How is the professional identity of ‘non-accountant’ sustainability assurance practitioners constructed and managed in Big-Four firms?

(1)

Amsterdam Business School

How is the professional identity of

‘non-accountant’ sustainability assurance

practitioners constructed and managed in

Big-Four firms?

Name: Hifsa Younus Student number: 10371435 Supervisor: C. Clune Date: 19 June 2016

Word count: 21980 words

MSc Accountancy & Control, specialization Accountancy Faculty of Economics and Business, University of Amsterdam

(2)

2 Statement of Originality

This document is written by student Hifsa Younus who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

Abstract

This research examines the controls one Big Four firm has in place to manage the identity of its accountant assurance providers. For this research ten interviews were conducted with non-accountant sustainability assurance providers working in the sustainability assurance and responsibility governance department of the firm. The interviews were conducted to discover if the firm was using a strategy of integration or a strategy of differentiation, following the

theoretical framework by Kreiner, Hollensbe and Sheep (2006). The findings of this research explain that the firm uses a strategy of integration; it wants to create homogeneity under its employees. However, this effect is off-set by the strategy of differentiation used within the department. Individuality and diversity in encouraged within in. This research contributed to existing literature in two major ways. One empirical contribution is that the research gap concerning socializing processes of non-accountant assurance providers is now filled. The theoretical contribution is testing whether the theoretical framework by Kreiner, Hollensbe and Sheep is applicable for sustainability departments within audit firms.

(3)

3

5.1.1 Associate level A1 ... 17 5.1.2 Associate level A2 ... 17 5.1.3 Senior associate ... 18 5.1.4 Manager ... 19 5.1.5 Senior manager ... 20 5.1.6 Partner ... 21 5.2 Creativity... 23 5.2.1 Associate level A1 ... 23 5.2.2 Associate level A2 ... 24 5.2.3 Senior associate ... 25 5.2.4 Manager ... 26 5.2.5 Senior manager ... 26 5.2.6 Partner ... 27 5.3 Image ... 28 5.3.1 Associate level A1 ... 28

(4)

4 5.3.2 Associate level A2 ... 29 5.3.3 Senior associate ... 30 5.3.4 Manager ... 32 5.3.5 Senior manager ... 33 5.3.6 Partner ... 34 5.4 Controls ... 36 5.4.1 Associate level A1 ... 36 5.4.2 Associate level A2 ... 37 5.4.3 Senior associate ... 39 5.4.4 Manager ... 41 5.4.5 Senior Manager ... 42 5.4.6 Partner ... 44

5.5 Occupational life and private life ... 47

5.5.1 Associate level A1 ... 47 5.5.2 Associate level A2 ... 48 5.5.3 Senior associate ... 48 5.5.4 Manager ... 49 5.5.5 Senior manager ... 51 5.5.6 Partner ... 52 6. Concluding discussion ... 53 7. References ... 57 List of tables Table 1: Profiles of interviewees………..16

(5)

5 1. Introduction

The Big Four accounting firms continue to win the most mindshare with heads of sustainability worldwide when compared to other services firms according to a 2013 global survey by

Verdantix of 260 heads of sustainability. The CEO of Verdantix stated that: “The positive results for the Big Four reflect the multi-million dollar investments they have made to develop the sustainability marketplace, shape standards like GRI and SASB and to educate corporate leaders on best practice.”

The market for sustainability assurance is a market that especially works for the interest of many stakeholders. The research by Herrbach and Kosmala (2006) showed that in declarations about any profession’s role, the altruistic intent of protecting the public interest is often stressed. In such a context, professional identification processes leave a certain leeway for an exercise of individual agency (Kosmala, 2005). This leeway contributes to different forms of work

identification and distancing with respect to the profession, to the firm, to the client, to the job, to peers and supervisors. Therefore, the ‘raw’ economic interests of the accountant profession are disguised.

However, there is no research available that explains the identification process of non-accountants in sustainability assurance. It is assumed that for a professionally qualified

accountant it is easier to adapt to the rules, regulations and controls of a Big-Four firm that for non-accountant assurance providers. For example, time management technologies and the amount of bureaucracy involved are familiar constructs for accountants. The role of a non-accountant might therefore be more ambiguous than the role and tasks of a professionally qualified accountant. Thus, this research will examine to what extent are the task performed by ‘non-accountants’ in sustainability assurance or integrated reporting practices compliant to what the “non-accountants’’ themselves want or thought they would do? Therefore, the research question of this paper is: “How is the professional identity of ‘non-accountant’ sustainability assurance or integrated assurance practitioners constructed and managed in Big 4 firms?” As stated by O’Dwyer in his 2011 paper: “Studies examining the socialization of non-accountants in

Big Four environments could also be a fruitful focus for future study in order to unveil the processes (both formal and informal) through which Big Four ﬁrms strive to socialize

(6)

6

have on practitioners’ professional work, especially the formation of their attitudes and

approaches to assessing sustainability-type data.’’ This paper is important because it provides a

new insight on the inner workings of a “Big-Four” audit firm. Which controls, if there are any, does the firm have in place to alter behavior of employees? Which strategy does it have in place? Also it provides an insight on how employees react to these controls.

This research will be conducted in a “Big-Four” firm in the Netherlands. This firm will now be referred to as firm “ABC”. Ten interviews with professionals working in the department of “Sustainability reporting and responsibility governance” were conducted. These professionals are non-accountants doing sustainability assurance work.

To classify the strategy firm ABC uses in order to manage the identity of its employees, the theoretical framework developed by Kreiner, Hollensbe and Sheep (2006) will be applied. The strategy that firm ABC employs will either be classified to be a strategy of “integration” or a strategy of “differentiation”.

Two contributions are found in this research, the first is an academic contribution as stated earlier. There is now research done in a field in which there is a research gap, there is more information available about the socialization of non-accountants in Big-Four firms. As for the second contribution, the theory by Kreiner, Hollensbe and Sheep is a theory that should be applicable in every firm, our theory will provide evidence on if that’s truly the case.

Following this introduction, the second paragraph will be a literature review containing necessary background information. The third paragraph will contain an explanation of the theoretical framework used in this thesis and the fourth paragraph will explain the methodology used in this research. Subsequently, section five is the narrative which contains the findings and an analysis of these findings. The sixth section is the concluding discussion and finally the seventh paragraph will contain all the references.

