ?rms’ lines
of services other than auditing. In particular, these
decisions may be characterized by functional con-
?icts between auditors and other specialists having
di?erent ways of reasoning (Goodridge, 1991,
p. 75). Although the accounting profession is
experiencing important changes—some Big Five
?rms even describing themselves as multi-
disciplinary ?rms instead of accounting ?rms
(Greenwood et al., in press)—current knowledge
on Big Five’s activities in lines of services other
than auditing is considerably limited.
In conclusion, the ?rm plays a crucial role in
auditors’ decision-making by setting the stage for
decision-making, speci?cally by con?guring its
organizational components in such a way that the
professional and commercial logics are under a
moderate level of tension. Though it may be to the
advantage of participants to make decisions in
accordance with the ?rm’s favoured logic, partici-
pants will ?nd within the ?rm some resonance for
claims that convey a di?erent way of making
decisions. It may be argued, therefore, that the
?rm and auditors’ decision-making are inex-
tricably linked, thereby constituting a challenge in
terms of external validity to auditing experimental
researchers. Not only is this di?cult to reproduce
in an experimental design the context in which
subjects usually act, but also the nature of experi-
mental designs is centred on rigorously reducing
subjects’ agency.
Acknowledgements
This paper is based on my dissertation at Uni-
versite´ Laval. I thank the members of my dis-
sertation committee, namely, Jean Be´ dard (Chair),
Maurice Gosselin, and Maurice Landry. I also
acknowledge the comments provided by David
Cooper, Michael Gibbins, Joane Martel, Keith
Robson, Steven Salterio, Roy Suddaby, and two
anonymous reviewers. Special thanks to the Fonds
pour la Formation de Chercheurs et l’Aide a` la
Recherche (FCAR) for ?nancial assistance.
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doc_581806076.pdf
The objective of this research is to better understand the role that the accounting firm organization plays when
auditors make difficult client-acceptance decisions in the midst of conflicting influences—specifically between the professional
and commercial ‘‘logics of action’’. The investigation was conducted via a field study at three Big Six firms
located in Canada. The main argument that is developed in the paper is that the firm sets the stage for auditors’ decisionmaking
by making its formal organizational components (e.g., the firm’s partner-compensation scheme and decisionmaking
policies) more reflective of one of the two logics, thereby establishing and helping reproduce certain patterns of
order and consistency within the firm.
On the role of the organization in auditors’
client-acceptance decisions
Yves Gendron*
School of Business, University of Alberta, Edmonton, AB, Canada T6G 2R6
Abstract
The objective of this research is to better understand the role that the accounting ?rm organization plays when
auditors make di?cult client-acceptance decisions in the midst of con?icting in?uences—speci?cally between the pro-
fessional and commercial ‘‘logics of action’’. The investigation was conducted via a ?eld study at three Big Six ?rms
located in Canada. The main argument that is developed in the paper is that the ?rm sets the stage for auditors’ decision-
making by making its formal organizational components (e.g., the ?rm’s partner-compensation scheme and decision-
making policies) more re?ective of one of the two logics, thereby establishing and helping reproduce certain patterns of
order and consistency within the ?rm. However, the ?rm’s organizational components are also to some extent re?ective
of the other logic, thereby providing decision-makers with a legitimizing space to in?uence the decision process di?erently. I
present ?eldwork data that is consistent with the paper’s argument. # 2002 Elsevier Science Ltd. All rights reserved.
1. Introduction
Since the 1970s, decision-making research in
auditing has relied heavily on the laboratory
experimental method (Solomon & Shields, 1995,
p. 172). Ashton and Ashton (1995, p. 9) maintain
that this line of inquiry has documented short-
comings of human judgement in the auditing set-
ting, generated insights on how these
shortcomings may be reduced or eliminated, and
helped to develop a better understanding of the roles
of knowledge and memory in auditors’ decision-
making. Nevertheless, some auditing academics
have been critical of the general direction of this
line of inquiry, arguing that the ?ndings do not
re?ect signi?cantly actual practice. For example,
Gibbins and Swieringa (1995, p. 242) note that most
audit studies have treated judgement problems as
separable from the organization of the accounting
?rm, and research participants have been treated
as independent actors. These methodological
assumptions are problematic since decisions in
audit settings are made typically by hierarchically
structured groups whose work is closely guided or
constrained by professional standards, ?rm poli-
cies and procedures, and decision support systems
(Libby & Luft, 1993; Solomon, 1987). While
recent laboratory studies have begun to include
organizational components in their experimental
designs, such inclusions have usually been done on
a one-component-at-a-time basis (Ashton & Ash-
ton, 1995, p. 22). Little research has examined the
in?uence of the ?rm on auditors’ decision pro-
cesses from a broader perspective. The objective of
this study is to better understand this in?uence.
The organizational setting in which most audit
engagements are carried out is the large profes-
sional partnership (Greenwood, Hinings, &
Brown, 1990, p. 725). These partnerships are
0361-3682/02/$ - see front matter # 2002 Elsevier Science Ltd. All rights reserved.
PI I : S0361- 3682( 02) 00017- X
Accounting, Organizations and Society 27 (2002) 659–684
www.elsevier.com/locate/aos
* Tel.: +1-780-492-2517.
E-mail address: [email protected]
owned by a relatively large number of partners
who, in addition to having some voting power, are
the ?rms’ key production workers, in charge of
recruiting new clients and providing services.
Rank-and-?le partners working at a ?rm’s various
local o?ces therefore have signi?cant power over
their work (Barrett, Cooper, & Jamal, 2001;
Freidson, 1986, p. 213). For their part, admini-
strative partners at a ?rm’s national o?ce assume
the co-ordination and control of activities within
the ?rm through various organizational com-
ponents, such as the ?rm’s partner-compensation
scheme and decision-making policies. However,
local practitioners may resist administrative part-
ners’ e?orts at overseeing their practice (e.g., Car-
penter, Dirsmith, & Gupta, 1994). Local o?ces’
decisions therefore constitute an arena in which
the perspectives of local practitioners and those of
administrative partners may clash. In spite of
practitioners’ resistance, research has shown that
organizational components may have a long run
socializing impact on local practitioners’ mindsets
(Covaleski, Dirsmith, Heian, & Samuel, 1998).
For example, through devices such as time bud-
gets, local auditors tend to develop particular
forms of time-consciousness that signi?cantly
a?ect their identity and decision-making beha-
viour (Anderson-Gough, Grey, & Robson, 2001).
In brief, auditors’ decisions are made in a complex
organizational setting, in which issues of profes-
sional autonomy, career advancement, policy-
making, and socialization intermingle.
This paper examines the relationship between
the accounting ?rm organization and auditors’
decision-making within the context of a type of
decision that auditors claim is crucial to their
practice, namely, the di?cult client-acceptance
decision (e.g., CICA, 1996, p. 5). According to The
Economist (1995, p. 62), auditors tend to be selec-
tive about audit engagements, especially at the
time of initial acceptance, in an attempt to miti-
gate the potential for lawsuits that signi?cantly
increased since the turn of the 1990s. In this
atmosphere, auditors’ rationale when making the
client-acceptance decision is that they are better
able to avoid lawsuits when rejecting potential cli-
ents for which available information suggests high
potential for litigation (Hall & Renner, 1991).
However, the decision to reject a potential client
may be di?cult to make since this option contra-
dicts the pressures that are exerted upon partners
to contribute to the growth of their ?rm (Be´ rard,
1994; Dirsmith, Heian, & Covaleski, 1997, p. 12).
Among all client-acceptance decisions, this inves-
tigation was restricted to those that auditors con-
sider as di?cult. These decisions allegedly have the
potential to jeopardize the ?rms’ survival (e.g.,
Estey, 1996), thereby making the con?icting
aspects of the resolution process more salient.
It is widely recognized in professional and aca-
demic literature that audit decisions are subject to
con?icting in?uences, in particular between pro-
fessionalism and commercialism (e.g., Bailey,
1995). The present paper aims to better under-
stand the role that the ?rm plays when auditors
make di?cult client-acceptance decisions in the
midst of such con?icting in?uences. Each of these
in?uences is conceived of as carrying its own rea-
soning—or logic of action (de Gaulejac, 1987)—
regarding the way decisions have to be made.
Speci?cally, I examine how the ?rm a?ects the
way auditors reconcile the professional and com-
mercial logics of action when they make di?cult
client-acceptance decisions.
Adapted from a current of research in organi-
zational analysis, the thesis of the paper is that the
?rm sets the stage for auditors’ decision-making
by con?guring its organizational components
(e.g., the ?rm’s partner-compensation scheme and
client-acceptance policies) in such a way that the
professional and commercial logics are under a
moderate level of tension. That is, to sustain
internal cohesiveness and avoid anarchy in decision-
making, the ?rm makes its organizational compo-
nents more re?ective of one of the logics. In so
doing, the ?rm sends auditors the signal that it
expects the logic to be signi?cantly in?uential
during decision-making. However, to prevent the
favoured logic from having a disproportionately
large impact on decisions (which may, at times,
not be bene?cial to the ?rm), the ?rm’s organi-
zational components are also to some extent
re?ective of the other logic of action, whose role is
to mitigate and constrain the favoured logic. As a
result of the ?rm’s organizational con?guration,
claims made by participants to in?uence the
660 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
decision process will tend to have more legitimacy
when they resonate with the logic favoured by the
?rm. However, participants inevitably have some
leeway in attempting to in?uence the decision
process di?erently, and the ?rm’s organizational
components indeed provide participants with a
legitimizing space to in?uence the decision process
in accordance with the constraining logic of action.
To assess the extent to which the paper’s thesis
is re?ective of organizational behaviour within
large professional partnerships, I conducted a ?eld
study at three Big Six Canadian ?rms, herein
referred to as ?rms ‘‘A’’, ‘‘B’’, and ‘‘C’’. The ?eld
study was chosen as the preferred mode of inves-
tigation since this method allows the investigator
to examine the conditions in which a phenomenon
of interest occurs (Yin, 1993, p. xi). The ?eld study
method is also likely to enhance the researcher’s
ability to build relationships based on trust with
interviewees, thereby making them more willing to
freely respond to questions (Merchant, Chow, &
Wu, 1995, p. 625). Building trustworthy relation-
ships with interviewees was critical to the present
research since auditors may be reluctant to dis-
cuss sensitive issues such as the ?rm’s practice-
development strategy and partner-compensation
scheme, as well as the client-acceptance decision
per se (Gendron, 2000).
2. Prior studies on the client-acceptance decision
Prior studies on the topic indicate that the cli-
ent-acceptance decision process is likely to be
in?uenced by formal organizational components,
namely, the ?rm’s practice-development strategy,
partner-compensation scheme, system of manage-
ment by objectives, and client-acceptance policies.
