Auditor-client interactions in the changed UK regulatory environment: a revised grounded theory model

Vivien Beattie, Stella Fearnley, Tony Hines

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Audit and financial reporting quality are under intense scrutiny nationally and globally. The outcome of high-level auditor-auditee discussion and negotiation issues (auditor–client interactions) is central to this debate. Beattie et al. developed a grounded theory model of these interactions in the 1997 UK setting. This paper reports on a field study of 45 interactions in nine case companies in the radically changed post-SOX regulatory environment. Crucially, interviewees in each case company extend the chief financial officer–audit partner dyad to include the audit committee chair. Fundamental revisions to the model emerge. The strongest influence on interactions has become the national enforcement regime, overlaid upon the international standard-setting regime. The outcome in both the eyes of the participants and in our evaluation is full compliance (contrary to the findings from the 1997 setting), regardless of the perceived quality of the standards and the integrity of the outcome. Personal and company characteristics, which were of most importance in 1997, have become peripheral. The audit committee chair is shown to fulfil a gatekeeping role in relation to the full audit committee.
Original languageEnglish
Pages (from-to)15-36
JournalInternational Journal of Auditing
Issue number1
Early online date6 Nov 2014
Publication statusPublished - Mar 2015


  • Auditor–client interaction
  • audit committee
  • audit committee chair
  • discussion
  • enforcement
  • financial reporting quality
  • IFRS
  • ISAs
  • negotiation


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