(7)

7 2. Literature review

In this section various papers will be discussed that provide the necessary background information to understand this thesis in detail. The first section will contain literature that discusses “legitimizing new forms of assurance”, the second paragraph will discuss “commercialism and identity tensions’’, the third paragraph will discuss “identity tensions in audit firms” and the final paragraph will discuss “non-accountants in sustainability practice”.

2.1 Legitimizing new forms of assurance

New forms of assurance need to prove their “legitimacy” to stakeholders in order to maintain their “license to operate”. O’Dwyer et al (2011) explained in their research that providers of new forms of assurance need to obtain “legitimacy” from three groups: the internal world (the risk department), the non-client external world (non-client users of financial information) and the client world. As written by Cooper et al (2007), comfort with the potential users can be created by selectively borrowing institutionally accepted techniques from financial audit. However, the limitations of these competencies can quickly become visible in the presence of audit activities which are considered to be ‘‘soft or advisory’’, and which are not easily susceptible to financial audit techniques. Specifically, the auditors in this research were not clear about how performance should be measured in departments whose activities are ‘‘soft and advisory’’ (e.g.,

inter-governmental affairs); whether measures of outputs could be linked to dollars; and the extent to which specific measures would be relevant to users. Therefore, it is much more difficult for assurors not having a financial audit background to obtain legitimacy from their environment. Because these assurors are not given legitimacy that easily, they might have issues with

managing their identity. Also, for non-accountants working in Big-Four firms, work can be more difficult because of “commercialism”, the emphasis put on being profitable. These professionals might be “forced” to engage in activities which do not meet their job profile, but are most

profitable for the audit firm. This is a possible factor that creates “identity tensions” for these professionals.

(8)

8 2.2 Commercialism and identity tensions

Gendron and Spira (2009) researched former members of the fallen audit firm Arthur Anderson. This paper suggests that professional accountants are sometimes faced with significant events which threaten their beliefs, interpretive schemes and their self-perception. The researchers examine the reactions of the employees after the destabilizing event, and also research the boundaries of controllability; the extent to which an entity of activity is controllable, how it should be controlled and by whom. Interviewees were either skeptics of Arthur Anderson’s control mechanisms having the ability to control employees into performing adequate audits, restoring (improvement on current controls is required), unwavering (external factors caused the problems) or others (mixed feelings). Majority of the interviewees believed that Arthur Anderson became too involved in commercialism, partners had become corporate clones. This took away from the quality of the audit and negatively affected the image of audit firms.

In addition, the research by Andropolous et al (2010), explores strategies of control aimed at regulating identity tensions within highly creative settings. They examine creative workers, such as those employed in the creative industries (e.g. product design, music). These are workers that deal with pressures from multiple identity demands (Michlewski, 2008). Being part of a bohemian milieu and sharing cultural, rather than materialistic, values lies at the core of their artistic self-perception (Eikhof & Haunschild, 2007). Daily work pressures, including deadlines, budgets, market demands and client satisfaction, force identification with the business. In addition, ‘creatives’ are expected to innovate only within manageable bounds, because

production is embedded in an economic context. (Eikhof and Haunschild, 2007). Seeking to entwine their artist and business identities often generates tensions as creatives’ identity work brings together conflicting values and expectations (Hackley & Kover, 2007). Identity regulation strategies represent managerial efforts aimed at influencing how employees cope with such tensions (Alvesson & Willmott, 2002). Critical literature has provided rich insights into such nuanced controls, and their potential abuses (Sveningsson & Alvesson, 2003). However,

researchers emphasize the lack of studies examining how firms might help employees cope with multiple identity demands (Alvesson & Willmott, 2002).

(9)

9 2.3 Identity tensions in audit firms

McNair (1991) described audit firms as characterized by ‘sociological ambivalence’. This is a situation in which the behaviors, attitudes, and norms that are shaped and maintained by the reward system (commercial focus) conflict with those that would be compatible with the ethical values displayed outside. This causes the practitioner to be pulled in opposite directions

psychologically, because firms ‘mask the economic imperative by embedding it in counter-norms and unwritten policies rather than in the formal management control system’. The commercial aspect of auditing has now arguably become a part of being a professional (Cooper et al., 1996), even to the extent that the public interest orientation is often eliminated altogether. But still, the conflict between client service and the firm’s profit maximization remains

unavoidable. This is proved in the research by Herrbach & Kosmala (2006), while an absence of any ethical or public interest orientation was noted in the interviews, interviewees

unambiguously stressed the commercial drive.

The tension created by the commercial focus may be even more relevant in the auditing context, this is because of the elitist and conservative dimension inherent in the firms. Rewards are targeted at a limited number of individuals and leave most of the others behind. While following the professional ideology is difficult given the firms’ business orientation, fully embracing the commercial focus and committing to the firm’s development is difficult for those who do not belong to the ‘chosen few’. This may further lead to ‘stepping back’.

The rhetoric of organizational values and its difference from ‘reality’ further works the process of distancing in hand. In balancing cynical distancing, retaining positive self-image and justifying the reasons for being an auditor are important in order to maintain satisfaction on the job. Self-justification, appears to be of great value in audit firms. Practitioners may give up the firm as being the source of their identity and draw upon professional and/or sub-unit (e.g. an office, a team) sources of identification. Distinct personal motives for working in audit can also be emphasized, such as a sense of challenge on the job, training or any relevant attribute. The researchers argue that this situation opens up a ‘free space’, whereby individuals more or less consciously and strategically hold onto identity attributes from the environment in order to structure their self-image around desire and, therefore, abide by discipline. Therefore, firms still can rely on the fact that auditors find benefits from the work they perform for themselves,

(10)

10 The research by Kornberger, Justesen en Mouritsen (2011) mentions that audit trainees in big accounting firms are disciplined, not only concerning technical expertise but also in terms of conduct in general. These disciplinary mechanisms are often connected to powerful constructs, such as ‘‘being a professional accountant’’ (Grey, 1998) or ‘‘career’’ (Grey, 1994). These constructs heavily regulate the behavior and attitude of trainees. Everyday social practices of audit trainees are influenced; the concept of being a ‘‘professional’’ accountant is defined by specific ways of talking, dressing, behaving and even feeling at the office (Coffey, 1994). Disciplinary practices form disciplined professionals, who behave in accordance with the norms of the firm and the values of the profession (Anderson-Gough et al., 2000).

