Trust formation within global audit
teams and the perceived consequences
on the audit quality
ABSTRACT: The audit profession deals increasingly with global group audits. A global group auditor has to rely on the work of the component auditor, which means that trust is needed between these team members. The objective of this study is to understand how trust is formed within global audit teams and to examine the perceived consequences of this on the audit quality. This paper uses the swift trust theory and theory on trust within teams to understand the trust formation within global audit teams. Thirteen interviews were conducted with global auditors at a BIG4 audit firm. The results indicate that trust in global audit teams is formed in the traditional way based on conversations and experiences with other team members. Trust increases in the initial phase of a global audit when auditors are from the same audit firm. Besides this, the audit profession itself gives auditors a basis to trust. The results also indicates that initial trust is based on function level, cultural or national bias and language proficiency. When there is a lot of trust within global audit teams, the perceived quality of the audit improves. Trust is lower in the first year and improves the following years in a global audit, which might have consequences for the audit quality in the first year.
University of Groningen Faculty of Economics and Business
MSc Accountancy & Controlling | Track: Accountancy
Marcel Corjanus | S4094255 Supervisor: Dr. S. Girdhar Co-assessor: Dr. S. Tillema
Word count: 12.031 Date: 12-01-2020
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Table of Contents
1 Introduction ... 2
2 Literature and background ... 4
3 Methodology ... 9
4 Results ... 11
5 Conclusion & discussion ... 21
References ... 24
Appendix A: Interview guide ... 28
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Introduction
The audit profession is increasingly involved by global group audits. The global expansion of the profession began before the 1980s and was caused by corporate expansion, financial markets, international accounting standards, and an increasing demand related to professional services on a global scale (Carson, 2014). A global group audit or global audit team is defined as “a group audit of financial statements with at least one significant component abroad” (Gunn & Michas, 2018). A global group auditor has to rely on the work of the component auditor, which means that trust is needed between these team members firm (Sunderland & Trompeter, 2017). In the traditional way, trust evolves over time due to a series of observations and interactions (Mayer, Davis, & Schoorman, 1995). In the beginning of a global audit, trust between these teams may be low when global auditors do not have experiences with each other. Trust within teams is important, because it influences the performance of a team (Erdem & Ozen, 2003). This paper investigates how trust is formed within global audit teams and the related perceived consequences on the audit quality. If trust formation is lower among global audit teams, the consequences on audit quality might be serious. Trust helps team members to accept criticisms, discuss mistakes, and express their thoughts, which increases synergy (Erdem & Ozen, 2003). Lower trust may negatively affect the quality of the audit and the effectiveness of the general audit process (Lightle, Castellano, & Baker, 2017).
Researchers in globalisation in the audit profession examined different areas, for example: coordinating of work in multinational audits (Barrett, Cooper, & Jamal, 2005), ethical reasoning differences of auditors (Tsui & Windsor, 2001), industry specialization by global group audit firms networks (Carson, 2009), and the effect of the financial crisis on the regulatory relationships in the global group audit arena (Humphrey, Loft & Woods, 2009). However, previous research has not examined the formation of trust within multinational audit teams. Nevertheless, the formation of trust in multinational teams is examined in a different setting by Tenzer, Pudelko, & Harzing (2014). They argue that multinational teams lead to language barriers, which lowers team members’ emotion-based intention to trust other team members. Tenzer et al. (2014) used a sample of 15 multinational teams in 3 German automotive companies. They argue that their results are not broadly generalizable. Garrison, Wakefield, Xu, & Kim (2010) found that more perceived diversity within multinational student teams leads to less trust among team members. They used the self-categorization theory, which argues that team members categorize each other in in-groups or out-groups. The authors argue that team members trust in-group team members more than out-group team members. So, multinational team members with different characteristics are more likely to categorize each other in out-groups, which reduces the trust formation. They also found a positive relation between trust and individual performance. This argument is likewise supported by Erdem & Ozen (2003), who argue that trust affects the output of the team and the whole organization. Overall, the formation of trust in multinational teams is already investigated in some industries, but not explicitly in the auditing research.
The formation of trust within audit teams has not yet been studied. In auditing research, the concept ‘trust’ is often treated in the sense of trust between auditor and client (e.g. Rennie, Kopp, & Lemon, 2010) and not the trust within audit teams. The main association of trust in auditing research is that less trusting auditors are more skeptical to the client, allowing them to better detect fraud (Rose, 2007). The consequences of trust formation within the global audit team on the outcome of the audit, and consequently on the audit quality, has not been
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investigated before. Trust in multinational teams is already investigated, as for example the aforementioned paper of Tenzer et al. (2014).
Regulators are concerned about the quality of global group audits and there is little research available regarding globalization in auditing (Downey & Bedard, 2019; Gunn & Michas, 2018; Sunderland & Trompeter, 2017). Everett (2003) argues that accounting researchers need to enter more into this field and investigate the dynamics and effects of globalization. This research could contribute to the audit literature by investigating how trust is formed within global group audits and by explaining the perceived consequences on the audit quality. Sunderland & Trompeter (2017) argue that future research in global group audits can be focused on the collaboration with colleagues around the world. The results of this paper could be used by regulators for a deeper understanding on how trust is formed in global audit teams and how this relates to the quality of the global group audit. Audit firms could use the results of this paper to understand how trust is formed within group audits, especially in case of global group audits. The possibility of low trust formation among audit team members is important to recognize in case of audit firms, because it may affect the audit quality negatively (Lightle et al., 2017). This research sheds a light on trust formation within global group audits, which could be used for future research, because trust formation is not studied yet in auditing literature. Therefore, the objective of this study is to understand how trust is formed in global audit teams and examine the perceived consequences of this on the audit quality. This leads to the following research question:
How is trust formed within global audit teams and what are its perceived consequences on the audit quality?
The remainder of this research proposal is organized as follows. In the first section, the theoretical framework is described. The research method is discussed in the second section. The results are described in the fourth section. Lastly, a conclusion and discussion is given.
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2 Literature and background
This section describes the literature and background of this research. A brief introduction of global audit teams is given in the first paragraph. Trust in teams is examined by previous research in different areas, which is outlined in the second paragraph. The swift trust theory, which explores how trust is formed in temporary teams, is described in the third paragraph. Lastly, the concept ‘auditing quality’ is defined in the fourth paragraph.