On the basis of ?eldwork data gathered in the
United States in four large accounting ?rms,
Asare, Hackenbrack, and Knechel (1994, p. 169)
found that the ?rm’s practice-development strat-
egy plays a major role in the client-acceptance
decision process, in that the extent of data collec-
tion and analysis in a given situation is closely linked
to the way auditors initially perceive the potential
client vis-a` -vis the ?rm’s practice-development
strategy. Speci?cally, data collection and analysis
are likely to be more intense for potential clients
whose ‘‘?t’’ with the ?rm’s strategy is initially
unknown to auditors than for potential clients
that are immediately perceived as ?tting or un?t-
ting the ?rm’s strategy. Asare et al. (1994, p. 172)
also underline that a ?rm’s partner-compensation
scheme may in?uence the decision process. Some
of their interviewees indeed mentioned that turn-
ing away a potential client is a di?cult choice for
many partners to make since successful recruiting
of clients is a criterion often used to determine
partners’ pro?t share. For their part, Dirsmith et
al. (1997, p. 15) found that, through informal
mentoring processes, a ?rm’s formal system of
management by objectives in?uences the way in
which auditors attribute meaning to their every-
day existence. These meanings inevitably come
into play during the client-acceptance decision
process. Finally, Gendron (2001, p. 304) found
that a ?rm’s client-acceptance policies in?uence
decision processes, notably by providing auditors
with an interpretative scheme and a vocabulary that
they frequently refer to when making decisions.
Prior research on client acceptance also indi-
cates that attitudes of decision-makers may in?u-
ence the decision process. In particular, Asare et
al. (1994) argue that partners who have recently
been involved in litigation may be more con-
servative when making decisions than they would
otherwise. In this paper, auditors’ attitudes are
considered to be an organizational component,
though attitudes do not have the same degree of
‘‘manageability’’ than the more formal organiza-
tional components, which can be shaped in spe-
ci?c ways. Indeed, the attitudes of a given
organizational member inevitably are a?ected by
the numerous interactions that s/he has with peo-
ple and texts, and many of these interactions
involve parties external to the organization (Cro-
zier & Friedberg, 1977, p. 210). However, the
organization is able to exert a certain in?uence on
the attitudes of its members, not least through
training and socialization procedures (Mintzberg,
1979), and through members’ continuous exposure
to the rhetoric underlying the ?rm’s formal organi-
zational components.
Prior studies therefore have brought to light
the possible e?ects of a series of organizational
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 661
components on the client-acceptance decision
process. We know very little, however, of the joint
in?uence that these components have on auditors’
decision processes (Zey, 1992, p. 24). Therefore,
the present paper sets out to contribute to the ?eld
of auditing research by investigating the following
research question:
What role does the accounting ?rm organi-
zation play in the occurrence of di?cult client-
acceptance decisions?
Although there are various ways to de?ne the
organization (Morgan, 1986), this paper assumes
that the ‘‘organization’’ comprises essentially
those organizational components that prior research
identi?ed as being likely to in?uence the client-
acceptance decision, namely, the ?rm’s practice-
development strategy, partner-compensation
scheme, system of management by objectives, client-
acceptance policies, and auditors’ attitudes.
3. The in?uence of the organization on decision-
making
To investigate the relationship between the
organization and auditors’ decision-making, I
draw on ideas developed by francophone
researchers in organizational analysis, who exam-
ined the in?uence of the organization on decision-
making in the context of business corporations
(e.g., de Gaulejac, 1987; Lemaitre-Rozencweig,
1986). Francophone organizational analysis is
basically aimed at developing a better under-
standing of the dynamics in organizations (Chan-
lat, 1994). It assumes that human action and
political processes play a key role in organi-
zational life, with activities and decisions within
the organization being subject to the in?uence of
organizational actors having di?erent interests
and adhering to di?erent logics. Also, these poli-
tical processes are viewed as being related to social
con?icts and ideological debates going on in the
surrounding world. These epistemological features
are signi?cantly distinct from those of other ?elds
of research in?uential in Anglo-Saxon organi-
zational analysis literature (Chanlat, 1994). For
example, by focusing on the idea that organi-
zations strive to adopt rituals and symbols widely
accepted in the institutional environment that
surrounds them, institutional theory neglects to a
signi?cant extent task accomplishment processes
within organizations (Donaldson, 1995, p. 119;
Perrow, 1985, p. 155).
1
In particular, francophone
organizational analysis provides a more compre-
hensive understanding of the role played by the
organization in decision processes.
According to this perspective, organizational
decisions bring into con?ict certain logics of
action that members have to reconcile during
decision-making, such as the ?nancial, commer-
cial, and technical logics (e.g., de Gaulejac, 1987,
p. 139). Each of these logics advocates a particular
way of making decisions. In this context, the term
‘‘logic of action’’ may be de?ned as a way of rea-
soning, or as an interpretative scheme that guides
organizational members when making decisions.
These schemes are conveyed and promulgated via
formal networks (e.g., the organization’s policy
manual, the press, the business literature) and
informal channels (e.g., discussions between col-
leagues). In particular, the logics of action are
produced and reproduced through organizational
members’ daily activities and decisions.
De Gaulejac (1987, p. 138) suggests that the
logics of action often con?ict regarding the manner
in which decisions are made, thereby generating
ambiguities within the organization. Organi-
zational members will tend to di?er in the way in
which the organization should respond and adapt
to these ambiguities—because of their diverse
experiences, cultures, and re?exive abilities
(Me´ le` se, 1990, p. 149). In this context, organi-
zational decisions may be conceived as arenas in
which organizational members seek to in?uence
the decision processes in accordance with the logic
they believe is proper to make decisions (Lemaitre-
Rozencweig, 1986). To that e?ect, organizational
members will use the resources at their disposal,
such as their own legitimated expertise to resolve
1
Institutional theory concepts and vocabulary have played
a signi?cant role in sociological studies of auditing—one of the
main theses developed by academics involved in this ?eld of
research being that auditing both imports and exports legiti-
macy (Power, 2000).
662 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
certain types of problems (Crozier & Friedberg,
1977, p. 83).
De Gaulejac (1987) also argues that if the logics
of action’s ambiguities were left unconstrained
within the organization, decision-making would
be characterized by intense and overt con?icts
between proponents of di?erent ways of reason-
ing. Internal con?icts would also be widespread if
the organization was providing members with
highly con?icting signals regarding the logics that
are expected to guide decision-making behaviour.
Ultimately, these con?icts could result in making
organizational activities di?cult to carry out and
ine?cient. Hence, to sustain internal cohesiveness,
the organization—through its organizational com-
ponents—may establish a system aimed at manag-
ing the contradictions between the logics of action.
De Gaulejac (1987) maintains that this system is
predicated on organizational components that are
being designed and shaped in a way that gives
prominence to certain logics of action. For exam-
ple, an organization’s information and control
system may emphasize certain types of data and
decisional criteria that are in accordance with a
given logic. By giving prominence to certain
logics, the organization signals that it expects
these favoured logics to be in?uential in decision-
making. This signal may become instilled over
time in members’ mind, through their frequent
exposure to the organization’s rhetoric. Instil-
lation also results from the routine act of making
decisions in accordance with the organization’s
favoured logics. In this manner, a signi?cant
number of organizational members come to share
a certain way of perceiving and understanding
events, thereby facilitating group decision-making
and reducing the likelihood of signi?cant con?ict
among decision-makers.
2
However, in giving prominence to certain logics
of action, the organization needs to be careful in
not completely overriding the other logics (de
Gaulejac, 1987, p. 132). Not only would it be illu-
sory to believe that members would comply in an
automatic way to the organization’s favoured
logics of action, but also, as argued by Lemaitre-
Rozencweig (1986, pp. 5 and 121), the organi-
zation may not bene?t in the long run when deci-
sions are made in a way that virtually leaves aside
certain logics. Through a detailed case study car-
ried out in a large European corporation involved
in the distribution industry, Lemaitre-Rozencweig
indeed shows how a speci?c logic of action (i.e.,
the purchasing logic) came to widely dominate
decision-making in the corporation. Her study also
brings to light some of the negative consequences of
this domination, such as sales data produced by the
company’s information system being scant, dis-
tributing warehouses becoming obsolete, and the
company’s ?nancial performance deteriorating.
The system that the organization may develop
to manage the logics of action therefore assumes
that the organization’s performance depends, to
some extent, on decisions being made under a
certain level of stress, that is, under tension. This is
why organizational components re?ect constrain-
ing logics of action, whose role is to limit, or
mitigate, the in?uence of the favoured logics. Cer-
tain ambiguities therefore are left hanging within
the organization. Although organizational mem-
bers may have di?culty to cope with ambiguity,
(a certain level of) ambiguity may bene?t the
organization. In other words, the contradictions
between logics of action do not constitute a dys-
function to eliminate (de Gaulejac, 1987, p. 141).
Rather they have to be mitigated.
The in?uence of the organization on decision
processes therefore is not deterministic. Crozier
and Friedberg (1977, p. 16) made it clear that
organizational members’ behaviour cannot be
dictated by the organization. It cannot be other-
wise since members are actors, autonomous agents
capable of calculation and manipulation, who can
adapt and invent responses depending on the cir-
cumstances (Crozier & Friedberg, 1977, p. 19).
In other words, members ineluctably have a cer-
tain room to manoeuvre in making decisions. As a
result, there is just simply no determinism between
the organization and the decisional processes. The
2
Of course, con?ict is not entirely controllable by the orga-
nization, and may erupt unexpectedly at any time (de Gaulejac,
1987, p. 138; Lemaitre-Rozencweig, 1986, p. 137; Me´ le` se, 1990,
p. 151). Nor would it be desirable for the organization to be
devoid of con?ict, since con?ict may be a source of renewed
leadership and ideas (de Gaulejac, 1987, p. 141). The point
made here is that attempts to circumscribe con?ict may bene?t
the organization.
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 663
organization rather a?ects the way in which organi-
zational members make decisions by de?ning the
context in which logics of action are reconciled
during decision-making (Lemaitre-Rozencweig,
1986). Speci?cally, the organization’s in?uence on
decisional processes is exerted through its organi-
zational components which, by being collectively
more or less supportive of a given logic of action,
a?ect the extent to which the logic may be sig-
ni?cant in decision-making. For example, claims
made during decision-making by participants are
likely to have more legitimacy when they resonate
with the logic(s) favoured by the set of organi-
zational components—although it is important to
note that participants have some leeway in
attempting to in?uence the decision process in
accordance with the other logics.
In short, the francophone organizational analy-
sis literature outlined above provides insights on
the in?uence of the organization on the way in
which actors make decisions in the midst of (often-
times) con?icting logics of action. This in?uence is
exerted through the organizational components,
which collectively constitute a champ de´ cisionnel
(Lemaitre-Rozencweig, 1986, p. 9), or decisional
?eld, that sets the stage for decision-making.