Management technologies such as time management devices, are an important in disciplining trainees. Examples would be simple ‘‘personal planners’’ (Coffey, 1994) to rather complex time budgeting systems (Anderson-Gough et al., 2001). They form a significant aspect of the regulation of the trainees, the trainees are disciplined and normalized through these technologies. Yet, trainees are not only subjected to these systems, but are also active in managing these systems to enhance their career prospects. Foucault (1982) described this unstable relationship as the ‘‘intransitivity of freedom’’; the exercise of power relies cannot rely on power relations alone, at least partial acceptance of the subject is required. Anderson-Gough, Grey, and Robson (2006) state in their research that young professionals put effort into seeking out ‘‘good’’ clients and positioning themselves amidst influential partners to gain visibility.

Regarding audit partners, the research by Covaleski, Dirsmith, Heian and Samuel (1998) focuses on the controls that shape the identity of partners. They state that techniques such as management by objectives and mentoring, are aimed at converting autonomous professionals into business entrepreneurs by replicating the firm within the individual. They conclude that

‘‘Control in professional firms occurs in a complex field of power and resistance in which people tend to be both explicitly and unwittingly constituted as corporate clones.’’ (Covaleski et

al.,1998). Prior literature has emphasized that professional services firms are increasingly commercialized, rationalized and managerialized (Cooper & Robson, 2006; Cooper et al., 1996; Hanlon, 1994). Therefore, it has been suggested that partners experience identity shifts from being a disciplined professional to a more entrepreneurially minded agent (Greenwood &

Suddaby, 2006; Sikka, 2008). The article discussed earlier, Gendron and Spira (2009), discussed the symbolism used at an Arthur Anderson partner meeting in 1989. The themes were profit and

(11)

11 sales, the rock song ‘Eye of the Tiger’ was played loudly, and a live tiger was brought on stage. Partners were in that way portrayed as ‘‘tigers’’. Some partners at Arthur Andersen worried that increased business competition was eroding profits, and therefore argued that the firm had to adopt aggressive marketing strategies. This scene was repeated at several partner conferences around the globe. For example, at a Sky Accounting partner conference in 2009 there was strong emphasis on the entrepreneurial attitude that was expected of partners. Kornberger, Justesen and Mouritsen (2011) argue that at Sky Accounting and perhaps in other Big Four Firms, partners were described as entrepreneurs who run their microbusiness within the larger firm. This statement is in accordance with Gendron and Spira’s (2009) statement that partners in large accounting firms are considered to be managers in charge of individual profit centers.

Therefore we can assume that senior staff, and especially partners, are expected to act in an entrepreneurial manner and sometimes even breed ‘‘black swans’’ in search of new business opportunities. This is due to the commercialization and diversification of the Big Four. We can conclude that auditors are ‘raised’ in audit firms, and are therefore taught to behave in that way from the very start of their careers. But we cannot say the same about non-accountant

professionals. They have different backgrounds and therefore and not used to the environment of a large audit firm.

(12)

12 2.4 Non-accountants in sustainability practice

The research by O’Dwyer (2011) showed that several non-accountant managers that were part of the research, insisted that they were working for the readers of sustainability reports. Also they claimed that their surely ‘‘idealistic view of sustainability’’ reflected both a personal and

professional commitment to ‘‘selling sustainability as a concept centered on a core concern for

stakeholders’’. These non-accountants were sustainability experts. These ambitions led to some

non-accountants having ambitions for assurance consistent with their personal commitments, at times without regard for the objectives attached to individual assurance assignments. Senior partner (accountant) assurors were careful to constrain what they viewed as certain non-accountant ‘‘activist’’ tendencies. For example, a JIF senior manager’s apparently ‘‘extreme’’ commitment to a stakeholder-oriented view of assurance resulted in him being ‘‘left out” in one assurance assignment. This was because senior partners considered him to be excessively critical of the quality of a client’s stakeholder engagement process.

Throughout their reflections on their experiences of practice, seniors, associates, and managers, particularly non-accountants, emphasized their personal and professional commitment to holding companies to account on behalf of wider stakeholder groups. However, senior

partners alongside emphasizing their professional responsibility to stakeholders or readers, viewed their role in more impartial terms and were less inclined to link their professional and personal motivations.

Also, the coordination of multidisciplinary practice has exposed some tensions between the different types of assurors. Initially, different approaches to assurance became evident when several non-accountant assurors interviewed expressed discomfort at the restricted scope

assurance approach adopted by PMP’s (the second Big-Four firm interviewed) accountant assurance team. According to them, the financial auditors were ‘‘somewhat timid’’ as their engagements only focused on assessing key numerical indicators determined by PMP. Non-accountants claimed that their approach was too heavily influenced by ‘‘a structured, inflexible

mentality’’. It was claimed that financial auditors in both firms followed standard substantive and

compliance testing procedures far too rigidly. For example, one JIF senior manager complained that financial auditors ‘‘had insufficient knowledge of the subject matter in (sustainability)

reports to judge the work of experts (non-accountant assurors)’’ and gave insufficient attention

(13)

13 3. Theory

This thesis will apply the theoretical framework developed by Kreiner, Hollensbe and Sheep (2006). In their article they conducted in-depth interviews with Episcopal priests to find out how members of a particularly demanding occupation conduct identity work to negotiate an optimal balance between personal and social identities. They define personal identity as the

“individuated self—those characteristics that differentiate one individual from others’’. Social

identity is defined in their article as “categorizations of the self into more inclusive social units

that depersonalize the self-concept”. Their results showed that the priests used two main

strategies to deal with the demands of the occupation: the strategy of integration and the strategy of differentiation. The strategy of integration entails blending of individual and occupational identities, which means that there is not much difference between the individual identity and the occupational identity. The strategy of differentiation entails the segmentation of individual and occupational identities. Both strategies are the opposite of one another.

Integrating personal (individual) and social (occupational) identity might cause “over-identification” which means that the identity of the social group replaces the own identity of the professional. In this state, the self gets lost and there is not much “uniqueness” left to the

professional. All employees are therefore more or less similar to each other in this state.

Differentiating personal and social identity means that the individual keeps his personal identity and social identity separate; both identities do not have an overpowering effect on each other. An extreme situation is also possible, in which the personal identity might not even get affected by the social group in the slightest, this phenomenon is called “underidentification”. In this state, the individual lacks what is called “inclusion”, similarity to others.