2.1 Global Audit teams
As mentioned before, the amount of global group audits increased in the last decade. A global audit team or global group audit is defined as: “a group audit of financial statements with at least one significant component abroad” (Gunn & Michas, 2018). For example, multinational firms have to prepare group financial statements, in which financial information of their foreign subsidiaries is included. In case of a global group audit, international audit firms must take advantage of their international network and coordinate between auditors in multiple countries to form an opinion of the consolidated financial statements (Gunn & Michas, 2018).
In a global group audit, there is a distinction between the group engagement team and the component auditor. The group engagement team is responsible for direction, supervision and performance of the audit engagement and report and has the authority to sign the audit opinion. The component auditor is responsible for the audit procedures at the foreign subsidiary (Hayes, Gortemaker, & Wallage, 2014, p. 508). The group engagement team determines in advance to what extent they will be involved in the work of the component auditors (Hayes et al. 2014, p. 511). In large international audit firms, the group engagement team and component auditors are member of the same international network (Gunn & Michas, 2018; Sunderland & Trompeter, 2017). Multinational firms will rather choose audit services from one network than multiple networks, because this is more cost-efficient (Carson, 2014). Sunderland & Trompeter (2017) argue that “global audit firm networks prescribe a worldwide methodology that describes execution of the audit in a consistent manner”. Multinational clients ask for global consistent audits, which demand client-industry knowledge by audit firms. The global audit networks deliver efficient and high quality audit services with these specialized knowledge (Carson, 2009).
The group engagement team has to rely on the component auditors’ work to formulate a sufficient appropriate audit opinion about the multinational firm (Sunderland & Trompeter, 2017). The component auditor provides audit evidence on the foreign subsidiary, which should be evaluated by the group engagement team. Significant matters should be discussed between team members of both teams (Hayes et al. 2014, p. 518). The evaluation of the group engagement team is based on a “reporting package”, which contains summaries of documentation of the work performed and conclusions. This reporting package does not include original documentation, and due to legal restrictions, audit teams do not have access to the engagement files of each other. This leads to a level of information asymmetry (Downey & Bedard, 2019). Therefore, the use of component auditors may create communication difficulties between the group and component auditors, due to differences in language, training and certifications, business customs and local culture (Sunderland & Trompeter, 2017). Sunderland & Trompeter (2017) argue that these differences could harm the effectiveness and/or efficiency of the global group audit.
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Overall, global audit teams require a lot of trust between the team members of both teams, the group engagement team has to rely on the component auditors and evaluation is based on the limited reporting package. Trust within teams is discussed in the next paragraph.
2.2 Trust within teams
The purpose of this paper is to understand the formation of trust within global audit teams. Therefore, a secure understanding of the previous literature on ‘trust’ is required. A broadly accepted definition of trust is defined by Mayer, Davis, & Schoorman (1995) as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” (Mayer et al. 1995, p. 712). The trustor is the trusting party and the trustee is the party to be trusted. The definition of Mayer et al. (1995) exists of two important elements: (1) the willingness to be vulnerable to actions of others and (2) the expectation of a particular action of others. The willingness to accept vulnerability is the intention of taking a risk and to depend on the trustee (Fulmer & Gelfand, 2012). In the context of global audit teams, the group engagement team takes a risk to rely on the work of component auditors. The expectation of actions of another is often referred as ‘positive expectations of trustworthiness’ in the literature, devised by Rousseau et al. (1998). The authors argue that these positive expectations refer to “perceptions, beliefs, or expectations about the trustee’s intention and being able to rely on the trustee” (Fulmer & Gelfand, 2012; Rousseau et al., 1998). Downey & Bedard (2019) argue that it is more difficult for group engagement auditors and component auditors to predict each other’s actions, due to “client and engagement characteristics that complicate the group auditor’s task in managing the engagement”. They found evidence that characteristics as size/regulatory and global structure make the global audit more complex. The authors argue that language and cultural barriers are less important, however the authors argue that future research is needed (Downey & Bedard, 2019).
Trust within teams is extensively examined in the previous literature in various settings, such as: consultancy firms, (de Jong & Elfring, 2010), automotive corporations (Tenzer et al. 2014), or virtual teams (e.g. Germain, 2011; Jarvenpaa & Leidner, 1999). Analysis on trust in teams focuses on two levels: team trust and interpersonal trust. Team trust is based on team-level and refers to trust which is shared among team members (Costa et al., 2015, Fulmer & Gelfand, 2012). Interpersonal trust focuses on individual level and refers to having enough confidence in other team members that one is willing to act on the basis of their words, actions, and decisions (McAllister, 1995). This research focuses on trust at an individual-based level which is more suitable, because the purpose of this paper is to understand how trust is formed between auditors within a global audit team. Quadackers, Groot and Wright (2009) argue that interpersonal trust plays a significant role in predicting skeptical judgement and decisions, which is very important for auditors. The authors argue that if an auditor has a lower level of interpersonal trust, he/she is assumed to be more skeptical (Quadackers et al., 2009).
There is a distinction between trust building in short-lived or temporary teams and ongoing teams (de Jong & Elfring, 2010). In general, the formation of trust is considered as a long-term phenomenon, trust evolves over time due to a series of observations and interactions (Garrison et al., 2010; Mayer et al., 1995). Robert, Dennis, & Hung (2009) also suppose that interpersonal trust will be developed gradually over time, as a result of individual assessment of previous behaviour of others. This means that trust will not develop in temporary teams in the traditional manner, namely based on a series of observations and interactions. According to Goodman &
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Goodman (1976), audit teams are an example of temporary teams and therefore have less time to build a long-term relationship of trust.
As mentioned in the introduction session, trust within teams is important for the outcome of the team. Different research shows that trust formation in teams has a positive effect on team performance (e.g. Costa, Roe, & Taillieu, 2001; Mach, Dolan, & Tzafrir, 2010). Trust within teams reduces conflicts, increases involvement, and reduces the probability that team members will leave the organization (Morgan & Hunt, 1994). The consequences of trust formation on the outcome of a global audit have not been studied before. The theoretical understanding of the consequences of trust formation on the audit outcome is discussed in the ‘audit quality’ paragraph.
2.3 Swift trust theory
Temporary teams such as global audit teams are characterised by a finite life span, complex tasks, diverse skills, and tight deadlines. To understand the formation of trust within these temporary teams, the swift trust theory of Meyerson, Weick, & Kramer (1996) is used. The authors defined swift trust as “a unique form of collective perception and relating that is capable of managing issues of vulnerability, uncertainty, risk and expectations” (Meyerson et al., 1996, p.167). This concept explains how high levels of trust can be created in temporary teams, even when they are missing essential trust sources as familiarity and shared experiences.