3
4. The in?uence of the ?rm on auditors’ client-
acceptance decisions
To better understand how the accounting ?rm
may a?ect auditors’ decision-making, I adapted
the theoretical developments described above to
re?ect the institutional environment of large pro-
fessional partnerships, as well as their actual
practices and formal structures (Ashton & Ash-
ton, 1995, p. 7; Greenwood et al., 1990). The
adaptation was mainly carried out by identifying
and de?ning, from a review of auditing literature,
two of the main logics of action that permeate
auditors’ activities, namely, the professional and
commercial logics.
For many years, perhaps indeed since the
beginning of the profession, tensions between the
professional and commercial logics of action have
been present within audit practice (Kirkham,
1992, p. 301; Radcli?e, Cooper, & Robson, 1994,
p. 602). The essence of the professional logic of
action may be inferred from Hall (1968), who
describes the set of attributes that generally are
considered in the sociology of professions as being
representative of ‘‘ideal’’ professionals. According
to this literature, ideal professionals strongly
identify with their profession, and consider the
main objective of their work to be that of serving
the public. Their driving source of motivation
when practising is the challenge to carry out
engagements. They also consider it important to
make decisions without external pressures from
clients or individuals outside of their profession.
It is worth noting that in the audit setting, inde-
pendence and the protection of the public are
central jurisdictional claims articulated and
defended by the profession to establish and
maintain its public legitimacy (Sikka & Willmott,
1995, p. 554).
The commercial logic contradicts the profes-
sional logic on many points. Commercial auditors
are described in auditing literature as striving to
make audit activities pro?table within a short to
middle term horizon, their driving motivator in
the workplace being remuneration (Humphrey &
Moizer, 1990, p. 232; Willmott, 1986, p. 576). As a
result, commercial auditors are concerned about
their ability to satisfy the needs of company man-
agers, who are viewed as those who largely in?u-
ence audit renewals (Hanlon, 1996). Commercial
auditors therefore tend to favour auditees’ inter-
ests, striving to be considered in the eyes of
management as business advisors in order to
3
From a longer-term perspective, organizational compo-
nents constitute a stake that organizational members may seek
to modify in line with their preferred logic, in order to bene?t
from a more permanent capacity to in?uence decisions
(Lemaitre-Rozencweig, 1986, p. 10). For example, members of
the engineering department of a corporation may attempt to
change the organization’s information and control system to
give more visibility to non-?nancial performance measures. If
they are successful, these members will bene?t from additional
rhetorical ammunition to in?uence a variety of operational and
strategic decisions in accordance with their preferred logic.
Organizational components are not static, and are constantly
subjected to pressures toward change. The present study, how-
ever, examines from a shorter-term perspective of analysis the
in?uence of the accounting ?rm organization on auditors’
decision processes.
664 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
obtain audit renewal and consulting engagements
(Kaplan, 1987, pp. 6–7).
Several means are used in the profession to
initiate auditors to the professional logic, and
remind them of its dictates. For example, auditors’
codes of ethics generally emphasize the chief
notions upon which the legitimacy of the auditing
profession is predicated, namely, public service
and independence (e.g., ICAA, 1997). Con-
currently, auditors are exposed to the commercial
logic through several sources, such as the business
literature that constantly stresses the importance
of the ‘‘bottom line’’, as well as the ?rms’ perfor-
mance evaluation reports that typically are based
on indicators such as ‘‘pro?ts per partner’’ (Cova-
leski et al., 1998). Auditors therefore have to
operate and make decisions in the midst of the two
logics of action, each of them carrying its own
representation of decision-making. These repre-
sentations oftentimes result in points of tension in
day-to-day decision processes.
Drawing on the theoretical developments
described in the previous section, I argue that the
?rm will seek to manage the contradictions
between the professional and commercial logics—
speci?cally by con?guring its organizational com-
ponents in a way that emphasizes one of the logics
while not leaving the other aside.
4
The rationale is
that the ‘‘stream’’ of decisions within the ?rm may
be better when decisions are made under a mod-
erate level of tension. For example, it seems un-
likely that a ?rm would thrive if members behave
in a way that disregards professionalism. Should
the public begin to doubt the quality of the service
provided, the audit ?rm’s reputation would be
damaged and the ?rm’s client base would begin to
erode. It is worth noting that excessive commerci-
alism is frequently underlined as one of the factors
that contributed to the failure of the accounting
?rm Laventhol & Horwath at the turn of the
1990s (e.g. Benoit, 1991; Weber, 1990). In a simi-
lar way, an audit ?rm is unlikely to thrive if
members behave as being totally disinterested in
pro?t—a minimum pro?tability threshold being
required for the ?rm to be able to pay wages and
other operating expenses.
The ?rm’s organizational components therefore
will put emphasis on one of the logics without
ignoring the other. For example, in the context of
the client-acceptance decision, while the ?rm’s
practice-development strategy, system of manage-
ment by objectives and client-acceptance policies
may be more re?ective of the professional logic,
the ?rm’s partner-compensation scheme may give
more weight to commercial criteria. By being
exposed to these somewhat contradictory signals,
and through the various ways in which the ?rm
can discipline its members (Covaleski et al., 1998),
?rm auditors may develop attitudes more con-
sistent with the professional logic while maintain-
ing some sensitivity to commercialism.
5
As a
result, professional claims in the ?rm will tend to
be given a relatively high degree of legitimacy
during decision-making. However, the ?rm’s
organizational components, which are to some
extent supportive of commercialism, provide par-
ticipants with anchoring points that could help to
strengthen pro?t-orientated claims during the
decision process. Again, the in?uence of the ?rm
on auditors’ decision-making is not deterministic;
rather it is limited to setting the stage under which
decisions are made.
Before going further, it is worth noting that the
present paper does not seek to develop an under-
standing of the ways in which organizational
components may be used to legitimize audit activ-
ities in the eyes of external stakeholders and ?rm
auditors. In particular, the paper does not take as
its central concern the examination of how di?er-
ences in the professional and commercial logics
draw accounting ?rms into legitimating activities,
seeking to provide stakeholders with coherent
4
McNair (1991) developed a related argument. The ambi-
guity pertaining to the cost versus quality dilemma is passed
on, via the ?rms’ management control system, to the individual
auditor who is expected to resolve the dilemma on a case-by-
case basis. What the present paper adds to McNair’s argument
is that the ?rm seeks to manage the level of ambiguity that its
local practitioners have to cope with by con?guring its organi-
zational components in a certain way.
5
Of course, auditors’ attitudes are also in?uenced by dis-
courses conveyed outside of the ?rm. However, discourses
conveyed within the ?rm signi?cantly a?ect the construction of
their attitudes.
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 665
accounts of both their professional and commercial
activities (Radcli?e et al., 1994, p. 602). While a
growing body of research shows that formal audit
devices are used to connect the audit practice with
culturally central values (Power, 2000), I argue
that organizational components also ineluctably
exert in?uence on auditors’ day-to-day decision-
making.
6
As well, the present paper does not
examine the di?erent and oftentimes con?icting
ways in which ?rm auditors use the terms ‘‘pro-
fessional’’ and ‘‘professionalism’’ in their everyday
lives. As underlined by Cooper, Hinings, Green-
wood, and Brown (1996, p. 644), a number of
commercial auditors conceive of their activities as
being ‘‘professional’’, arguing that in today’s
competitive world the essence of professional
work is to be businesslike and responsive to audi-
tees’ needs. In contrast, in the present paper the
term ‘‘professional’’ refers to a logic based on an
idealized, coherent and organized set of values
and ideas centred on the notion of serving the
public—and not practitioners’ ?nancial self-inter-
ests. Decisions made in audit ?rms are subject to
the in?uence of this set of ideas (as well as com-
mercial ideas) through the participation of human
actors in decision processes, each actor favouring
one of the two sets or maybe a balanced combi-
nation of both.
5. Method
5.1. Ideal types
To assess the extent to which the adaptation
developed above is re?ective of the role of the ?rm
in actual client-acceptance decisions, data were
gathered at three Canadian Big Six ?rms on client-
acceptance decisions and those organizational
components that prior studies identi?ed as likely
to in?uence the client-acceptance decision pro-
cess.
7
Due to space limitations, this paper reports
data collected in ?rms A and B. Data from ?rm C
(where the professional logic of action is domi-
nant, likewise to ?rm B) also supports the study’s
theoretical adaptation (Gendron, 1997).
Fieldwork and analysis used ideal types. An
ideal type for every organizational component
(Table 1) and of the client-acceptance decision
process (Table 2) were developed a priori for each
logic of action by relying on auditing literature.
These ideal types, in turn, were used to develop
interview instruments, and provided benchmarks
to which empirical data were compared to ?nd
indications of the logics’ in?uence. Via this
benchmarking process, the extent to which
organizational components are shaped in accor-
dance with the logics of action was assessed as well
as the extent to which these logics are re?ected in
the decisional processes. I used these assessments
to evaluate whether the role played by the ?rm in
decisional processes is consistent with the theore-
tical perspective outlined previously.
5.2. Data collection
The sources of information used in each ?rm to
gather data on organizational components and
client-acceptance decisions are described in
Table 3. Data were gathered mainly through
6
It is also worth noting that the paper’s central thesis—that
the ?rm sets the stage for decision-making—is not inconsistent
with institutional theory that argues that formal organizational
components often are loosely coupled (but not totally dis-
connected) to activities that actually take place within the
organization (e.g., Meyer and Rowan, 1977).
7
Another paper also derived from this research project centres
not on the relationship between organizational components and
auditors’ decision-making but on the client-acceptance decision
process per se (Gendron, 2001). Speci?cally, this other paper relies
mainly on data gathered on client-acceptance decision processes to
assess the extent to which they are re?ective of the professional
and commercial logics of action, as well as of the mechanistic and
organic logics. Interpretation of the ?ndings focuses on within and
between-?rm similarities and di?erences in decision processes. In
contrast, the present paper aims to better understand how the ?rm
in?uences auditors’ decision processes through a theoretical
adaptation of a stream of organizational analysis research. Field-
work data on the ?rms’ organizational components and client-
acceptance decision processes is used to assess the empirical valid-
ity of the theoretical adaptation. It is also worth noting that the
present paper does not deal with the mechanistic and organic
logics due to space constraints, and because in recent years
accountants, accounting academics, regulators, and business
journalists generally seem to be much more interested in issues of
professionalism and commercialism (e.g., Glover, 2001; Hanlon,
1994; Levitt, 2000; The Globe and Mail, 2002).