While working, an individual might have to deal with “identity demands”. These are defined as “situational factors that pressure individuals towards extreme integration or segmentation of personal and social identities”. Simply put, the environment expects the

individual to act in a certain way. An example would be the management expecting the employee to attend company events on the regular. Because of these “identity demands”, the individual might experience what are called “identity tensions”. These are “the stresses and strains

experienced by an individual in relation to the interaction between her or his personal identity and a given social identity”. An employee might have a social life outside of work which might

(14)

14 be affected by the employee having to attend company events regularly.

The individual might feel the need to engage in “identity work” at times. Identity work is a range of activities that individuals engage in to create, present and sustain personal identities that are congruent with and supportive of the self-concept. It therefore consists of the tactics that individuals use in response to “identity tensions” and “identity demands”. For example, an individual can try harder in order to not get influenced by the firm culture. Also, an individual can try to make up for a substandard performance in other areas, such as trying to increase social interaction with colleagues in order to make them become more accepting of mistakes that are made by him. It can also be because his working environment asks a certain amount of “identity work” from him, which we defined earlier as “identity demands”, such as socializing with co-workers and attending company events.

In the context of this thesis, employees will be asked if they experience any “identity tension” due to “identity demands”, and in what kind of “identity work” due they engage to deal with both. What kind of effect do all of these factors have on the “personal” and “social” identity of the individual? Does the individual feel that there is not much uniqueness left to him after being formed to the firm culture? Or is it that individuality is something that is stimulated within the firm? Does the firm use a strategy of integration or a strategy of differentiation?

Integration Identity Demands: Inclusion Occupational Identity = Personal identity Identity tensions (Overidentification) Identity work Identity tensions (Underidentification) Occupational Identity ≠ Personal identity Identity Demands: Uniqueness Differentiation

(15)

15 4. Research methodology

To answer my research question, I obtained an internship at one of the “Big-Four” audit firms which will now be referred to as ABC. I contacted one employee of the “Sustainability and Responsibility Governance” department within the firm. She provided me with a list of the names of all the employees and whether they hold an accounting-related degree. From that list I chose ten individuals and made sure my sample was representative of all hierarchal levels within the department. I then contacted all employees without an accounting background individually through email and provided them with a small explanation of my research question and why I specifically wanted to interview them. The interviewees then responded back through email or phone call and appointments were made. I made sure to inform the individuals beforehand that I was going to record the interviews and they all agreed to it. The interviews were conducted between the 14th of March 2016 and the 8th of April 2016. Nine interviews were conducted face to face and one interview (with the senior manager) was conducted through a phone call. I had prepared a list on interview questions before the interviews, these questions were partially based on assumptions made in previous literature and the rest of the questions I had created myself. The interviews I took consist of “standardized open-ended questions”. As Gall, Gall and Borg (2003) explain, participants will always be asked the same questions, but the questions are worded in a manner so that the provided responses will be open-ended. Because of the questions being open-ended, participants have the ability to provide as much detail on information as they want. The professionals have the opportunity to fully express their viewpoints and experiences. Also, it becomes easier for the interviewer to ask follow-up questions. During the interviews I at times deviated from my list of questions dependent on the topics that were more relevant for each interview. The length of the interviews ranged from thirty-five minutes to 75 minutes. The length of the interview depended on various factors, such as the time the interviewee could spend on the interview and the length of the answers of the individual.

After having conducted all the interviews I started the transcription process. I transcribed all interviews in two weeks’ time in April of 2016. In order for my research to be dependable, I saved all recordings of the interviews and sent all my transcriptions to my supervisor.

Subsequently I sorted the answers of the interviewees based on the topics that were being

(16)

16 and “occupational and private life”. After speaking with my supervisor I then decided on how I would structure my narrative section. Afterwards, I extracted the important data from the data that I had already sorted per topic. I have made sure that I took all the opinions of the participants with me in my in my analysis, in order to increase confirmability and fairness. Subsequently I sorted all the data per hierarchal level; this is to show the difference in opinion per topic for each level within the organization (and potential socialization into the firm as the individual moves up into the firm). After writing the text for a hierarchal level, I applied the theoretical framework to the answers given. I did this for each hierarchal level per topic discussed. Are there any identity demands and identity tensions apparent? What kind of identity work does the individual engage in? After finishing the narrative question I will try to assign either the “integration” or the “differentiation” strategy to the department and the firm as a whole. Even though the conclusion will be created based on this specific case setting, the findings and conclusion will be clarified in way which will increase transferability to other milieu.

Table 1: Profiles of interviewees

Hierarchal level Job tenure at ABC

Previous working experience Interview medium Partner 18 years Policy officer in the government,

environmental consulting

In person Senior Manager 5.5 years Business development consulting Phone call Manager 5 years Sustainability policy officer in

the government

In person

Manager 5 years Sustainability advisory In person

Senior Associate 3 years Environmental, social and corporate governance officer

In person Senior Associate 1 year Policy officer in the government In person Senior Associate 1 year Analyst investment law and

human rights law

In person Associate level A2 2 years Sustainability consultant In person

Associate level A2 2 years Sustainability business developer In person

(17)

17 5. Narrative

5.1 Initial work experience 5.1.1 Associate level A1

This interviewee has been working for ABC for about eight months and indicates that he was told during the job interviews that the work would consist of fifty percent audit work and fifty percent advisory work. He wanted to do advisory, but was willing to do audit work. “So they did

their best to explain what it (assurance) is about, advisory you can imagine, so if you do not have any experience with audit because of you educational background or internships you don’t really know what an audit is about.” The associate states that he’s contented with the work he’s doing

right now, but it’s really the repetitive character of assurance work that he does not like. “It’s

always the same work just for another client. In that sense I notice that I tend to want to move to advisory work between now and two years further. If I’m a senior associate I’ll say that I can do some assurance work here and there if that’s necessary for the team but my focus should be on advisory work.” After a few years of experience the employees get to choose whether they

would like to focus on advisory or on assurance. Therefore we can conclude from this section that associates that do not have an accounting related background do not know exactly they will be doing, but it is compulsory to do assurance and advisory work. However, the firm does give the employees the opportunity to do the work they prefer after gaining a few years of experience, which is at senior associate level.