Swift trust theory suggests that group members can initially build trust by setting up trust expectations from role-based settings of which they are familiar, because the tight deadlines reduce the ability to develop expectations about the other team members based on first-hand information (Costa, Fulmer, & Anderson, 2018; Jarvenpaa & Leidner, 1999). Meyerson et al. (1996) argue that role expectations are “more stable, less capricious, more standardized, and defined more in terms of tasks and specialities” (Meyerson et al., 1996, p.181). This means that the trustor can make assumptions about a person’s competence based on the fact that this person fulfils a certain role rather than specific knowledge about the individual’s abilities, motives, etc. So, this trust can be seen as “competence trust”, because the role gives the trustor the confidence that the other party carries the competence to perform their task (Tatham & Kovács, 2010). The level of swift trust is mostly based on knowledge sharing among team members, which could help the team member to better perform their tasks (Pinjani & Palvia, 2013). The swift trust theory suggests that roles of members are well-defined and inconsistent role behaviour or blurring of roles impair the formation of swift trust (Jarvenpaa & Leidner, 1999). Clarity of roles helps team members to sharpen their expectations. Different studies (e.g. Jarvenpaa & Leidner, 1999; McLaren & Loosemore, 2019) use the function of individuals as roles in a team. An audit team is hierarchically divided in distinct roles (e.g. manager, supervisor, senior) and meets the assumption of well-defined roles (Rudolph & Welker, 1998). Inconsistent role behaviour may harm the formation of trust among global audit team members. Role blurring will lead to uncertainty among team members (Meyerson et al., 1996 p.181).
Team members also import expectations of trust based on stereotypical impressions of others. This is described by Meyerson et al. (1996) as “category-driven information processing”. Team members place others into a category and base their trust on how much trust they have in this category (Robert et al., 2009). In global audit teams, this phenomenon may cause some problems, because cultural stereotypes can be flawed, biased or incomplete
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(Zakaria, Amelinckx, & Wilemon, 2004). Team members in temporary teams have limited chances to prove themselves due to the finite lifespan.
For the formation of trust, team members heavily depend on reputation around individual or organisational identification and attributes (McLaren & Loosemore, 2019). This indicates that the formation of swift trust may depend on reputations of team members or organisations. Swift trust is created in temporary teams when interdependence is high, which means that team members are vulnerable (Xu et al., 2007). According to Xu et al. (2007), trust is more important when interdependence in a team is higher. As mentioned before, the group engagement team has to rely on the component auditors and evaluation is based on the limited reporting package, so the interdependence in a global audit team may be high. Results in previous literature show some interesting findings in understanding the swift trust theory. The results of Jarvenpaa & Leidner (1999) and Zakaria & Yusof (2020) show that swift trust sustain if team members keep communicating enthusiastically. Results of Germain & McGuire (2014) show that leaders in virtual teams need to manage the team, culture, communication, and conflicts to foster swift trust. Crisp & Jarvenpaa (2013) find that early trusting beliefs (swift trust) influence team performance.
According to Meyerson et al. (1996), the swift trust is temporary (6 weeks duration approximately) and fragile. The swift trust formation is thin, because there is not enough time for experience with each other, which is necessary for thicker forms of trust to occur (Meyerson et al., 1996, p.185). As mentioned before, thicker forms of trust occur due to a series of observations and interactions. There are some differences between swift trust and trust. Zakaria & Yusof (2020) argue that swift trust is simpler and formed faster among team members than the traditional form of trust. Swift trust can appear at any stage of the process and its quality and extent will depend on the team member’s amenability, other than with traditional trust (Zakaria & Yusof, 2020).
The formation of swift trust is already examined in global distributed teams, such as virtual teams (e.g. Germain, 2011; Jarvenpaa & Leidner, 1999; Zakaria et al., 2004) and military groups (e.g. Hyllengren et al. 2011). This theory is suited for global audit teams, because these teams are temporary with less opportunity to develop trust in the traditional manner (Goodman & Goodman, 1976). The swift trust theory helps to understand how trust is built within global audit teams. However, this theory has never been examined in the auditing literature.
Overall, based on the swift trust theory, it can be assumed that global group audit teams may experience high levels of trust, because when a developed trusting relationship is absent, swift trust allows team members to manage issues of vulnerability, uncertainty, risk, and expectations (Robert et al., 2009). In summary, team members of temporary teams base their swift trust on role-based interactions, expectations of trust based on stereotypical impressions of others, reputations of team members and organizations, and vulnerability due to high interdependence.
2.4 Audit quality
The objective of this paper is to explore how trust is formed and to investigate what the perceived consequences are for the audit quality. Audit quality is a highly examined concept in the auditing literature, but not well understood (Knechel et al., 2013). A broadly cited definition by DeAngelo (1981) of audit quality is “the market-assessed joint probability that a given auditor will both (a) discover a breach in the client's accounting system, and (b) report the breach”. This definition is based on the outcome of the audit and the focus on the audit process
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is not addressed (Beattie, Fearnley, & Hines, 2013). The existing literature discusses plentifully about audit quality. However, this is not the scope of this paper, so audit quality is discussed in short.
In short, this paper tries to understand the perceived consequences for the audit quality, so the consequences on the audit quality which a team member of a global audit group observes. This means that an auditor-based perspective on audit quality will be favourable, which is given by Knechel et al. (2013). The authors argue that auditors define high audit quality as “satisfactorily completing all tasks required by the firm’s audit methodology” (Knechel et al., 2013).
Gul, Wu, & Yang (2013) find that individual characteristics of audit team members, such as “educational background, Big N audit firm experience, rank in the audit firm, and political affiliation” affect the audit quality. In addition, Chen et al. (2017) find that international working experience of individual auditors is associated with better audit quality. Currently, some consequences of characteristics of individual auditors are investigated, but the consequences of trust formation on the audit quality are not been studied yet. Lightle et al. (2017) are the only authors who address the issue of trust formation among audit teams. They argue that in a situation with low trust, audit team members may daunt to speak up and ask questions, especially lower level team members. For example, if a team member fails to ask a question, the member do not receive feedback, which would not help to develop his or her professional judgement (Lightle et al., 2017). The researchers argue that lower trust may affect the audit quality and the effectiveness of the audit process (Lightle et al., 2017). These propositions are not further examined by Lightle et al. (2017). This paper tries to investigate if trust formation of global auditors has consequences on the perceived audit quality.
The definition of DeAngelo (1981) and Knechel et al. (2013) indicates that audit quality is related to the outcome of the audit. As mentioned before, the consequences of trust formation in teams on the outcome of a team is already investigated, but not in auditing research. So, the formation of trust within audit teams may have consequences for the audit quality, which Lightle et al. (2017) indicated before.