666 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
Table 2
Ideal types: client-acceptance decision process
Dimension Professional logic Commercial logic
Dominant source(s) of motivation in
accepting new clients
Challenge to apply auditing expertise
to new situations, and the possibility
of (further) developing the ?rm’s
reputation
Remuneration
Emphasis on key issues that are
claimed to be central to the
profession in accepting new
clients (i.e., ?rm sta?ng, expertise,
and independence)
Higher Lower (since these issues are
perceived by commercial auditors
as not being closely related to
pro?tability)
Main audit stakeholders about whom
participants are concerned
Public and third parties Potential client’s management
(who largely in?uences audit
renewals and is in charge of giving
consulting engagements to the ?rm)
Importance given to spin-o? work Lower (in order not to compromise
independence)
Higher (since spin-o? work is very
lucrative)
Audit pricing Charge for audit services is similar to
standard price (it is considered that
discounts depreciate the value of
auditing in the eyes of clients and society)
Charge for audit services is signi?cantly
discounted (it is considered that being
auditor facilitates the sale of other
services to auditees)
Table 1
Ideal types: organizational components
Organizational component Professional logic Commercial logic
Practice-development strategy
Audit pricing strategy Charge for audit services is similar to
standard price (it is considered that
discounts depreciate the value of auditing
in the eyes of clients and society)
Charge for audit services is signi?cantly
discounted (it is considered that being
auditor facilitates the sale of other services
to auditees)
Service di?erentiation strategy Centred on the ?rm’s reputation of
expertise
Centred on the development of close
relationships with auditees
Partner-compensation scheme
Main aspect emphasized in
determining partner compensation
Expertise (practice-development performance
is not emphasized in order not to compromise
partners’ independence)
Practice-development performance
(it is believed that emphasis on this aspect
increases partners’ sensitivity to pro?tability)
Main aspect emphasized in
promoting managers
Ability to apply knowledge Practice-development performance
System of management by objectives
Nature of objectives taken into account A broad range of long-term objectives are
?rstly considered
Short-term objectives related to pro?tability
and growth are ?rstly considered
Client-acceptance policies Centred on collegiality and protection of
third parties’ interests
Centred on pro?t considerations
Attitudes of participants
Identi?cation with the profession Higher Lower
Main objective of audit work Serving the public Making pro?ts within a short to middle
term horizon
Main source of motivation when practising Challenge to carry out audit engagements Remuneration
Importance given to independence Higher Lower
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 667
interviews, which are recognized as particularly
e?ective when the researcher is interested in in-
depth responses from a relatively small number of
interviewees (Palys, 1992, p. 166). The interviews
were semi-structured to allow interviewees to
express themselves according to their own systems
of meaning (Deslauriers, 1991, p. 36). Internal
documents describing the client-acceptance poli-
cies and decision aids were also examined, as well
as the ?rms’ descriptive brochures.
Tactics to reduce response bias and overcome
interviewees’ potential reluctance to freely provide
information were incorporated in the interviews.
Each interview began by describing the broad
objective of the research (i.e., to study the client-
acceptance decision). It was then mentioned that
complete anonymity would be provided to the
interviewee and to the ?rm, and that no other ?rm
member would examine the notes taken during the
interview. Importantly, interviewees were not
made aware that the professional and commercial
logics were being investigated. For example, inter-
viewees were not asked directly if the engage-
ment’s pro?tability mattered in making the
decision. Rather, indirect questions were asked,
such as what their dominant sources of motivation
were in accepting potential clients.
Also, the interviews were not tape-recorded since
the presence of a tape-recorder may have induced
interviewees not to provide certain information.
Rather the ‘‘memory-transcript method’’ was used
to record data (Deslauriers, 1991, p. 65). That is,
key aspects of the interviewee’s answers were noted
during each interview. Then, drawing on these notes,
a detailed recollection of the interviewwas written no
later than 12 hours after the interview.
An additional argument needs to be made in
order to establish further the validity of the data
provided by the interviewees. That is, it is nowa-
days not obvious that auditors will be system-
atically biased in interviews towards
demonstrating that their behaviour is consistent
with the professional logic. Today’s auditors are
continuously exposed to discourses of profession-
alism and commercialism. For example, several
recent documents from the Canadian Institute of
Chartered Accountants support auditors’ involve-
ment in providing management advisory services
to auditees, while stressing the importance of
the professional core values of objectivity and
integrity (Greenwood, Suddaby, & Hinings, in
press). Auditors may therefore be confused
about ‘‘appropriate’’ decision-making behaviour
with regard to issues of professionalism and
Table 3
Data-collection procedures (in each ?rm)
a
Component Source(s) of information
Practice-development strategy Interviews, with at least two individuals
Audit ?rm’s descriptive brochures
b
Partner-compensation scheme Interviews, with at least two individuals
System of management by objectives Interviews, with at least two individuals
Client-acceptance policies Chapter of the ?rm’s manual describing the
client-acceptance policies
Firm’s decision aid and corresponding instructions
Interviews, with at least two individuals
Attitudes of participants Interviews, with six or seven individuals
Client-acceptance decision process Interviews, with six or seven individuals
Background information on di?cult decisions, such as their main
characteristics and annual frequency
Decision process followed in a di?cult situation
a
In all, seven interviews were conducted in ?rm A and six in ?rm B. Most interviewees were partners. All interviewees were asked to
describe the client-acceptance process followed in a di?cult situation. All interviewees were also asked about their professional and commercial
attitudes. Some of the interviewees additionally were asked to provide information on the other organizational components.
b
In addition, ?rm B allowed me to examine the 1995 report of a consultative committee in charge of examining the operations of the ?rm.
668 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
commercialism. Furthermore, as shown later, the
results in ?rm A—where the decisional situations
are mainly consistent with the commercial logic—
demonstrate that contemporary auditors are not
systematically biased toward professionalism
when being interviewed.
Seven and six individuals were interviewed
respectively in ?rms A and B, most of them being
partners experienced in client-acceptance decisions.
In each ?rm, the contact partner selected the
interviewees. However, to mitigate selection-bias
risk, both contact partners were asked to provide
interviewees that varied in their length of service
with the ?rm. The interviews were conducted
mainly in o?ces located in Montre´ al and Toronto,
and their length varied from one to three hours. In
particular, each interviewee was asked to describe
the typical decision process that auditors follow
when facing a di?cult situation—both contact
partners being reluctant for me to examine speci?c
decisions. This requirement did not signi?cantly
a?ect the results since most interviewees answered
by describing a speci?c situation. Each interviewee
also was asked about her/his attitudes pertaining
to the professional and commercial logics of
action. Professional and commercial attitudes
were mainly drawn from the interviewees’ discus-
sion of the most important issues that characterize
contemporary auditing. Finally, in each ?rm at
least two of the interviewees were asked addition-
ally to provide information on the other organi-
zational components.
5.3. Data analysis
Data was analyzed by relying on qualitative
procedures (Huberman & Miles, 1991; Patton,
1990). Descriptions of decisions and other docu-
ments were coded to identify the main theme(s) of
each segment of data. Tables and ?gures were
developed to display data in a compressed and
ordered form. Conclusions emerged from com-
parisons of decisions and sites, and were veri?ed
by searching for contradictory data.
Speci?cally, qualitative procedures began during
?eldwork. Methodological notes were taken to
keep a record of the research procedures, the prob-
lems encountered and their solution. Theoretical
notes were made when transcribing interviews by
writing down ideas that might later be useful in
making sense of data (Deslauriers, 1991, p. 62).
Once data collection was almost completed, quali-
tative analysis focused on developing, for each
?rm, a site report describing the client-acceptance
decision process within its organizational context.
To that e?ect, all interview recollection notes and
other documents were coded to identify the main
theme(s) of each segment of data (Huberman &
Miles, 1991). Afterwards, to assess the extent to
which the organizational components and decisio-
nal situations are re?ective of the logics of action,
the coded material was examined and compared
with the ideal types to identify words, expressions
or ideas that are indicative of the logics’ in?uence.
Of course, the site reports were compared fre-
quently during their development to make sure
that there were no inconsistencies between them.
After being completed, each ?rm’s site report
was sent to the corresponding contact partner to
make sure that the anonymity of the ?rm and its
potential clients was protected. Each contact
partner was given one month to communicate any
concerns to me; no concerns were communicated
within the one-month period. Finally, the site
reports served as the basis for preparing a com-
parative report aimed at examining the issues
investigated from a between-?rm perspective (Yin,
1989, p. 134).
6. Fieldwork evidence
This section presents evidence gathered to assess
the extent to which the study’s theoretical adapta-
tion outlined in Section 4 is supported. Emphasis
is on ?eldwork data collected in ?rms B (where the
professional logic is dominant) and A (where the
commercial logic is mainly in?uential).
6.1. Firm B: being professionally orientated
Overall, ?rm B’s formal organizational compo-
nents are mostly in accordance with the profes-
sional logic—although these components are also
re?ective, to a certain extent, of the commercial
logic. In accordance with the professional logic,
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 669
the ?rm’s practice-development strategy does not
promote discounted audit fees. For example, one
interviewee mentioned that ?rm partners tend not
to tender for audit engagements when they believe
that the main reason for which the potential client
wants to change auditor is to reduce audit fees:
Auditing increasingly is perceived as a com-
modity. It is now seen like a can of soup;
people decide to purchase it by looking only
at the selling price. [. . .] The audit market is
now characterized by a lot of low-balling.
What a pity. In our ?rm, we don’t tender
when it’s obvious that the potential client
only wants to low-ball
8
(Partner).
Likewise, several interviewees underlined that
the ?rm strives not to charge audit fees that would
contribute to depreciate the value of auditing in
the eyes of clients and society. It therefore seems
that ?rm B auditors see adequate compensation as
a signi?cant attribute of professionalism. Accord-
ing to participants, an appropriate level of audit
fees signals to clients the quality of audit work; it
is also indicative of the extent to which society
recognizes the value of auditing. This perception
contrasts with classic literature on the sociology of
professions, which assumes that professionals are
dedicated to their work, in terms of accepting to
carry out professional tasks even when fewer
extrinsic rewards are available (Hall, 1968, p. 93).
The professional logic of action therefore is not
homogeneous across professions; it rather adapts
to individual contexts.
Interviewees also pointed out that the ?rm’s
strategy aims to make audit stakeholders aware of
its intention to develop audit practice by adhering
to standards that go beyond those of the profes-
sion—that ?rm partners actually are able to say
‘‘no’’ to management in order to protect share-
holders’ and third parties’ interests. In particular,
one interviewee mentioned that partners were
seeking to establish the ?rm’s reputation of rigor-
ousness in the eyes of lawyers and bankers, in
order for them to recommend the ?rm to busi-
nesses as a potential auditor when the opportunity
arises. It should be noted, however, that the ?rm’s
strategy is characterized by one particular com-
mercialistic aspect: the ?rm’s e?orts at di?er-
entiating itself from its competitors by providing
auditees with value-added services, such as man-
agement advisory services. One interviewee pointed
out that di?erentiation in the eyes of business
managers is almost inevitable given the competi-
tive environment in which audits take place:
In a competitive audit market, ?rms don’t
have the choice. They either low-ball or
emphasize di?erentiation. We do the latter.
Our growth is coming from the fact that we
strive to keep our existing clients; we want to
make them happy by going beyond their
expectations. We want to make our clients
aware that we are di?erent, thereby prevent-
ing them from making invitations to tender
(Partner).