5.1.2 Associate level A2

Both A2 associates have been working for ABC for about 1.5 years now. Like with the associate of level A1, they both indicate that they were told about audit work but did not understand it fully. One female associate stated: “In practice I noticed that it’s not my nature, I have to work

hard for it. There are people who do have an accounting, financial or economic background, for them the way of thinking is more natural. So that required some getting used to. I did not have any expectations, I had no idea. I just went into it. I felt as if I was in the deep. (omitted) The nice thing is we have development days which the accountants of my year level also have. You learn a lot of theory and also practice, I also get very good guidance from my colleagues from the department. I said I felt in the deep but where it was possible I was helped very well on the

(18)

18

projects themselves and there was a lot of time for coaching.’’

The male A2 associate stated that he was told that he would do fifty percent assurance and fifty advisory. But in reality he is doing more assurance work. “I do a lot more assurance

work then I expected, but that’s fine. So if you ask to what extent does it meet (expectations meeting reality), I didn’t really know anything. I thought I would do more advisory, right now I’m also trying to keep it 50-50.” What we can conclude from this section is that ABC tries to

allocate their employees to where more employees are needed, because of this the fifty percent that was supposed to be advisory is then compromised on. We can also conclude that even though the associates enter without any knowledge about auditing, ABC makes sure there is enough guidance available for the starters. The male associate stated in accordance to this statement: “I worked as a freelancer for a consulting company for making food commodity

supplying more sustainable. I stopped working there after half a year because that company was not very suitable for starters. ABC is better in that, every year many people come in and they don’t expect that you already know how to do everything. And there’s a lot of capacity for helping others, people know coaching is part of the job. They need to make time for it.’’

5.1.3 Senior associate

All three senior associates have a background different from accountancy. Until now they have found assurance work interesting but they all definitely want to go further in advisory. One senior associate stated: “Let me put it this way, if I only had to do assurance then I would not

work for ABC much longer. Because I don’t get pleasure from it, there they really look at things from the perspective of an accountant. (omitted). When I first came here I was accepted for a field in which we’re not doing that much yet. Were still developing that and I have a role in developing that proposition. And at the same time it is expected from me that I learn the ABC “way of working’’. This means I also have to work on projects I never thought I would do. My role is to make sure that the proposition we’re developing is successful and to increase my work on it, to make sure that fills my agenda. If I don’t succeed in that and I would have to do the work that is being done now in sustainability which is assurance, I would not be working here for long.’ One female senior associate stated: “So my first busy season was a big shock, shock is a big word but I thought it was really difficult to just understand what I was doing here. I am used to, also from my education, thinking conceptually. I just want to understand the bigger

(19)

19

picture. So when I first started within assurance I did not have that picture because you kind of start with details. But for me it was not clear what I was doing, why and how does this fit in the whole, what do we want to achieve with this. That makes it difficult in the beginning. (omitted). From next season I will be doing a lot more advisory, that’s where my passion lies a lot more. I also feel like my background fits that much better. But I do think it helps you if you do that at the beginning for a few years, because ABC is in the end an accounting firm.” Like we concluded

from the associate A2 section, ABC puts the employee to work where he is most needed. The employee himself must make sure that there is enough work for him in his desired field (advisory in this case). In regards to this statement, a female associate who does sustainability work for the financial sector stated: “If I was hired to do other assurance besides the financial industry, I

would not have done it. That would have been a point. Let’s say it’s also a lucky niche, we have so much work in the financial sector for sustainability that I never have to do things that are not related or to find billable hours somewhere else.”

5.1.4 Manager

The two managers interviewed both have almost five years of experience working for ABC, both without prior experience in accounting related fields. The male manager stated that he globally knew what kind of work he was going to do. But like his subordinates, did not really understand what audit work consisted of. “I really felt like I was thrown in the deep, I had just gotten in and

I felt as if I didn’t understand or didn’t understand well enough what I was doing. I also thought it was interesting; you converse with clients a lot, you visit a real company, and you see how messy an administration can be. All of that is interesting. But I also felt quite out of habit, more of that.” The female manager did not experience much difference in the type of work she was

doing and was expected to do. Her main worry was the fact that she might lose her freedom due to working in such a large firm. “I was afraid I would have less freedom than I had in the smaller

consultancy firm, because I would end up in a large hierarchal context in which I would not be able to take much initiative. But that was not the case at all, that (taking initiative) was possible and is still possible. So I thought that was a positive. But what I did not expect what that there are so many systems, ways of working, departments, who brings input where, etcetera in such a large organization. I did not expect it because I came from a company with only five people,

(20)

20

that’s different from the massiveness of ABC.”

5.1.5 Senior manager

The senior manager has been working for almost 5.5 years for ABC until now. His expectations of the work he would do are not much different than what he expected. He states that it is exactly the amount of work you have to put in order to keep doing the things you want which is different than what he expected. “What I did not expect was the extent to which you had to take initiative

yourself for the development of the work you do. The responsibility you have to take to get to the place you want to go and do the things you want to do. That really depends on how much responsibility you take, if you don’t ABC takes you to places you perhaps don’t want to be. That’s the most important thing, I thought wow I have to do a lot of work to get to places I want to be.” In regards to the previous statement he elaborated: “If I don’t pay attention ABC could make an auditor out of me. The probability is not very big. It’s not that I see audit as something negative, but I had a different view about my future. Then you have to make sure yourself that that type of work will come. That could be through selling it yourself, or know to involve in together with others. That’s the most concrete example I think. ABC puts you in where they need you, you have to make sure that ABC needs you for the things you’re good at and doesn’t put you somewhere else. ABC is a firm that works with productivity goals, continuity is in work that comes back every year, and sustainability accounting has a very strong repetitive character. So in that you can easily reach your productivity. So you can easily be forced to do it, so you have to make sure that you put other productive work against it to prevent you from ending up there.”

This statement is in accordance with what was found with subordinates of this senior manager. We can conclude that ABC gives the preference to assurance work because assurance work easily reaches productivity goals. The senior manager clearly experienced what is called “identity tensions”. As he states, you can be easily forced to engage in assurance work if you cannot create advisory work by yourself. He is experiencing stress between his “personal identity” and “social identity”. The effort that the individual has to engage in order to create a new productive opportunity to not be forced to engage in assurance work is what is identified as “identity work”.