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3 Methodology
The next session sets out the methodology of this research. In the first paragraph, the research method is discussed. The sample of this research is described in the second paragraph. The data gathering is described afterwards.
3.1 Research method
To get a better understanding on the previous mentioned research question, interviews were conducted in a Dutch BIG4 audit firm. Interviews are concerned with the understanding and collection of rich data (Walker, 1985). This study used the interview method, because the purpose of this qualitative research method is “to explore the views, experiences, beliefs, and/or motivations of individuals on specific matters” (Gill, et al., 2008). Interviews give a good opportunity to deal with more complex and wide-ranging issues (Smith, 2017). This paper wants to explore the formation of trust within global audit teams and the perceived consequences on audit quality, which fit the qualitative interview approach. The format of the interviews was semi-structured, which allowed flexibility in the interviews (Gill et al., 2008). Semi-structured interviews provide the interviewer some space to ask additional questions (Smith, 2017). This was important for this research, because participants could raise and/or discuss some issues on this topic that not yet have been known.
Data analysis was done by using the following steps. The key points of the interview questions were marked and coded first. The main points of the interview were inserted in a summary of the transcripts, which gave structure in the interview data. The codes of the interviews were compared for similarities and differentials, which resulted in a categorization of the codes per interview question. This was used to analyse the results of the interviews. Opinions of auditors that deviated from key points were included in the results section. Additionally, I used quotations of the interviews for a better interpretation of the results.
There are some validity issues in the interview research method which are important to understand. First, internal validity may be endangered by misinterpretations of questions and/or answers. The possibility that this may occurred is reduced by sending the transcripts to the participants to counteract any misinterpretation. The participants may only provide answers that do not harm other team members. This issue is mitigated by asking neutral questions and ensuring the confidentiality before and during the interview. Secondly, external validity issues may occur in this research. External validity deals with the generalisability of the results to the ‘real world’ (Smith, 2017). In this research, 13 interviews were conducted. It is not possible to generalise the results of this interview to all global audit team members. This was a limitation of this research. The purpose of this research was to gain an understanding of the trust formation process in global audit teams, but the results cannot be generalized to all global audits.
3.2 Sample
The participants are members of global audit teams from a BIG4 audit firm in the Netherlands. To ensure the anonymity of the auditors, only the functions of the participants are used in citations. An amount of 13 interviews were conducted at different skill levels. The following functions were represented in the interviews: two supervisors, two assistant managers, five managers, two senior managers, and two partners. Lower level team members did not participate in the interviews, because they have no or limited interaction with other global audit teams in this audit firm. The average length of each interview was 40 minutes. Most of the participants were Dutch, so the interview was conducted in Dutch. Two of the
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participants were Turkish, so these interviews were conducted in English. Further details of the participants can be found in appendix B.
The interviews were conducted with auditors who have an experience with global audits. Auditors of different skill levels were selected, because they could experience the formation of trust in different ways. Due to the COVID-19 measures, the interviews were conducted using Microsoft Teams.
3.3 Data Gathering
The interviewees were contacted by e-mail, which clearly indicated what the topic of the interview was and what the participant could expect. When they would like to participate, they got an invitation for a Microsoft Teams meeting because of COVID-19 restrictions. In the email, participants were informed that participation was anonymous, and confidentiality was assured.
Before the interviews were conducted, an interview guide was composed, which was based on the literature. The interview guide provided the basis of the interview questions. An advantage of an interview guide is that it assures an all-embracing and consistent coverage of all interview themes (Lillis, 1999). Results of previous research on swift trust theory were also used to formulate the interview questions. The interview guide can be found in appendix A. The interviewee was asked for permission to record the entire interview. The interviews were transcribed after conducting the interviews. To ensure accuracy, the interview transcripts were sent back to the interviewees. This gave the interviewees the opportunity to add some additional comments, which they might not have noticed during the interview and this prevented misinterpretation (Humphrey & Lee, 2004, p 342).
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4 Results
The results of the interviews are discussed in this section. The first section describes how global audit team members create trust with other global audit teams in general. The initial trust formation in global audit teams is discussed in the second section.
4.1 Trust in general within global audit teams
Based on the interviews, the formation of trust is very important for auditors in a global audit team. Trust is needed in global audit teams, because the group engagement team has to rely on the work of the component audit team.
[…“Trust is really important, because I think that we send a lot of formal documents and instructions and that we should have the confidence that they will carry out what you ask of them.” – Manager 5]
[…“Trust is important. You have component auditors that you need to rely on, for example if you are a group accountant and you have five significant components under you, which are 80% part of your entire annual accounts and you need to rely entirely on them, then the trust must be so great to know what they are doing is enough for you as group auditor.” – Manager 1]
The first element of the definition of trust by Mayer et al. (1995) is “the willingness to be vulnerable to actions of another”. Based on the quotes, the group auditor feels vulnerable for the work of the component auditor, which was often mentioned by the participants. The group auditors have to rely on the work of the component auditors. This result is consistent with the argument of Sunderland & Trompeter (2017) who argue that group auditors have to rely on the component auditor’s work. This phenomenon leads to a need for trust between members of these teams. This vulnerability is addressed by using a guide of the group audit team. The guide is the instruction for the component auditors, which includes the audit objective, what kind of work they have to perform, the risks of the audit, the scope of the audit, etcetera. The guide is based on the framework of the audit firm. When the group auditor sends instructions, they plan a meeting with the component team to discuss the instructions and problems. Some participants argued that the amount or specification of instructions depends on, among other things, the trust they have in the component team. A group auditor can also address the vulnerability by visiting the component team and review the file of the component audit team. It is important to note that the instructions and site visits are not only based on trust in the component auditors, because the significance of the component, risks, and own regulations also play a role in its determination. For example, a file review is mandatory once every three year.
[…“The means we use to check whether trust is good, is our guide: the group audit instructions, that is, the booklet that contains everything. When your trust in a certain component auditor is less, you can write down your guidelines even more specifically or send examples. In order to minimize the noise and the mismatch between the expectations of each other as much as possible. … More instructions come when you have less trust in someone. That is actually comparable to the case when you have a team member in which your trust is a bit lower about being able to work independently, then you know that you have to give more instructions and explanations.” – Senior manager 2]
[…“Yeah, I do feel vulnerable for the work of component auditors. Sometimes, we do a site visit, to ask if there is something that we need to deal with in their view. You have to make sure
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that their folder is in line with our folder. We push them to make it on the level that we want. Sometimes you send them very specific instructions, to fill out and check, that might help.” – Assistant manager 1]
The participants were asked to explain how their trust is formed in other global audit team members. Despite the argument of Goodman & Goodman (1976) that audit teams are temporary teams, auditors mainly argued that their trust was based on experiences in the past with the other global auditors. Global audit teams exist for a relatively short period, but there is a high probability that the teams will be the same the following year. So, when the auditors have experiences with the other global audit team, trust is based on these previous experiences.