Another interviewee speci?ed the nature of
those di?erentiating services:
Clients who want something more than
?nancial statements want advice. They want
us to help them with regard to their business
opportunities. For example, the ?rm may help
a client to develop activities in Asia by identi-
fying potential partners for a joint venture.
Clients such as this one want to bene?t from
our international network (Audit manager).
Firm B auditors therefore appear to give busi-
ness advice that go far beyond accountants’ typi-
cal jurisdiction. It is as if ?rm auditors were
seeking to persuade management that the audit
?rm is an obligatory passage point to business
success (Latour, 1987). Of course, as underlined
by Daly and Schuler (1998), independence con-
cerns about the ?rm’s dual role of auditor and
business advisor are ignored in participants’
discourse.
The ?rm’s strategy is also more re?ective of the
professional logic. Each partner’s compensation is
8
Quotations in this section should not be assimilated to
excerpts from verbatim interview transcripts. Rather, the quo-
tations are excerpted from the detailed recollections of the
interviews, which I wrote by drawing on ?eld notes taken dur-
ing the interviews.
670 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
tied to her/his performance with regard to four
criteria, namely, integrity, technical knowledge,
risk management, and practice development. One
interviewee mentioned that the weight given to the
fourth criterion is moderate: ‘‘Practice develop-
ment is not the most important variable.’’ Further,
to decide on the promotion of audit managers to
the rank of partner, decision-makers reportedly
take mainly into account the candidate’s record
with regard to risk management, human resources
management, and capacity to satisfy clients’ needs.
Practice-development performance plays only a
minor role in promoting audit managers since, as
mentioned by one interviewee, the ?rm expects
new business to be mostly generated by ‘‘white-
hair partners’’. However, the same interviewee
added that ‘‘It’s a plus when partner candidates
already have an ability to recruit new clients.’’ The
commercial logic therefore is not left aside from
the ?rm’s promotional practices.
Similarly, the ?rm’s system of management by
objectives is more in accordance with the profes-
sional logic. The ?rm’s system is predicated on the
same performance dimensions than the partner-
compensation scheme. Pro?tability and growth
objectives are not emphasized at the level of the
individual partner. As mentioned by one of them:
‘‘I don’t have a speci?c growth objective to meet
each year.’’ Although each o?ce has to meet
pro?tability and general growth targets, o?ces
play a signi?cant role in determining their targets
by ‘‘taking into account’’ general strategic guide-
lines provided by the national o?ce. It also seems
that the national o?ce is ‘‘relatively tolerant’’
when a local o?ce does not meet its annual
growth and pro?tability targets.
9
In terms of policy, about eleven pages of the
?rm’s manual are related to client acceptance, in
addition to the exhaustive policy documentation
relative to the ?rm’s computerized decision aid for
client acceptance.
10
Essentially, these policies spe-
cify that before the ?rm accepts new clients, part-
ners have to identify risks related to acceptance as
well as con?icts of interests with existing clients,
and take these risks and con?icts into consider-
ation when making a decision. In accordance with
the professional logic, client-acceptance policies
lay stress on the notions of peer consultation and
protection of third parties’ interests. Pro?t con-
siderations generally are not emphasized, although
policies require partners in charge of acceptance to
assess the projected economics of potential
engagements (e.g., overall recovery rate).
In summary, ?rm B’s formal organizational
components are more re?ective of the professional
logic, while still putting some weight on the com-
mercial one. Over time, by being exposed to the
?rm’s rhetoric, practitioners may develop attitudes
that re?ect the weight given by the ?rm to each of
the logics—although it is important to recognize
Table 4
Firm B: professional and commercial attitudes of interviewees
a
Dimension Interviewee
I II III IV V VI Total
P C P C P C P C P C P C P C
Identi?cation with the profession 5 1 1 1 1 1 2 10 2
Main objective of audit work 3 1 3 1 1 1 1 1 8 4
Main source of motivation 4 1 1 3 2 1 1 2 2 13 4
Independence 1 1 2 1 1 1 2 5
Total 13 4 5 1 4 2 5 3 4 2 2 3 33 15
a
Table 4 displays the number of indications of professional (P) and commercial (C) attitudes found in the transcript of each of the six
interviewees.
9
This high level of tolerance needs to be interpreted in the
context of the ?rm having grown substantially in the last few
years before ?eldwork—implying that the number of occur-
rences in which local o?ces actually did not meet their objec-
tives may have been relatively low.
10
More detail about the ?rm’s decision aid is provided in
Gendron (2001, p. 301).
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 671
that attitudes are subject to a variety of other
in?uences.
Tables 4 and 5 provide detail on interviewees’
attitudes, showing the number of professional and
commercial attitudinal indications that I found in
the interview recollection notes (Table 4), as well
as examples of attitudinal indications excerpted
from these notes (Table 5). Overall, interviewees’
attitudes are signi?cantly more indicative of pro-
fessionalism than commercialism. In accordance
with the professional logic, participants tended to
identify with the profession, for example by refer-
ring to the ‘‘good old days’’ when the profession
was predicated on the notion of character rather
than economic opportunism. Participants also
tended not to consider remuneration as the main
objective of audit work. In particular, several of
them were strongly disapproving of the practice of
low-balling. As well, most interviewees appeared
to be motivated by the challenge to carry out audit
engagements. However, participants showed sen-
sitivity to pro?t considerations a few times. For
example, one interviewee underlined the extent to
which consulting services are pro?table. Commer-
cial attitudes also were conveyed in sentences that
lay stress on the development of close relation-
ships with auditees, and the appropriateness of
becoming a good consultant in their eyes.
It therefore appears that ?rm B auditors have two
di?erent sets of attitudes. The ?rst attitudinal set,
which is dominant, conceives of audit clients as
shareholders and third parties who rely on ?nancial
statements. The second set—whose weight is lower
but nonetheless signi?cant—assumes that the cli-
ent is the auditee’s management team. Interest-
ingly enough, ?rm auditors seem to be able to go
back and forth easily between these two sets of
attitudes, without having signi?cant dissonance
feelings. Several interviewees indeed highlighted
that they are both independent and close to man-
agement. For example, one partner mentioned:
I think that I’ve always been able to be inde-
pendent. I’ve often told my clients things that
they don’t want to hear. However, at the
same time, I need to be relatively close to
management. For example, a CEO may think
of something at night in his living room. He
may then decide to call me immediately to
discuss it during one hour. You know, CEOs,
at their hierarchical level, often don’t have
anybody to discuss things with apart from
their auditors (Partner).
This quote suggests that this partner’s com-
mitment to the ?rm extends beyond the spatial
Table 5
Firm B: examples of attitudinal indications found in the interviews
Dimension Professional indication Commercial indication
Identi?cation with the profession ‘‘Firm X is not wholly responsible for the
billion(s) of dollars that plainti?s ask in
Court. There are users who did not read the
?nancial statements.’’ (defends another ?rm)
‘‘Unfortunately, it seems that all
the other large accounting ?rms
are low-balling.’’ (denigrates other
members of the profession)
‘‘When I began to work, we were really a
profession, very British indeed. Pro?t
considerations were important but not
dominant.’’ (conceives a ‘‘real’’ profession
as one that emphasizes character)
Main objective of audit work ‘‘The audit market is now characterized by a
lot of low-balling. What a pity.’’ (suggests that
pro?ts are not the main objective of audit work)
‘‘An important part of an auditor’s
professional life is to generate pro?ts.’’
Main source of motivation ‘‘I need to be proud of what I do in my
professional life.’’
‘‘You can’t imagine how consulting
is pro?table.’’
Independence ‘‘I’ve often told my clients things that they
don’t want to hear.’’
‘‘We emphasize the needs of
management. I think this is a
good thing to do.’’
672 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
premises of her/his o?ce, as well as beyond the
typical white collars’ working schedule. This is in
accordance with the ?ndings of Anderson-Gough
et al.’s (2001) study, which indicate that
auditors’ private-time boundaries are relatively
?exible and open to the ?rm’s in?uence. What
also emerges from this partner’s comments is a
peculiar self-conception of her/his identity, in
which s/he is provided with an ability to shift
roles, to change hats depending on the nature of
the circumstances that s/he faces. This ability to
shift roles may explain why auditors typically are
unlikely to agree with criticisms addressed by aca-
demics and other parties towards their indepen-
dence (e.g., Sikka & Willmott, 1995). Auditors
actually may believe that they are able to be inde-
pendent when providing signi?cant levels of man-
agement advisory services to auditees, and that
people who criticize them are not su?ciently
knowledgeable about the realities of audit practice
(Humphrey, Moizer, & Turley, 1992)—including
their ability to shift roles (allegedly) unprob-
lematically. This ability is re?ective of what Beck
(2000, p. 75) calls ‘‘inner mobility’’, that is to say
the capacity of individuals in today’s society to be
able to alter social roles easily, to be ‘‘both here
and there across frontiers at the same time’’.
It is therefore within an organizational context
that favours the professional logic of action, but is
to some extent supportive of commercialism, that
?rm B auditors make client-acceptance decisions.
Overall, data gathered in ?rm B on client-accep-
tance decisional processes supports the view that
the organization in?uences auditors’ decision-
making. Firm B interviewees provided descrip-
tions of six di?cult client-acceptance situations. In
general, these situations are more re?ective of the
professional logic—though the commercial logic
exerted in?uence on the decisional process. Two
situations are described below to provide more
detail on the nature of the decisional process, and
the in?uence of the logics of action.
11
These two
situations were chosen because they both ended in
rejection, and vary on the extent of prior knowl-
edge that participants had about the potential cli-
ent. Both situations occurred in Toronto.
According to the partner in charge of accep-
tance in the ?rst situation, ?rm partners already
had a relatively good knowledge of the potential
audit client. The ?rm had provided in the prior
years some non-audit services to the company,
and partners already were con?dent that the com-
pany’s top managers were ‘‘honest’’. The audit
engagement would have consisted of giving an
opinion on some information provided to the
company by another corporation, which was
already an audit client of the ?rm. The partner in
charge highlighted that the related annual fees
were signi?cant, and provided an indication of
their magnitude.
The partner in charge rapidly became concerned
of a possible con?ict of interest if the audit
engagement was accepted:
The problem is that if we found anything
wrong in the information provided by our
existing client—for example if we found that
the information provided is not reliable—
we’d feel very uncomfortable with our exist-
ing client. We’d be in a position where we
disagree with our own client. However, what
complicated the case is that we thought that
the possibility that something’s wrong in the
information provided was quite low, perhaps
only 1%. I was un-decided (Partner in charge
of acceptance).
The partner in charge then ‘‘needed to see what
others thought’’. S/he discussed the matter with
two other partners, one of them being in charge of
approving acceptance of risky clients in Canada.
They discussed whether it would be appropriate to
contact a top manager of their existing client to
see whether the corporation had any concerns
about the potential engagement. This scenario was
not pursued because partners felt that even if they
obtained approval from one of the corporation’s
top managers, the other top managers might not
become aware of her/his approval. In subsequent
discussions, the partner in charge raised the point
that although the likelihood of ?nding de?ciencies
in the information provided by the existing client
11
Some information is not disclosed in order to protect
anonymity of the potential clients.