(21)

21 5.1.6 Partner

This partner entered the firm as a consultant 18 years ago. He is one of the main figures that established the sustainability assurance and responsibility governance department in ABC. He stated that because of the increasing demand for assurance, he and his former team started working in assurance. He saw a hole in the market, there was no pressure from ABC involved. “We started to do more assurance type of work, purely because the clients asked for it. After five

to six years, we thought we should go back to assurance because fifty to sixty percent is assurance related work, should we not just go there? So it was just following what the client asked from us. (omitted). Then we assembled the RA’s around us. (omitted) We could have been on the advisory side for emission reports, but there was also a demand for assurance. It was a commercial choice, that’s continuity, we could do it again every year and earn more money. That was a very good choice. (omitted). Our sustainability group, and I think that will also be the case for other firms, is kind of a smaller version ABC. We have a stable assurance portfolio and a volatile consulting portfolio.” In regards to allowing the importance of his subordinates doing

audit work he had said the following: “A few years ago we were less explicit about saying you’re

going to do assurance work. Now we tell all the associates that are here for a job interview it’s nice that you’re here but realize that you’re going to be doing mostly assurance work for the first few years. People don’t really like that in the beginning, but I also think that’s interesting to experience, by doing assurance you learn a lot about a company, you understand how a company organizes it’s data flow. (omitted). And you’ll see a lot of firms, and an inside view of how they work. Actually, all colleagues find that interesting. But we’ve been explicit about that for the last three to four years, before that we had discussions with people who said I thought I would be a sustainability consultant here bit I’m only doing audits, I don’t want that.” I then

asked if it was possible for them to choose to focus on advisory instead of assurance. “That is

negotiable. But when we work for the client we have a team, and we need to serve those clients. And sometimes that creates tension because people want something else. But this is what we’ve sold so we need to this first before we do other things. We do this as a team, that means that sometimes you’ll do fun projects but it’s also simply work. (omitted). You have variation here. But it does happen at times, especially when people are further in their careers. But then it’s important that you’re able to generate enough business. If you want to be a consultant and there is no business, then your career won’t be very long in ABC. Then the cold side comes up, but all

(22)

22

of us are here to also earn money. We do invest in new things that don’t bring us money right away but in the long term we hope to win capital in there.”

It is clear that it is expected you do assurance work when needed, and after reaching a higher position you need to be able to create your own business if you want to do other things. Employees have experienced “identity tensions” because of the unexpected amount of assurance work they were doing. Because of this the department explicitly informed the employees

beforehand. With the partner no “identity tensions” were spotted. It is clear that the partner made his moves with the intent of increasing profit for the firm.

(23)

23 5.2 Creativity

The associate had mentioned that audit work is rigid. In response to that I asked him if he feels if there is creativity needed in this field of work. “No. I don’t know much about financial audit but

we have a lot of colleagues that have a financial audit background or already have an RA degree and now work for sustainability. And they say that here with us you still have the ability to be relatively creative. It’s not like IFRS or other accounting standards. I haven’t done a financial audit before but that’s what I hear from financial audit colleagues. So in that sense relatively more but it will always be less than with an advisory project.” I then proceeded to ask him

whether he gets the opportunity to be creative in the department. He stated that that really depends on who the person above you is and who is managing the project. “That really depends

on your senior and manager. Some of them give you freedom and say Tim how would you do this? Go start work and bring forth a proposal and they will tell you if they think it’s right or not. But there are also people that say we have to this and that and you have to do it this and that way, go start your work. (Omitted). I think it’s difficult to say if I want more creativity, I think audit work inherently requires less creativity. Because then you will get creative bookkeeping and that will bring you issues with the government.’’

We can conclude from this section that sustainability assurance is a field that does not require creative input, but compared to financial audit, which is inherently even less open to input, it does require some more creativity. But it is dependent on the person in charge of project management or the senior that works above you. Since the interviewee has no experience with financial audit, based on his obtained information he mentions that the field does not require creativity. This also has an effect on the concept of “uniqueness”, we assume that personal input is not something that is required for the field and therefore “uniqueness” is not stimulated within the department.

(24)

24 5.2.2 Associate level A2

When asked about whether they believe creativity is needed in their work the male associate stated: “Advisory yes, assurance no. The nature of the work is not creative. Creativity is punished

in that. (omitted) You can say I’ll do it that and that way, they’ll ask what do you mean? There it’s about maximum output, you have to be as efficient as possible and do as much as possible as fast as possible. . I can imagine that on a high level, I of course just started then you’re just going through excels, and then creativity is not rewarded, or at least not asked for. And of course when you’re at a higher level and you start thinking on a strategic level, then it’s different. (omitted). Everything is hammered shut by rules. I think you need to do be able to do a lot of things for accountancy, but if there’s something that’s not needed that’s creativity. Just look at the people that walk around here at accountancy, those are not the most creative souls. (omitted) Sustainability reports of course have a different meaning than financial reports. A promotional flyer is very denigrating way of calling it, but it’s of course kind of a story which involves then wanting to tell how good they are. And then I think that sometimes it’s our job to ask if it makes sense what they say. It’s not about a small table or a journal entry and the write-offs this or the losses that, it’s about the general image the company creates. That’s what you look at instead of looking at a specific part. So there’s definitely more room for interpretation.” The female

associate stated that she thinks that creativity is needed more with sustainability assurance than with financial audit: “It’s difficult for me to judge because I don’t know the view of an

accountant. But what I do understand is that when I’m with financial audit at development days is that they have fixed journal entries that are the same with almost every client. So it’s a lot more standardized. And with us, if I take employee satisfaction as an example, gets defined differently at every client. So yes you have to be creative and have more of an open mind to understand what he means but also to stand firm to say if something is not right or some more information is needed.’’ I then asked her if she feels that she gets the opportunity to be creative

in the department. “Thinking by yourself is something that gets stimulated. (omitted) Actually,

one suggestion I gave with a client was implemented. Sharing your own opinion is stimulated, they ask you what you think about this, tell us what you did and why did you do it this way. I also think that depends on the team member. I work with teams that mostly contain the same people. So it’s possible that it’s different within other teams, I think that that is a bit personal.’’