[…“You discuss less often with each other. I have a client with a component auditor abroad, but they have been there for several years, so I have seen them in real life. Because you've been there before, that makes communication a lot easier.” - Assistant Manager 2]
Global group auditors explained that trust is mostly based on conversations, reviewed procedures, meeting deadlines, and questions and answers of the component auditors. The auditor knows, based on conversations with the other auditors in the other global audit team, who they are up against. Open communication is very important for most of the auditors, they appreciate immediate communication with the group auditor when there are problems or new findings of the component team. When the component auditor has good findings or in-depth questions, trust is created for the group auditor because the group auditor knows that the component auditors take their work seriously and meet the expectations of the group auditor. The group auditor can review the file of the component auditor and determine if expectations are met. When expectations are met by the component auditor, trust is created between the group auditor and the component auditor. Due to pressure of deadlines in global audits, auditors create trust when the component auditors meet the deadlines. An example of how trust is formed for a global group auditor is given below.
[…“Trust is based on experiences you have and what you see in the file, which the component auditors return; how it's worded, how the expertise is, how they have thought about it. You often get that from the reports.” – Manager 5]
On the other side, component auditors based their trust on the clarity of the instructions of the group auditor and the conversations. Participants noticed that global group auditors need more trust than component auditors, mostly due to the interdependence on the work of the component auditors. Component auditors only have to deliver work as prescribed by the group auditors, which explains why trust is less important in this case.
Participants gave examples of situations when the previous experience was not favourable, which led to low trust. Some participants indicated that they do not experience low trust because they experienced no problems in the past, other participants gave some examples of the cause of this low trust. The most mentioned cause of low trust is the failure of component auditors to meet the deadlines. This had consequences for the trust that the group audit team had in their component auditors. The second element of the definition of trust by Mayer et al. (1995) is “the expectation of a particular action of another”. A deadline is an example of an expectation of a group auditor, and if the component auditor fails to achieve this, the trust is damaged. Participants argued that failing to meet the deadlines leads to lower trust in and being tighter on deadlines the following year. Another reason that leads to low trust in global audit team was
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the experience in failure to comply with agreements from the instructions of the group auditors. Participants gave different examples of component audit teams which performed other, often more concise, procedures than those required of them in the instructions. Some participants mentioned that this was the case because component auditors are used to doing things differently in their own country. This influenced the trust of some participants and led to more specific instructions in the next year. Downey & Bedard (2019) argue that it is more difficult to predict each other’s actions in a global audit due to “client and engagement characteristics that complicate the group auditor’s task in managing the engagement”. In the interviews, group auditors argued that they describe their expectations in the group audit instructions and discuss these with the component auditors. But as described before, it is possible that these instructions are not always sufficiently followed or understood by the component auditors. In addition, the auditors do not think that a global group audit is more complex than a ‘regular’ audit, but when the number of components increases, it may give more difficulties in aligning the procedures with the component auditors. The participants who experienced low trust argued that it is hard to recover the low trust for component auditors. The group auditors argued that the bad reputation must be repaired by meeting the group auditor’s expectations in the following years. Often, this will not be restored within a year. Three participants said that a component team was performing so badly that they were replaced the following year.
The participants noted that there is a difference between trust in a global audit compared with a non-global audit, others do not notice a difference in trust between these audits. Some Dutch auditors argued that contact with Dutch colleagues is a lot closer than with non-Dutch colleagues, because there is always a physical distance.
[…“During a normal audit, you know those people and you see the people, you have much faster a feeling of trust or not. If you do not trust someone, you will recover quicker than with colleagues of international teams as you do not actually see them or meet them. You do not work with the entire team; you usually have one contact person who then directs his team. The only thing you have to rely on is that contact person. It is easier to not trust someone in a normal audit than in a global group audit.” – Supervisor 1]
[…“Most of the time I was able to communicate on open lines of communication. If you have that, I don't care whether it's in the UK, the Netherlands or Germany. My trust in my colleagues is not directly affected by this. It gets a bit more difficult when you are faced with real issues that the component team do not report and that you discover later.’’ – Senior manager 1]
The auditors argued that trust has an impact on the audit quality. When there is a lot of trust within global audit teams, the quality of the audit improves. Some auditors argued that the audit process improved when trust is present between team members in the global audit teams, which will improve the quality of the audit. When trust in component auditors is high, the group auditors knows what the component audit team is doing and report important matters, such as significant risks, estimates or certain transactions, this improves their perceived audit quality. Trust is not the only factor that determines the audit quality, however it plays a role for improving the audit quality.
[…“Everything is actually based on the professional judgement of the accountant, which determines the audit quality to a higher degree. Trust is of course an extremely important factor in that professional judgment. So, trust plays a significant role in this.” – Senior manager 2]
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[…“I think that the audit quality will improve when there is trust between global audit team members. But you have to be careful of not getting false trust.” – Supervisor 2]
On the other hand, some participants argued that it is dangerous to have too much trust in other global audit team members. Like mentioned by supervisor 2, the auditor has to be aware that he or she has no false trust. This means that there should be no blind trust in other global auditors. Some auditors gave examples of situations where they experienced too much trust in other team members, which turn out to be unfounded. An example of this is given in the next quote.
[…“I had that in the Middle East, I trusted that they were doing well, and we trusted them for multiple years. They came up with points that we thought were profoundly good. However, when we performed a file review, the results were different than we expected. This did not lead to an audit misstatement, however, trust is reduced in this kind of cases.” – Manager 5]
Some auditors noticed that the audit quality is lower in the first year, because they do not exactly know what they can expect from each other. From the lessons they learned in the first year, they can optimize the collaboration in the second year. In the first year, there is often a file review, which can optimize their expectation and trust. These arguments are consistent with the results of Crisp & Jarvenpaa (2013) that early trust formation influence team performance. In this case, it influences the audit quality negatively, because the quality is lower in the first year, according to the auditors. Of course, the trust formation is not the only factor that influence the audit quality of a global audit, but it may influence the audit quality according to the auditors.