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 673
was very small, the related consequences of ?nding
such de?ciencies would be signi?cant and detri-
mental to the ?rm. Agreeing on the signi?cance of
these consequences, the partners ?nally decided to
reject the engagement: ‘‘We thought and came to
the conclusion together to reject the engagement.’’
The partner in change emphasized that nobody in
the ?rm questioned ex post this decision.
In the other situation, an accountant who
worked previously for the ?rm contacted the
partner in charge of acceptance to assess whether
s/he would be interested in being appointed as
external auditor of a joint-venture business, in
which the ?rm’s ex-employee was part of the
management team. The joint venture was at the
developmental stage; it would have consisted of
using a new technology to transform a used pro-
duct into several components in the USA, to be
sold on the market. Market demand for these
components already was ?rmly established. The
company’s managers wanted to fund the project
through an initial public o?ering. The partner in
charge highlighted that reputable lawyers and
brokers were involved in the equity-?nancing pro-
ject, and that the ?rm’s ex-employee also had a
good reputation. No other accounting ?rm had
been approached by the joint-venture managers.
The partner in charge’s initial reaction about the
project was quite positive: ‘‘It was something I
wanted to do.’’ S/he and another audit partner
then began to collect information on the joint-
venture project to evaluate acceptance. Speci?-
cally, they had a meeting and follow-up discus-
sions with the joint-venture managers. They also
reviewed the feasibility study prepared by these
managers, and concluded that the underlying
assumptions were reasonable. However, they were
concerned about the extent to which the new
technology was reliable, and asked the joint-ven-
ture managers whether they would accept inde-
pendent engineers to evaluate the technology.
Managers agreed to the partners’ request.
The partner in charge then brie?y discussed the
potential engagement with the audit division head
partner. A few days later, the latter informed the
former that the ?rm’s partner in charge of
approving acceptance of risky clients in Canada
strongly objected to the engagement:
The audit division head partner told me [i.e. the
partner in charge of acceptance] that [s/he] [i.e.
the partner in charge of approving acceptance
of risky clients in Canada] exploded. The
technology was unproven, we were sure to be
sued if the business failed, the business did
not yet have environmental clearance to build
a plant—who would like to have this kind of
business in their backyard? No amount of
fees would be enough for that. No way
(Partner in charge of acceptance).
The partner in charge responded that s/he and
the other audit partner were still in the process of
collecting data and that their decision was not
made yet. The partner in charge then phoned the
partner in charge of approving acceptance of risky
clients in Canada:
Then I realized that there was nothing to do.
When the highest says no, it’s no. Having
contested [her/his] decision would have been
detrimental to my career. It’s interesting, a
professional decision then became a very
good illustration of organizational behaviour
(Partner in charge of acceptance).
The partner in charge then phoned the ?rm’s ex-
employee to make her/him aware of the ?rm’s
decision. One of the lawyers involved in the
equity-?nancing project, as well as a partner of a
smaller audit ?rm, later called the partner in
charge to inquire about the reasons for the ?rm’s
decision. The partner in charge concluded the
interview by underlining that—according to her/
his knowledge—the joint-venture project never
became reality.
12
Several indications of the in?uence of the pro-
fessional logic are found in the two situations. In
the second one, the partner in charge’s enthusiasm
12
This decisional situation seems to lend support to one of
the main arguments made by audit ?rms in attempting to per-
suade politicians of the need to change litigation legislation. It
is claimed that fear of litigation often prevents large audit ?rms
from accepting nominations as auditors of start-up businesses,
thereby making it di?cult for these businesses to ?nd ?nancing
to start their activities—even when these activities are likely to
be bene?cial to society (e.g., Estey, 1996, p. 9).
674 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
in describing the peculiar activities of the joint-
venture project suggests that a key motivator for
client acceptance was the challenge to carry out
new audit work. In the ?rst situation, decision-
makers gave prominence to a potential con?ict of
interest, which is an issue claimed to be central to
the auditing profession (e.g., CICA, 1996). Deci-
sion-makers in the ?rst situation also showed
concerns about the interests of a third party (i.e.,
the ?rm’s existing client). Furthermore, in both
situations, spin-o? work was not explicitly
brought up in the interviews, thereby suggesting
that participants did not emphasize it during the
decisional process. Pro?t considerations therefore
seem to have played a minor role in both deci-
sions. Nevertheless, in the ?rst situation, the part-
ner in charge showed some sensitivity to pro?t
considerations by referring on her/his own initi-
ative to the amount of fees that the engagement
would possibly generate each year to the ?rm,
thereby suggesting that the commercial logic of
action played a certain role in decision-making.
6.2. Firm A: emphasizing commercialism
In contrast with ?rm B, ?rm A’s formal organi-
zational components are mostly in accordance
with the commercial logic—though components
are to some extent re?ective of the professional
logic. The ?rm’s practice-development strategy is
centred on the development of close relationships
with auditees—the ?rm seeking to provide value-
added services from the point of view of corporate
managers. Also, the ?rm allows partners to dis-
count signi?cantly audit fees, particularly when a
potential client is perceived as having important
needs in terms of management advisory services.
The practice of low-balling is therefore ?rmly
established in the ?rm. However, the ?rm’s strat-
egy comprises one professional aspect, which is
that of seeking to establish the ?rm’s reputation of
expertise in a number of industries in the eyes of
other professionals (e.g., bankers and brokers)
and in?uential businesspeople. The expectation is
that these individuals will recommend the ?rm to
businesses searching for a new auditor.
The ?rm’s partner-compensation scheme also is
more re?ective of commercialism. The three most
important criteria used to determine partner com-
pensation are: ability to recruit new clients; prof-
itability of engagements carried out during the
year; and expertise (the latter being consistent with
professionalism, though). Further, promotion
from manager to partner depends signi?cantly on
the candidate’s record concerning practice devel-
opment. As mentioned by one interviewee recently
promoted to the partner status:
Recruiting new clients is an important pro-
motion criterion. I provided a lot of informa-
tion on it. You know, a manager cannot be
promoted if he is only a good auditor, sitting
most of the time in his o?ce. The ?rm wants
its partners capable of recruiting new clients
and selling a variety of services to existing
clients (Audit partner).
The ?rm’s system of management by objectives
also is more consistent with commercialism. As
highlighted by interviewees, annual objectives
related to growth and pro?tability play an impor-
tant role in managing local o?ces and in evaluat-
ing o?ce partners. Nevertheless, in accordance
with professionalism, partners are allowed to
invest time and resources to reach longer-term
objectives, which are not necessarily quanti?able.
Similarly, the ?rm’s client-acceptance policies
are more re?ective of the commercial logic.
Essentially, these policies—as well as the corre-
sponding assessment form that partners need to
complete before accepting any new client—specify
that decision-makers need to compare the risks
related to the acceptance of the client with the
economic bene?ts that acceptance would generate.
The assessment form requires partners to assess
the amount of audit and non-audit fees that would
be charged to the client if the audit engagement were
accepted. The form also comprises about 10 yes/no
questions aimed at assessing acceptance risks—
some of the questions are related to auditor inde-
pendence, in accordance with the professional logic.
Overall, ?rm A’s formal organizational compo-
nents are con?gured in a way that emphasizes
commercialism, without completely leaving aside
professionalism. The extent to which auditors’
attitudes are consistent with these con?gurative
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 675
signals is shown in Table 6. In accordance with the
commercial logic, interviewees generally con-
sidered that the provision of management advi-
sory services to auditees is not problematic, and
does not impair independence. As underlined by
one interviewee: ‘‘The closer the relationship with
the client, the better we can serve the client.’’
Another argued that the market would ‘‘know’’ it
if the extent of non-audit services provided by the
?rm to auditees was not acceptable, and penalize
the ?rm accordingly—the interviewee implicitly
assuming that the market is omniscient, infallible,
and able to exert in an unconstrained way dis-
ciplinary forces on economic entities. Several par-
ticipants also tended to consider remuneration as
their main workplace motivator, for example
when mentioning that: ‘‘The ideal CA needs to be
a good seller.’’ However, in accordance with the
professional logic, participants tended to identify
with the profession. For example, some inter-
viewees deplored that the cornerstone of the pro-
fession, ?nancial auditing, seems not to be valued
anymore by clients. Others highlighted that colle-
giality is an essential part of their practice.
Thus, auditors’ attitudes in ?rm A are sig-
ni?cantly in accordance with the ?rm’s formal
organizational components—being largely re?ec-
tive of the commercial logic, and to a minor extent
of the professional one. Drawing on the study’s
theoretical adaptation, it is expected that decisions
will re?ect to a large degree these con?gurative
and attitudinal weights. Data gathered in the ?rm
on client-acceptance decisional processes indeed
supports the view that the ?rm in?uences auditors’
decision-making. In general, the four descriptions
of di?cult client-acceptance situations that ?rm
A’s interviewees provided are more in accordance
with the commercial logic—though some indica-
tions of professional in?uences were found in the
data. Two of these situations—which occurred in
Montre´ al—are described below. Both situations
ended in acceptance, and vary on the extent of
prior knowledge that participants had about the
potential client.
In the ?rst situation, the CEO of a relatively
large manufacturing corporation informed the
partner in charge of acceptance that the corpor-
ation decided to change auditor, being unsatis?ed
with the range of services provided by its former
small accounting ?rm. Firm A was invited to sub-
mit a proposal, as well as two other accounting
?rms. The partner in charge already knew the CEO,
who was on the mailing list of ?rm A’s brochures.
The company was in a ‘‘turbulent’’ situation:
?nancial condition was ‘‘unstable’’; labour–man-
agement relations were strained; and operations
were in the process of being restructured. All these
features, according to the partner in charge, poin-
ted to the company having ‘‘enormous’’ needs in
terms of non-audit services. One tax and one con-
sulting partner subsequently validated this initial
assessment. The discussions they had with com-
pany managers shortly after contacts were estab-
lished showed that the company had
‘‘considerable’’ needs—notably in terms of process
reengineering and product re-orientation.
However, the partner in charge was initially sig-
ni?cantly concerned about the company’s ?nancial
Table 6
Firm A: professional and commercial attitudes of interviewees
a
Dimension Interviewee
I II III IV V VI VII Total
P C P C P C P C P C P C P C P C
Identi?cation with the profession 1 1 1 1 1 1 1 2 1 1 8 3
Main objective of audit work 1 2 1 1 3
Main source of motivation 2 1 1 1 2 3
Independence 2 1 1 1 2 1 1 1 1 9
Total 1 3 3 2 1 3 1 2 1 3 3 2 2 3 12 18
a
Table 6 displays the number of indications of professional (P) and commercial (C) attitudes found in the transcript of each of the seven interviewees.