(25)

25 comparison with advisory work, sustainability assurance is something that does not require creativity, in fact it might even be something that is not appreciated. He does state that sustainability assurance requires more creativity than financial audit does, which is also confirmed by the female associate. In addition, the female associate states that own input is something that gets stimulated within the department. What we can conclude from this is, like the female associate stated, the amount of input allowed is something that is dependent on the person in charge. No “identity tensions” were spotted with both employees concerning creativity, they are accepting of the circumstances and just move along with them.

I asked the senior associates about creativity in the field, if they feel that it’s needed and whether they have the opportunity to give input. All three associates state that the field itself is not creative, but since it’s still underdeveloped it requires their own input. “The whole discipline is

still hugely in development, it’s not as advanced as core assurance, financial audit. So I think because of that we still have freedom to think about how we should deal with this. That needs, using a nice ABC term for it, a lot of professional judgement. But in the end if I have to audit a number it’s based on the same tasks as done in financial audit. So you can’t really deviate from it in that sense. So its’s half-half I think. (omitted) But I do think that is the case for this

department. I can’t say anything about others, and I mean you also hear other stories. I do think it goes very well here, a lot of discussion takes place here. Of course in the end someone is responsible and has to make a decision and sometimes you think do we all agree or not but I do feel like I can say the things I want and it is listened to.’’

We can conclude from this section that because of the rigid nature of audit, personal input is not necessarily required. But because of the less developed nature of sustainability assurance, more input is required than with financial audit. And the associates believe they get the

opportunity to state their opinion within the department. Therefore, no “identity tensions” or “identity demands” are spotted.

(26)

26 5.2.4 Manager

The female manager stated that the department holds discussions with each other to find out about each other’s views. “I think RA’s conduct the discussions from the knowledge they have of

reporting, and the non-RA’s conduct the discussions more with logical thinking and reasoning with society and stakeholders in mind. Because they have a less rule-based background. But on the other hand both have to deliver quality, both require professional judgement. But everything is done with discussions and a lot of review from other people before something is signed off. Because of that we make sure that we agree with each other. You’re right it’s not as clear as financial auditing. The client understands financial auditing more, but sustainability assurance is more unclear to them. But I think the clients also like it that you can do things with logical thinking without only following rules.” I then asked her if she considers professional judgement

to be equal to creativity. She answered: “I think it’s the same, of course we can have the

discussion that it creates creative bookkeeping, but that’s not the same. But when you asked the question I saw it more as professional judgement and holding good discussions with each other to know each other’s view. But you have to keep integrity. So I think being creative but keeping

integrity is in my opinion professional judgement.”

What we can conclude from this section is that the employees of the sustainability department hold a lot of discussions with each other, and review each other before making decisions. Through that they make sure that everyone agrees. We can therefore assume that personal input is valued. There is no reason to assume that there are “identity tensions” present with the managers.

5.2.5 Senior manager

Like various other subordinates, the senior manager states that creativity is inherently more limited in audit work. “Because there are more technical requirements, according to law and

things ABC thinks have to be done, quality or appearance. So that’s more limited. But I have operating in a different environment than what you call core audit, so I have always had the room to think critically and therefore also in a creative way to meet the requirement of ABC and law. (omitted) It’s difficult to deal with all the regulation and requirements, but it’s the point to search for room and opportunities in which you can bring in your own input. Some things need to be done, the biggest profit is in to just accept that things are like that.” I then asked if

(27)

27 creativity is needed more for sustainability assurance, he answered: “Yes. I think that has to do

with the discipline (sustainability assurance) being less methodical than core audit. Also you work with clients who still have to figure out a lot, so it’s about what does the client want, what can we do, what is allowed and what can we achieve together? So in that sense we need to be creative.”

What we can conclude from this section is that the senior manager does have to ability to be creative in an inherently limited discipline. As he states himself, you cannot be creative everywhere and therefore “accepting” the circumstance is most profitable. We do not spot any “identity tensions” from the senior manager in regards to assurance work.

5.2.6 Partner

I asked the partner because sustainability does not have fully developed standards like IFRS, if he thinks that requires more creativity. His answer was: “That requires more professional

judgement, not so much creativity. Firms can report under GRI G4, that does give guidance. It does not prescribe how to value things but it does indicate how to determine the material subjects, it indicates what to take with you in your report. To an important degree, we still test against the norm of the company. The company defines its own material themes and KPI’s. We give them advice on if their KPI’s represent what is considered material. So there is much more dialogue there, which requires professional judgement. What is also different from financial audit it alongside the numbers, KPI’s, the text of the report is important. The claims in the text are important, many times those claims are also qualitative. We also have a lot of discussion on those claims with the client. That makes it interesting and difficult. It’s not zero’s and one’s, there’s room for interpretation. The colleagues that come to us from financial audit find that difficult. So you’re holding a discussion on the content with the client, in that sense you are allowed to think yourself.’’

Through the words of the partner we can conclude that because of the guidance-based set-up of the GRI standards, the department testing against the norm of the client and qualitative claims in reporting text, there is room for the employee to “think for himself”. This is defined by the partner as “professional judgement”. We do not spot any “identity tensions” with regards to “creativity” with the partner.

(28)

28 5.3 Image

For comparison purposes I then asked him further how the associate experiences working with RA’s. “In the trainings I do with them I noticed them being very focused on compliance. What is

the minimum amount of work required to get the maximum result.” He states that he thinks that

the people of his department care more about what is stated should be trustworthy. Because investors need to use this, people believe what is stated in these statements and if that’s not accurate, society is going to be the victim of it. Therefore they care more about stakeholders than financial auditors do. ‘’I do think there is a reason that they (RA’s) come to work in this

department, they need to have some interest in sustainability of course. If I think about it I think they have that less. If I work with them they look at sustainability from a reporting perspective, that broader view on what is happening within sustainability is something that is missing a bit.’’

I then asked him if he believes that non-accountant assurance providers are stricter than financial auditors because of personal views. His answer was: “Yes I do recognize that. To give you an

example, I had to do a project for the “charity lottery”. This was the first time they reported there CO2 emissions per prize. (omitted). In my opinion they were just using random websites to get their data (determining life cycle of raw materials per prize), they also used scientific articles but mostly random websites. They used websites like vice.com, very popular literature. Then I think, if you’re going to report about this than do a good job. You will tell something to the reader of this report, you claim something important. If that’s poorly substantiated… In that sense I recognize it. It does depend on the person though. I definitely know that the younger people, and definitely compared to RA’s on our department or the people that came here from financial audit, and definitely the people that start as associate in the sustainability department all have an intrinsic motivation, have personal morals and values. We all think all of us need to treat the world better. So that can lead to us perhaps being stricter. And because there is no standard, we need to come up with the standard ourselves. Or at least when is something appropriate and when not. A lot of professional judgement is needed for that.’’ As a follow-up

question I asked him about what he believes other departments within the firm, mainly financial audit, think about the sustainability department. “I do think that definitely a part of the company

still thinks of this as a hobby club. I do think that if you look higher up, where people are that need to have a vision about the future of the job and the board of directors and things, they do

(29)

29

take it very seriously. I think they know that we need to go to integrated reporting at some point.”