[…“You can decrease audit quality when there is a low trust. You need to build trust and build the quality.” – Assistant manager 1]
Mostly, the global audit teams will remain the same next year, but it may happen that global audit teams has to collaborate with new global audit team members due to a new engagement or replacement of team members. In this case, auditors do not have any experience with these global audit team members. How trust is formed for global audit team members in this case, is discussed in the next paragraph. Summarized, all participants based their trust on previous experiences with each other, but this kind of trust building may differ when there are new group audit or component team members. The following quote illustrates this:
[…“I have been working with most component auditors for quite some time. As a result, you know well how someone else is in the game. … If you are working with a completely new group accountant or component, you have to build up from the scratch, then you have to go there, sit down with them and immediately do a file review to see how they have done their work, so be tight on the ball.” – Manager 2]
4.2 Initial trust in global audit teams
As aforementioned, global audit team members based their trust on previous experiences with other team members. The participants were presented a situation where they were getting a new group or component audit team (the initial stage of a global group audit), to understand how trust is built without previous experiences. The participants were asked how they experience trust in the initial stage of the global group audit. The auditors reacted differently on whether there was trust in the initial stage of a global audit, seven participants argued that there was trust in the beginning, the other participants argued that there was no trust or that they
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had to wait for the first meeting with other global auditors for any trust formation. When the questions were going more in-depth, auditors argued that there were some elements where they based their trust on. The participants who argued that there was trust in the initial stage of a global audit, mostly argued that they have to trust each other because you cannot work without trusting each other. The participants who argued that there was a little or no trust in the initial stage of the global audit, argued that they first had to visit the other team to trust them. The first year is the most difficult year, according to the participants.
[…“First of course, you have to trust, but then you need to assess this trust, I think that is the way you trust. Without trusting anyone, you cannot work.” – Assistant manager 1]
[…“There is no immediate trust if you don't know someone yet. You already create a certain feeling through the contact you have and the answers you get to the questions you ask, the way of responding, and the speed of responding, so based on that you get a feeling. The first year, I will always visit the new component auditor to meet him face-to-face.” – Partner 1]
Some participants disagreed with each other on how much trust there was in the beginning of the global audit. This often depends on the individual. Most participants argued that when the auditor was from the same audit firm, the trust was stronger. In general, the trust in the initial phase of the global audit was medium, but little incidents could damage the trust formation. For example, when the component auditor does not meet the first deadline, the trust of the group auditors is quickly damaged. On the other side, when the first instructions send by the group auditor are unclear or incomplete, trust between the component auditor and group auditor is damaged.
[…“I trust others in a global audit team fairly quickly, but trust can always be damaged by a small thing.” – Manager 1]
[…“I experienced that trust is low at the beginning and is improving during the audit. Because you communicate and you have periodic reviews, and meetings.”- Assistant manager 1]
The swift trust theory of Meyerson et al. (1996) assumes that trust is high in the initial phase and thin. The results above indicate that trust is medium in the initial phase of the audit. However, participants argued that little things can damage their initial trust, which indicate that the initial trust is thin. When the component auditor does not meet the expectations of the group auditor, trust of the group auditor to the component auditor is quickly damaged and will decrease.
Auditors who argued that their trust was low in the beginning of a global audit, explained that the trust improves during the audit when other team members meet their expectations. The expectations of a group auditor were mostly about meeting deadlines, communicate adequately and performing qualitative work as described in the instructions, which is checked in the file review. Component auditors based their expectations on clear instructions and communication with the group auditor. The auditors who argued that their trust was medium or strong in the beginning, argued that meeting their expectations leads to maintaining that trust.
[…“I think that people assume that you trust each other, you can see that on all sides. What often goes wrong is that you have a completely different expectation of quality standards.” – Partner 2]
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In the example above, a partner argued that audit quality standards differ between different countries, leading to different expectations about the quality of an audit. Some auditors gave examples where they found out, during the first file review, that they have a different image of quality in an audit in a different country. This led to more detailed instructions for the next audit and a decrease in trust in the other auditors.
Participants were asked directly what they based their trust on with a new group or component audit team. Afterwards, the participants were asked how different elements of the swift trust theory of Meyerson et al. (1996) play a role in their trust formation. These various elements will be discussed below. The most frequently mentioned elements will be discussed first.
4.2.1 Same audit firm
The most mentioned basis of trust in the initial phase of a global audit was that the other team member was from the same audit firm. Usually, this was the first thing that came to the participant’s mind when it comes to initial trust formation in a global audit. All other participants agreed when they were asked if this played a role in their initial trust formation. This result is consistent with one element of the swift trust theory. Namely, McLaren & Loosemore (2019) argue that swift trust heavily depends on the organisational identification and attributes. The auditors mentioned that they had a common ground when someone was from the same audit firm. They use the same language, system, methodology, and policies and standards. The auditors expected a certain kind of proficiency when someone was from the same audit firm. In the opinion of the auditors, this helps to create trust between the team members in the initial phase. The following quotes illustrate this. The name of the audit firm is omitted in the quotes and replaced by "My Audit Firm".
[…“In the beginning you expect something from someone and that is your trust in someone. Someone is employed by us, so you expect that someone will go for it and do their best. When you start to see procedures or receive reports, you will find out if that idea is true.” – Supervisor 2]
[…“When a new international engagement starts, I try to get My Audit Firm there as soon as possible, because then I know what to expect. … I prefer to operate everything within My Audit Firm, because you know where you stand. You have the same policies, guidelines, system, methodology, and communication, you create a kind of feeling with the component.” – Partner 1]
In the last quote, the partner prefers a component team which is a member of their own network, because he feels more comfortable with it and knows what he can expect from the component auditor. The auditors mentioned that they often collaborate with auditors of the same audit firm. Most of the participants also had an experience with other audit firms as a group or component team. They do not see a difference when someone is from another BIG4 firm, because there was some difference in the common ground, but these differences were small. They argued that trust was lower when the other global team is non-BIG4, because they do not have that common ground.
[…“There is also a difference with BIG4 offices, you often have a different term, but then you are often talking about the same thing. With smaller and local offices, there is a greater difference in how they perceive things.” – Senior manager 1]
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When the other global audit team was from the same audit firm, the global auditors knew what quality they can expect. Their audit firm has quality standards which gave the global auditors confidence and a certain expectation. It was not explicitly trust that improved the perceived audit quality when the other team was from the same or a BIG4 audit firm, but the shared quality standards gave them trust and increased the audit quality.