676 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
condition, and decided to investigate further the
matter with another audit partner. They both
went several times to the premises of the potential
client to inquire about the company’s strategic
plans. During their investigation, the role of the
second partner consisted of playing the devil’s
advocate, examining the situation at hand from a
sceptical point of view, questioning the emerging
conclusions, and making sure that all signi?cant
aspects of the company’s ?nancial condition were
considered. The two partners eventually con-
cluded that the risk of ?nancial distress was
acceptable, given the limited number of investors
involved, the extent of non-audit services to be
provided, and partners’ con?dence that these
services would ultimately translate into the
company’s viability being improved.
In addition, the company’s bankers and lawyers
were also asked about top managers’ reputation.
Their comments provided the partner in charge
with the comfort that top managers were not
‘‘crooks’’. The partner in charge also made sure
that acceptance of the engagement would not cre-
ate a con?ict of interest at the ?rm level. A pro-
posal was sent to the potential client once the two
audit partners decided to accept the potential cli-
ent, and obtained the approval of higher-ranking
partners. The audit fee included in the proposal
was signi?cantly discounted given the extent of
non-audit services involved, and also ‘‘to signal
top managers that the ?rm wanted the engage-
ment’’. The company eventually selected ?rm A as
external auditor. Informally, the partner in charge
then came to a fee arrangement with the CEO: the
partner would be available almost anytime to the
client but, in return, fees would be paid promptly.
Again, this arrangement suggests that private-time
boundaries of partners’ life are permeable to
working imperatives—here, in the name of client
service and ?rm A’s pro?tability.
In the second situation, ?rm A already had prior
knowledge of the potential client, having provided
services to improve the ?nancial condition of one
of its subsidiaries. The potential client was a pri-
vately owned corporate group, involved in the
real-estate business. The opportunity for the ?rm
to be nominated auditor occurred when the parent
company appointed a new board director—a top
manager in another (unrelated) corporation whose
external auditor was ?rm A. The audit partner
already in charge of this unrelated corporation
eventually asked the new director whether the
real-estate corporate group would be interested in
changing auditors; the director appeared receptive
to the idea. Therefore, the client-acceptance deci-
sion process in this situation took place con-
currently with auditee’s top managers making the
decision to appoint new auditors.
The partner in charge underlined that accep-
tance initially was ‘‘tempting’’ since the corporate
group had signi?cant liquidities; the situation was
characterized by a ‘‘red ?ag’’, though, since most
liquidities had been transferred to a Caribbean
country. ‘‘Were the transfers legal?’’ The partner
began the decision process by obtaining a copy of
the ?nancial statements of all business units
belonging to the corporate group. He found that
the audit would involve many corporations with
di?erent ends of ?nancial year, concluding that:
‘‘Acceptance was very tempting since the audit
fees would be very high.’’ Also, one of the ?rm’s
higher-ranking partners asked the banker of the
potential client (whom he knew personally) about
the transfers of money. The banker speci?ed that
the transfers were legal, being part of an estate
planning strategy.
As a result of these preliminary investigations,
the partner in charge was ‘‘pre-committed’’ to
accept the potential client. A meeting was then
organized with the parent company’s top man-
agers to present the ?rm, in which ?rm partners
asked managers whether they agreed for the ?rm
to make a formal inquiry about the company
‘‘since we [i.e., ?rm partners] would like to work
with you [i.e., top managers]’’. This subsequent
inquiry did not generate any worrying ?nding in
spite of the numerous discussions that took place
among ?rm partners regarding, for example, the
credibility of their sources of information. It was
?nally decided to make a formal proposal to the
real-estate corporate group (which top managers
eventually accepted).
Several commercial in?uences characterize these
two situations. Decision-makers in the ?rst situ-
ation were in?uenced by the extent of non-audit
services that they expected the ?rmto provide to the
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 677
company. During the interview, the partner in
charge showed empathy with the company’s
?nancial problems, being committed to respond to
its (consulting) needs. Investors’ interests do not
appear to have played any signi?cant role in the
decision process. On the contrary, the partner in
charge referred only once to investors during the
interview, conceiving them as a threat to the ?rm,
that is to say as potential plainti?s that could sue
the ?rm in the event of the company’s bankruptcy.
Also, the proposed audit fees were signi?cantly
discounted, in the hope that it would increase the
likelihood of being appointed both auditor and
provider of non-audit services. In the second
situation, the extent of audit fees that the partner
in charge expected to collect from the corporate
group played a major role in the decision process.
Pro?t considerations therefore appear to be sig-
ni?cantly in?uential in ?rm A’s client-acceptance
decision processes. Nonetheless, in the ?rst situa-
tion, the partner in charge made sure that accep-
tance of the engagement would not place the ?rm
in a con?ict of interest, thereby suggesting that
professionalism also in?uences decision-makers.
It is also worth noting that in the ?rst situation
non-audit partners were involved before the client
was accepted to identify opportunities to provide
non-audit services. Their involvement was moti-
vated by the aim of di?erentiating the ?rm from
competitors and, of course, of sustaining the
accounting ?rm’s growth and pro?tability. How-
ever, involvement of non-audit partners at such an
early stage should not be interpreted as an indica-
tion that the ?rm was already committed to accept
the client. As mentioned by the partner in charge:
‘‘If I’d believe that the company would have failed
within the next few months, I’d never have
embarked in this.’’ Rather, early involvement of
non-audit partners is indicative of the extent to
which non-audit services play a signi?cant role—
but not an absolute one—in the ?rm’s client-
acceptance decision processes (and in the ?rm’s
service di?erentiation strategy).
6.3. Discussion
The four speci?c situations described above sug-
gest that in both ?rms di?cult client-acceptance
decisions are more than rituals aimed at legitimiz-
ing choices already made in advance. In every one
of these situations, decision-makers were con-
cerned signi?cantly by at least one issue at a cer-
tain point during the decision process. In addition,
when reconstructing the series of events that took
place in accepting or rejecting the potential client,
some interviewees mentioned on their own initia-
tive that they initially were uncertain about the
decision to make (as in ?rm B’s ?rst situation), or
that the engagement would have been rejected if
the information collected had indicated a sig-
ni?cant risk of ?nancial distress (as in ?rm A’s
?rst situation). Furthermore, as shown in ?rm B’s
second situation, high-ranking partners may
bypass local practitioners’ decisional process to
unilaterally impose their point of view. Thus, in
both ?rms, it was not obvious to participants at
the beginning of the decision process that the
potential client would ultimately be accepted or
rejected.
13
Firm A’s and B’s situations also provide insights
on the extent to which auditors rely on reputation
assessments in making the client-acceptance deci-
sion. As highlighted by Asare et al. (1994), these
assessments are mainly driven by auditors’ sensi-
tivity to the impact that clients may have on their
own ?rm’s reputation. For example, in ?rm B’s
second situation, participants relied on the repu-
tation of promoters’ lawyers and brokers to assess
the promoters’ reputation. In the other ?rm (?rst
situation), participants made phone calls to the
bankers and lawyers of the potential client to
assess integrity of management. This referential
network seems to be well developed as one inter-
viewee mentioned that it generally takes her/him
about 25 min to obtain information on the repu-
tation of a businessperson. Also, auditors in both
?rms sometimes hire investigating agencies to
enquire about the reputation of management—
especially when auditors have serious reputation
13
However, decisional situations that participants consider
easy may be more ritualistic. Several interviewees—especially in
?rm C—described situations that point to the ritualistic and
ceremonial nature of the decision process—which was mainly
aimed at documenting and justifying decisions already made in
advance. These ritualistic situations are not considered in this
paper.
678 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
concerns or when their referential network is
unable to provide su?cient information.
Not only do auditors draw on reputation infor-
mation to make client-acceptance decisions, but
they also construct reputations by accepting or
rejecting potential clients—as shown in ?rm B’s
second situation where a lawyer and an auditor
from another ?rm asked about the reasons that
led ?rm B to reject the engagement. As argued by
Sztompka (1999, p. 73), individuals often confer
trust or distrust to targets of trust (such as other
individuals, groups or systems) merely by imitat-
ing others’ trust decisions, especially when ‘‘sig-
ni?cant others’’ (i.e., individuals and groups that
are well considered) make these decisions. Not
being deemed trustworthy enough by a large audit
?rm to be admitted into its client base therefore
may have far-reaching consequences for a poten-
tial client. Auditors are thus involved actively in
what may be called a market for reputations. One
interviewee underlined that this market is becom-
ing increasingly complex with most potential cli-
ents being aware of the ?rms’ screening processes
and their reputational consequences, thereby
motivating a number of them to enter into
manipulative behaviour. For example, the same
interviewee added that potential clients sometimes
present the ?rm with false—though apparently
reliable—claims of trustworthiness, such as falsi-
?ed curriculum vitas and letters of reference.
My analysis also shows that in ?rm A, auditors’
decision-making behaviour is largely consistent
with the commercialization of accountancy thesis
developed and defended by several academics
(e.g., Brilo?, 1993; Cousins, Mitchell, Sikka, &
Willmott, 1998; Hanlon, 1994). In short, these
authors argue that auditors are now mainly com-
mercially driven, and that their commercial stance
is at the heart of several audit failures—auditors
being not powerful enough to oppose auditees’ top
managers for fear of losing audit and non-audit
fees. However, ?rm B’s client-acceptance decision
processes are inconsistent with the commercializa-
tion thesis. In this ?rm, auditors did not give a
signi?cant weight to pro?t considerations. Though
it remains to be seen whether ?rm B auditors are
still committed to professionalism once a new cli-
ent is accepted (Gendron, 2001, p. 306), ?rm B’s
client-acceptance decision processes cast doubt on
the generalizability of the commercialization thesis.
The paper’s main argument is that the ?rm sets
the stage for decision-making by con?guring its
formal organizational components in such a way
that the professional and commercial logics are
under a moderate level of tension. The data gath-
ered in ?rms A and B support this argument. In
each ?rm, the formal organizational components
give more weight to one of the logics, while being
to some extent re?ective of the other. Given the
paper’s theoretical adaptation about the role of
the ?rm in decision-making, these structural
weights are expected to have a corresponding
impact on auditors’ attitudes and decisions—
though it is important to recognize that the in?u-
ence of the ?rm is inevitably modulated by audi-
tors’ agency. Indeed, interviewees’ attitudes in
each ?rm are consistent with the structural weight
given to each of the logics, thereby suggesting that
the ?rm’s socialization process is particularly
e?ective at instilling ways of reasoning in auditors’
frames of reference. Also, client-acceptance deci-
sions in both ?rms tend to be re?ective of the
organizational components’ structural weights.
These ?ndings suggest that by giving promi-
nence to one logic of action, the ?rm’s formal
organizational components ultimately have had an
impact not only on auditors’ attitudes, but also on
decisional processes. By being exposed to the
components’ rhetoric, auditors may have devel-
oped interpretative schemes that are more con-
sistent with the ?rm’s favoured logic. Auditors
may also be aware that, if they want to succeed
within the ?rm, they should tend to make deci-
sions in accordance with the favoured logic.