We can conclude from this section that sustainability assurance providers look at reporting from a wider “stakeholder” perspective and financial audit looks at it more with a reporting perspective. But no “identity tensions” are spotted from the associate as he works with RA’s, he does consider their way of thinking to be more superficial, the associate clearly

separates individuals without an RA-degree from non-accountant assurors. In addition, he states that sustainability assurance is not taken seriously by everyone within financial audit, it is the people that are higher-up within the firm that understand the importance of the field. We can therefore assume that sustainability assurance is still struggling to gain legitimacy from the standard auditor within the firm. Also here, no “identity tensions” are spotted. From his answer we can assume that the associate does not engage in “identity work” either to prove his

legitimacy.

The male associate stated that the main difference with working with RA’s, is in that financial auditors have audit guidelines, which are not as established with sustainability reporting. “What I

notice is that, of course I don’t want to generalize them. The accountants are used to all those frameworks, but if they don’t have them anymore they have more difficulty. (omitted) They are stricter, mainly concerning procedures. I notice that we look at reasonableness (omitted). If a small thing is put somewhere else, we don’t really care about it. We define what is important (omitted). They look at the small things in a more meticulous manner and want to deal with it that manner.” The female associate answered accordingly: “Sustainability assurance is a very new field and a lot of clients have nothing, or for example the database is not well organized, the processes are not good, there are no definitions, if you ask for something and they send you the wrong thing, it’s not a mature process yet between the client and us. So we have to be strict in that, we can’t just accept anything if you haven’t demanded anything. (omitted) But I do think that our demands surely won’t be stricter than theirs, definitely not.’’ I then asked the associates

what they think other departments, especially the financial audit department, think of their department. They state that there are a lot of open minded professionals who take interest in their work. But both associates stated that they do not think that they are taken seriously by the whole

(30)

30 financial audit department. “A financial audit partner once said if you look at the total fee of the

project, a very small percentage goes to sustainability. But at the shareholder’s meeting, relatively the most amount of questions are related to the sustainability report. So in a certain way it does not get taken seriously and I do understand it, because there’s a lot of room for interpretation and there are less direct consequences associated with our report. If in the newspaper it says Ahold has made a loss of that many millions in 2015, that has a much bigger impact then if it says Ahold has emitted two percent more emissions.’’ The female associate

stated: “I think that’s also inherent to the type of person, because they are the people who study

accountancy and have a focused view. They look at numbers, journals that have always been that way, happened that way in history and give judgement about it. It’s kind of rigid, and with us you need more of an open view. So I can understand that that open view can be difficult for that type of person. I am now generalizing them but I think the cause is somewhere in there.”

It is clear from the answers of both associates that the profession is not taken completely serious throughout the firm. We can conclude that the department is still struggling to obtain legitimacy within the firm. A possible cause would be, according to the female associate, the fact that financial auditors have a focused view, and sustainability assurance requires a more open view. But also with these associates, no identity tensions were spotted, and they do not engage in any “identity work” individually to be taken more seriously. Also, RA’s are stricter in regards to procedures, therefore it becomes more difficult for them to work in an area such as sustainability assurance were standards are not as defined. But no friction is spotted here either, both associates are accepting of the differences between the two types of professionals.

When asked about whether sustainability assurance providers are stricter due to personal morals and values, all associates answered that it’s exactly due to the fact that the profession is not that established. A lot of times it’s the first time the client is engaging in sustainability reporting. “We

work together with a financial team, I can imagine them thinking they’re so critical they want to improve the world, but it’s about if you report something, it has to be accurate. A company is relatively less experienced in it, so there is more discussion on what to report and how to report. That discussion does not exist at all with financial reporting. So in that sense, I don’t think they’re more critical. It’s just that the experience on reporting is not there with the client and it

(31)

31

creates more discussion.” Another associate stated: “A sustainability report is not compulsory, then I do think that you need to show what you need to show. You asked us to check it, so

apparently you think it’s important. In that sense there could be a difference, in something that is new and something that has been going on for years, in which all the processes are familiar. We get asked a lot, what do you guys actually do, why do you do this, why do you need this data and why not that. That causes you to ask more questions to the client and explaining more to the client. But I think it’s difficult to say if that’s more or less than financial audit.” Another

associate also stated that both groups don’t completely understand what the other is doing, for sustainability assurance that is even more unclear since a lot of professionals within the firm do not know that assurance is being given on sustainability reports. According to her both sides need to take big steps to reduce that knowledge gap. Another female associate stated something similar: “We have a few RA’s here in our department, they have a totally different background.

And I do think that people who work in this department think we want to add something good in any way whatsoever. Maybe for some that may be “activism” or “tree huggers” or whatever we get called. I do think it’s definitely not that bad, people here are realistic. There are financial audit RA colleagues that I meet that think it’s interesting because I hear a lot of people say oh nice work that you guys do, interesting, you also look at the strategy of a company and

everything. But there are people who think differently, but that’s not a problem, I think it keeps you sharp. (omitted) So for example when I was at an associate academy event last year or the year before I had to explain what we do. The fact that a sustainability report gets audited is for a lot of people new. So I think that from our department we need to do better in that, how can we inform people in a better way?”

We can conclude from this section that sustainability assurance is still in the process of obtaining legitimacy within the firm itself, this could be because both sides are still not sure about what kind of work is being performed. This is more the case for sustainability assurance because it is a new field. All senior associates agree that bigger steps could be taken in order to inform each other. Also here, no “identity tensions” could be spotted. Also, the “identity work” that is being done is explaining to colleagues what kind of work sustainability assurance is.

How is the professional identity of ‘non-accountant’ sustainability assurance practitioners constructed and managed in Big-Four firms?

Amsterdam Business School