[…“I think that trust is always there within My Audit Firm, because you assume good people who work well together. I think you do that on the basis of the quality system that we know. I think that's essential.” – Partner 2]
4.2.2 Audit profession and function level
The audit profession gave the participants a basis for initial trust in a global audit team. The audit profession has a reputation of integrity and objectivity which applies all over the world. Auditors are well educated, and they have international regulations, which gave the participants a reason to trust each other in the first regard. The profession created an expectation that the other auditor is a professional. This is evident from the following quotes:
[… “The profession gives trust, if we cannot trust each other, then I think we will all stuck. I always have trust in the auditors around me. In principle, I do not trust anyone who is from an external party. ... because everyone has the same rules and we are a professional group that is founded on objectivity and integrity.” – Supervisor 1]
[…“Of course, it remains a professional craft in which you are in the lead, how honest you are as an accountant, that is one of the basic principles. That is always my starting point for people sitting opposite me, that they do the same in their best honour and conscience. Then that trust is there, so I think that is a very healthy starting point.”- Manager 3]
This result is consistent with the argument of McLaren & Loosemore (2019), that someone base their trust on an individual identification, in this case the audit profession. The global auditors exercise the same profession with high education requirements and international regulations, resulting in a certain level of trust in the initial phase of the global audit.
According to some participants, the function of someone in a global audit team also plays a role in the initial trust formation. There is a clear hierarchy in audit teams which is consistent with the argument of Rudolph & Welker (1998). When someone had a higher function, the perceived initial trust was higher. In the opinion of some participants, a higher position was associated with having more experience, for example they trusted someone more easily if someone was a partner. The auditors do not have experience with the other team member, but the function gave them an expectation of experience and knowledge of a team member. This result is consistent with the assumption of the swift trust theory which assumed that trust expectations are built from role-based settings. Not every participant agreed with this, because some participants do not see, for example, a difference between a manager and partner in case of trust formation.
[…“A function does give some trust, because they have already shown in the past that they are ready for that role and perform it so well.” – Manager 5]
[…“I see the level manager to a partner as one that gives me a certain trust. There is a gap between the levels under manager. Because you have a certain expectation pattern of what someone knows, can do, understand, and properly oversee the overall picture.”- Manager 2]
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Not every participant agreed that the function level plays a role in the trust formation in the initial phase of the global audit, which is given in the following quote:
[…“A function shouldn't matter. In the end, we are all human and we all can do something wrong or have it right or draw the wrong conclusion at one time. I think open communication is more important than someone's job level. That creates trust.” – Manager 1]
The interviews do not reveal explicitly whether trust in the audit profession or function level contributed to the perceived audit quality. The reputation of the audit profession and function level play a role in their initial trust formation and gave a basis of trust but does not indicate explicitly an increase in the perceived audit quality.
4.2.3 National or cultural bias
Another element that plays a role in the initial trust formation of global audit team members are national or cultural bias. Some participants indicated that they often had an expectation in advance for a country and then considered this when creating trust. These biases had often to do with the regulator, culture, previous experiences, and audit quality of the country. This result is consistent with the argument of Robert et al. (2009) that team members place others into a category and base their trust on how much trust they have in this category. The following quotes give examples how, regulations in the first quote and culture in the second quote, influence the formation of trust:
[…“In general, I think the trust in Dutch teams is great internationally. That's because we are so critical, don't want to leave things in the middle, step out of the grey area and have things confirmed in black and white. I think we leave our mark on it, so you can see that a lot of group audit teams rely on us. This is because of our regulator, if we had a regulator who was like, "whatever," we really wouldn't be making that much effort.” – Senior manager 2]
[…“For example, I have the idea that Asia and New Zealand are a bit more rigid and call less, so I think they have less trust in me and I in them, so that I will make extra calls and coordinate things and send extra emails for clarification, while I don't have that with the US.” – Manager 5]
One auditor argued that other global audit teams had an expectation of the Dutch auditors, which may be biased. Other auditors gave examples that they based their trust on the country or nationality of the other team.
[… “I think that trust is related to the audit quality of the country and the experience I had with the country. In Portugal you get good reports and they work quite neatly, in Poland they mainly work as component auditors, so they are less able to think for themselves. Those are aspects that you consider. If I had experiences with a Portuguese auditor, then I will also project it onto other Portuguese.” – Manager 2]
[…“This can go both ways, positive or negative. I think bias does play a role. If you have a German partner in which I have good trust, then you are biased that things will work out. Conversely, with certain people you have the idea that you prefer to avoid them. That certainly plays a role.” – Partner 2]
Participants argued that biases can be flawed and were not always true. A global auditor can have an expectation of audit quality of a particular country which can be flawed. An auditor gave an example of a new component team of a country where they had some doubts about it
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beforehand. So, they had done an extensive file review, but it turned out that the audit quality was better than expected and the biases were unjustified.
Not all participants argued that the cultural bias had a direct impact on their trust formation, but most of the auditors thought that cultural bias were present in global audit teams. These examples are consistent with the swift trust theory which assumed that team members import expectations of trust based on stereotypical expectations of others. These findings contradict the results of Downey & Bedard (2019) who argue that cultural bias was less important in global audit teams.
4.2.4 Language
Apart from the fact that language is not an element of the swift trust theory, participants often indicated that good communication is essential for initial formation of trust and collaborating with each other. The communication with other global audit teams is often in English which is not the native language of every auditor. The participants argued that most of the documentation and communication in their audit firm was in English, but the English language could give some problems. This contradicts the findings of Downey & Bedard (2019) who argue that language barriers play a less important role in global audit teams. In the interviews, participants argued that language problems could play a role in their initial trust formation. However, this result is consistent with the result of Tenzer et al. (2014), who argue that multinational teams lead to language barriers which lowers team members’ emotion-based intention to trust other team members. The result of Tenzer et al. (2014) was founded in a multinational automotive setting but is also applicable in a multinational audit setting.
Some Dutch participants thought that their English proficiency was good, but they found it difficult to apply nuance. They noticed that the proficiency in other countries was lower, except for English speaking countries, such as the United States and United Kingdom. The English language affected the auditors’ trust when they cannot understand the other global audit team member. The auditors mentioned that not only their initial trust can be damaged by language problems, but also their long-term general trust which is also illustrated by the following quotes: […“For example, the Dutch speak good English, but when we speak with a foreign colleague who really speaks broken English, you can immediately see in the first conversation that trust is starting to swab. So, for someone who cannot speak up verbally in English, it is very difficult to gain trust, even though they may be very good at their work.” – Senior manager 2]
[…“Even at My Audit Firm, which has a lot of highly educated people, you see that this can still be a problem. … Ultimately, that does affect your trust, if you cannot understand each other.” – Partner 1]
An auditor gave also an example that he heard that Southern European countries thought that the Dutch were immediately super professional and were very good at making a first impression. But later, they found out that the content was much less than what they expected in the begin. He argued that South Europeans are worse in English communication and because of that, the trust was damaged immediately, even when the terms of the content do not differ from other countries. Two auditors argued that the quality of the global audit can suffer when language problems occur. They argued that global auditors may do not understand each other, so you may miss some quality.