However, the in?uence of the latter on client-
acceptance decisions is not absolute; indications of
the in?uence of the constraining logic indeed were
found in a number of situations. As such, the
in?uence of the constraining logic may be facili-
tated by the ?rm’s organizational components,
which provide some anchoring points for partici-
pants to advance claims that are consistent with
the constraining logic.
Finally, given the stakes related to di?cult client-
acceptance decisions, one may believe that the
decisional situations would have been characterized
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 679
by signi?cant con?icts between proponents of the
professional and commercial logics of action.
Management research on strategic decisions
indeed shows that strategic decision-making typi-
cally is a messy activity around which multiple
groups with con?icting interests tend to content
(Dent, 1990, p. 8). However, the interviewees pro-
vided me with descriptions of decisional situations
that do not bring to light signi?cant con?icts
between decision-makers—?rm B’s second situ-
ation being the exception. Rather, the descriptions
of decisional situations tend to be consistent with
a representation of decision-making in which
decisions are made in a relatively harmonious
way, and in which the search and collective
assessment of information play a central role. I
argue that this low level of con?ict is in accor-
dance with the paper’s theoretical argument con-
cerning the role of the ?rm in auditors’ decisions.
Indeed, if the ?rm is e?ective through its organi-
zational components at shaping auditors’ mindset,
then it is sensible to believe that decision-making
will not be an arena permeated with intense con-
?icts between upholders of di?erent logics. That
is, by being exposed to organizational components
that give a major weight to one logic and a minor
weight to the other, ?rm auditors may have come
through socialization processes to share the same
ways of reasoning, thereby limiting the emergence
of con?icts between decision-makers.
14
7. Conclusion
According to Power (1995, p. 317), we know
very little about auditing in its organizational
context. However, a growing number of studies
that seek to probe into the organizational func-
tioning of audit ?rms have been published recently
(Hopwood, 1996, p. 218). My research lies within
this research tradition, seeking to better under-
stand the role of the accounting ?rm organization
in decision processes, more speci?cally how the
?rm a?ects the way in which the professional and
commercial logics of action are mediated and
re?ected in client-acceptance decision processes.
Large Canadian accounting ?rms agreed to parti-
cipate in the ?eld research, thereby allowing me to
look beneath the surface of audit practice into the
‘‘black box’’ (Power, 1994, p. 304).
Of course, this study is inevitably characterized
by limitations. First, the ideal-type apparatus used
to analyze interview transcripts and documents is
predicated on a series of dimensions aimed at
putting into light di?erences—not similarities—in
the in?uence exerted by the logics of action on
organizational components and decisional pro-
cesses. The data displayed in the tables may
therefore overstate di?erences about the impact
that logics of action have on organizational com-
ponents and decisional processes. The results
should be interpreted in a relative rather than
absolute way. Second, the ?ndings are inescapably
reliant on the quality and comprehensiveness of
the data collected. In this respect, it is worth
underlining that data collection was limited due to
the ?rms’ participation requirements. The ?rms
did not allow me to interview all decision-makers
involved in each client-acceptance situation, nor to
examine the corresponding documentation. The
descriptions of decisional situations therefore are
unlikely to be as comprehensive as they could have
been. Nonetheless, several steps were taken to
increase the reliability of the ?eld study. Complete
anonymity was provided to the ?rm and the
interviewees who, furthermore, were not made
aware that the professional and commercial logics
of action were being investigated. Interviews also
were not recorded. Third, since data collection
was completed in Big Six o?ces located in the two
largest cities of Canada, readers should be careful
before generalizing the results to other settings.
For example, in Big Six o?ces located in smaller
cities, signals from the ?rm’s organizational com-
ponents may a?ect auditors’ mindset di?erently
(e.g., ?rm policies issued by the national o?ce
may be perceived as being more applicable to
practitioners in large-city o?ces). Smaller-city
auditors may also have a relatively distinct under-
standing of their market environment, thereby
14
The signi?cant lack of comfort that auditors frequently
feel when faced with a di?cult situation is also likely to facil-
itate group decision-making, the position of each participant
being, to a certain extent, negotiable. Interviewees indeed often
mentioned that they were undecided and signi?cantly uncom-
fortable at the beginning of the decisional process.
680 Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684
possibly altering the client-acceptance decision
process. Future research may investigate the extent
to which the theoretical adaptation developed in
the present study is applicable to other settings.
Generally speaking, this paper provides insights
into the ?rms’ organizational processes used to
accommodate the con?icts and contradictions that
permeate auditors’ environment (Humphrey &
Moizer, 1990, p. 235). It is especially shown that
the ?rm’s discretion in in?uencing behaviour is
limited to setting the stage where decisions are
made, the ?rm’s organizational components
jointly operating as a system aimed at putting the
professional and commercial logics of action
under a moderate level of tension. By favouring
one of the logics when structuring its organi-
zational parameters, the ?rm aims to prevent
decision-making from being erratic and punc-
tuated with many con?icts between participants.
However, organizational components also re?ect
to some extent the other logic since the ‘‘stream’’
of decisions within the ?rm may be better when
the other logic constrains the in?uence of the
dominant one. Thus, although the two logics of
action con?ict over many points, they are para-
doxically complementary, since it is from their
(moderate) opposition that balance may be
reached during decision-making.
In fact, an important implication of this paper is
to highlight the principle of ‘‘complementarity
within contradiction’’, and to illustrate how it is
re?ected in the ?rms’ decisional processes and
organizational components. In an Accounting,
Organizations and Society’s special issue devoted
to auditing, Hopwood (1996, p. 217) wonders why
the rhetorics of commercialism and professional-
ism are still promoted side by side in many parts
of the world. In this paper, I argue that it is to the
advantage of the ?rm to perpetuate such contra-
dictory rhetorics via its organizational compo-
nents, which are precisely aimed at (loosely)
regulating the coexistence of the rhetorics.
The principle of complementarity within con-
tradiction is in accordance with a theme that has
begun to appear in the professional and academic
literature, that is to say, that con?icting logics are
probably unavoidable in any human organization,
and are not necessarily unhealthy since, when
properly played out, they provide an additional
opportunity to challenge decisions (e.g., Indepen-
dent Review Panel on Modernization of Comp-
trollership in the Government of Canada, 1997,
p. 32; Van de Ven, Polley, Garud, & Venkatara-
man, 1999). Future research could further investi-
gate this theme, exploring in more detail, for
example, the relationship between a ?rm’s perfor-
mance and decisional processes being made under
a moderate level of stress between logics of action.
Future research could also examine, via histor-
ical analysis, the process in which the ?rms’ organi-
zational components are shaped with regard to the
two logics of action. Although data collection in
the present study concentrated on the in?uence of
organizational components on recent and speci?c
decisions, indications were found that the weight
given to each logic by the ?rm’s organizational
components varies over time.
15
Organizational
components are not static and members may
attempt to change the structural weight given to
the logics to bene?t from a longer-term capacity to
in?uence decisions. Future research could examine
the conditions under which transformations of an
audit ?rm’s organizational components took
place, and investigate how actors tried to modify
components in accordance with their own situated
interests. Further research also is needed on the
?rms’ socialization processes. The present paper
indeed shows that attitudes of ?rm auditors are
largely re?ective of the respective weights given to
the professional and commercial logics of action
by the ?rm’s formal organizational components,
thereby pointing to the e?ectiveness of the ?rm’s
socialization processes. Although some research
has been conducted on large ?rms’ socialization
processes (e.g., Anderson-Gough et al., 1998; Dir-
smith & Covaleski, 1985), much more work is
needed to develop a thorough understanding of
the processes used to construct identities of ?rm
auditors (Fogarty, 1992).
15
For example, some interviewees in ?rm C mentioned that
many partners, especially those who were promoted to partner
status long ago (when the partner-compensation scheme was
di?erent and more professionally orientated), ?nd it di?cult
to meet the commercial requirements of the current partner-
compensation scheme.
Y. Gendron / Accounting, Organizations and Society 27 (2002) 659–684 681
Moreover, audit researchers could use the ideal
types developed in the present paper to examine
how logics of action are mediated and re?ected in
other types of audit decisions, and the role that the
?rm plays in the decisional process. In particular,
some interviewees underlined that retention deci-
sions should be the subject of more academic
investigations since these decisions are often more
di?cult to make than client-acceptance decisions.
As underlined by one partner:
One needs to have balls to say to a current
client, ‘‘No, I don’t want to audit your cor-
poration anymore.’’ In contrast, when it
comes to the initial client-acceptance decision,
it is not di?cult to turn away a potential cli-
ent. I just have to say: ‘‘I don’t have the
time,’’ or ‘‘I don’t have the speci?c expertise.’’
I can’t say this when I want to turn away an
existing client. I think that one of the main
challenges of the profession in the following
years is to cope adequately with the retention
decision (Firm B audit partner).
Therefore, concerns related to justifying rejec-
tions—not only in the eyes of the client but also in
the eyes of peers of the partners who initially
accepted the client—may play a signi?cant role in
the retention decision, thereby possibly a?ecting
the ?rms’ organizational components and the
ways in which logics of action exert in?uence on
decision-making. The ideal types may also be used
to examine decisions made within the ?rms’ lines
of services other than auditing. In particular, these
decisions may be characterized by functional con-
?icts between auditors and other specialists having
di?erent ways of reasoning (Goodridge, 1991,
p. 75). Although the accounting profession is
experiencing important changes—some Big Five
?rms even describing themselves as multi-
disciplinary ?rms instead of accounting ?rms
(Greenwood et al., in press)—current knowledge
on Big Five’s activities in lines of services other
than auditing is considerably limited.
In conclusion, the ?rm plays a crucial role in
auditors’ decision-making by setting the stage for
decision-making, speci?cally by con?guring its
organizational components in such a way that the
professional and commercial logics are under a
moderate level of tension. Though it may be to the
advantage of participants to make decisions in
accordance with the ?rm’s favoured logic, partici-
pants will ?nd within the ?rm some resonance for
claims that convey a di?erent way of making
decisions. It may be argued, therefore, that the
?rm and auditors’ decision-making are inex-
tricably linked, thereby constituting a challenge in
terms of external validity to auditing experimental
researchers. Not only is this di?cult to reproduce
in an experimental design the context in which
subjects usually act, but also the nature of experi-
mental designs is centred on rigorously reducing
subjects’ agency.
Acknowledgements
This paper is based on my dissertation at Uni-
versite´ Laval. I thank the members of my dis-
sertation committee, namely, Jean Be´ dard (Chair),
Maurice Gosselin, and Maurice Landry. I also
acknowledge the comments provided by David
Cooper, Michael Gibbins, Joane Martel, Keith
Robson, Steven Salterio, Roy Suddaby, and two
anonymous reviewers. Special thanks to the Fonds
pour la Formation de Chercheurs et l’Aide a` la
Recherche (FCAR) for ?nancial assistance.
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