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[…“This certainly affects your trust in other people, for example I had an Israeli team that directs me, and they cannot speak English. I don't get it, because you would expect of Israeli to talk good English. Then the audit becomes very difficult and I also become a bit suspicious. … This often has consequences for the quality of the audit. What you see in Israel is that they send instructions that do not quite meet the My Audit Firm’s quality standards, and if you are going to discuss about it, they just say 'you have to do it' that's the only sense they can make. While that is not rationally necessary and the quality does not improve, but rather undermines it” – Partner 2]
The partner mentioned in the quote above that language problems may have consequences for the perceived audit quality. When an auditor is afraid to speak in a foreign language, quality can be missed. This is illustrated in the following quote.
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5 Conclusion & discussion
The audit profession deals increasingly with global group audits. Goodman & Goodman (1976) argue that global audit teams are temporary teams. It is difficult to build trust in these temporary teams, however the swift trust theory states that it is possible to build trust within temporary teams. This paper aimed to investigate how trust is formed in global audit teams and examined the perceived consequences of this phenomenon for the audit quality.
This research has established an understanding how trust is formed within global audit teams. Namely, trust in global audit teams is formed based on more and more conversations and experiences with other team members, regarding the results of this paper. Global audit team members occasionally contact each other, however the composition of the team is likely to be the same in the following year. Group auditors based their trust mostly on conversations, reviewed procedures, meeting deadlines, questions, and answers of component auditors. Component auditors based their trust on the clarity of the instructions and conversations with the group auditor. Meeting the expectations of the other auditor is important for trust formation of global audit team members, especially for group auditors who feel more vulnerable and need more trust than component auditors. The way how trust arises between audit team members, was not established in auditing research. This paper gives an understanding of trust formation between global audit team members, however the trust formation between non-global audit team members is still unexamined. Future research may fill this gap. Understanding the trust formation is important, because it has consequences on the perceived audit quality, regarding the results of this paper. When there is a lot of trust within global audit teams, the perceived audit quality is improving, because the audit process runs smoother. But the auditor has to be aware that they have no false trust, which may harm the audit quality. Trust in global audit teams is lower in the first year and will improve in the following years and so does the audit quality.
To understand the whole process of trust formation between global audit team members, it is important to understand how trust is formed when members do not have experiences with each other. Not all participants argued that there was initial trust, however some argued that there were some elements where they based initial trust on. The most mentioned basis of trust in the initial phase of the global audit, was that the other team member was from the same audit firm. The auditors expected a certain kind of proficiency when someone was from the same audit firm and they shared the same ‘common ground’, this helped them to create trust. When the other global auditor was from the same audit team, they shared the same quality standards, which created trust and increased the perceived audit quality. The audit profession gave the participants also a basis for initial trust in a global audit team, because the profession created an expectation that the other auditor was also a professional. The function level of a global audit team member also played a role in the initial trust formation, but not every auditor agrees with this. When auditors do not have experience with an individual, the function gave them an expectation of experience and knowledge of that team member. The interviews do not reveal explicitly whether trust in the audit profession or function level contributed to the perceived audit quality. Some auditors argued that cultural or national bias played a role in their initial trust formation, which can be flawed. If their trust was flawed, it can create false trust or distrust, which had consequences on the perceived audit quality. At least, some participants thought that language barriers played a role in their initial and general trust formation when they cannot
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understand the other global audit team member, which may have consequences on the perceived audit quality.
The elements of the swift trust theory of Meyerson et al. (1996) are applicable to global audit team members, especially swift trust that is based on the reputation of the organisation (the same audit firm) and individual attributes (the audit profession). For other elements, participants had a different opinion. Swift trust was present for some participants, but it was thin because little incidents could harm the trust formation. It is important to note that global audit teams did not met the assumption of the swift trust theory, that these teams are completely temporary, as indicated by Goodman & Goodman (1976). Namely, it is often the case that these teams remain the same in the following year. This is why trust within global audit teams can be built in the traditional manner. So, the swift trust theory may not be well suited for global audit teams, but it helps to understand how the trust is formed in the initial phase of a global audit. This paper contributes to the swift trust theory, because it shows how different elements of the theory are applicable to teams that are not completely temporary. This theory is applicable in the initial stage of these kind of teams.
Everett (2003) argues that accounting researchers need to investigate the dynamics and effects of globalization. Sunderland & Trompeter (2017) indicate that future research in global group audits is needed on the collaboration with colleagues around the world. This research gives an understanding how global auditors collaborate with each other and what essential is for keeping trust in each other. Meeting each other expectations (e.g. meet deadlines and prescribed audit procedures in the instructions) is essential for a healthy long-term trust relationship. Especially in the first year, it is important to emphasize your expectations to the other global auditor(s). This prevents expectation gaps that leads to less trust and therefore may have consequences on the audit quality.
One limitation of this study is that interviews were conducted with only 13 participants and are not generalisable for the all global audit teams. The interviews were conducted via Microsoft Teams due to the COVID-19 measures. This may have an impact on the answers of the participants, because they could react differently than in a face-to-face interview. Trust is also a personal-based perception and differs between every individual. Interviews were conducted at one audit firm, so it is possible that results will differ between different audit organizations. However, the results may give an indication how trust is formed in global audit teams and what the perceived consequences are for the audit quality. Interviews were conducted with auditors of two offices in the Netherlands with group audits with a lot of components, but the headquarter of this audit firm has bigger group audits with a large number of components. Large group audits with a lot of components could require more trust and coordination than the group audits covered in this paper. So, it may be useful for future researchers to focus on the biggest group audits at the headquarter of a BIG4 audit firm, in case of trust formation within global audit teams.
This research showed that language barriers and cultural bias played a role in global audits and, in this case, influenced their trust. This was contradicting with the results of Downey & Bedard (2019), who argue that it has less influence on the global audit. However, the result that language barriers influence the perceived trust of global auditors is consistent with the result of Tenzer et al. (2014). Tenzer et al. (2014) argue that multinational teams lead to language barriers which lowers team members’ emotion-based intention to trust other team members.
