The comfort theory revised : how client types influence auditors’ comfort levels

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The comfort theory revised

How client types influence auditors’ comfort levels

Student: Liselotte de Zoete Student Number: 6042074

Date: 22-06-2015

Education: MSc Accountancy and Control, Accountancy track

Institution: University of Amsterdam, Faculty of Economics and Business Supervisor: Dr. G. Georgakopoulos

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1. Statement of originality

This document is written by Liselotte de Zoete, who declares to take full responsibility for the contents of this document. I declare that the text and work presented in this document is original and that no source 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 the work, not for the contents.

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2. Abstract

Purpose: This paper provides empirical evidence on comfort as a ritual as researched by

Pentland (1993). Specifically what influences different client types have on the comfort of the auditor in a financial audit engagement. The creation of comfort is examined from the

auditors point of view.

Design/methodology/approach: For the purpose of this paper an interpretative case study

was conducted at PwC in the Netherlands. Data was gathered from interviews with 9 auditors from PwC through participant observation.

Findings: Comfort is still an important factor in a financial audit engagement. Clients play a

large role in the creation of comfort and this differs per industry and size of the client. All three types of comfort creation, state sense, relief sense and renewal sense, were impacted, positively and negatively.

Research limitations: The limitations of this research are primarily found in the limited

amount of time and amount of interviews available for research and the difficulty of

generalizing the findings of one specific case study in a specific contextual setting. But it is also important to keep in mind that there is a language barrier that could influence the results.

Originality/Value: While the comfort theory plays an important role in the audit profession,

it still is largely under-researched and there is a need for more societal research in auditing. This research aims to fill a research gap, by studying the influence of client types on the comfort levels of auditors

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3. Abbreviations, definitions & list of tables

3.1. Abbreviations F.S = Financial Services

CIPS/TICE = consumer product industry EU & M = Energy, Utilities en Mining PS/PC = Public sector & private companies S.A. = Senior associate

3.2. Definitions EGA = PwC working paper

R.A. = register accountant, Dutch version of CPA AURA = PwC audit Framework

3.3. Tables

Table 1: interviewee selection Table 2: coding scheme Table 3: framework

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4. Introduction

Auditing has evolved greatly over the course of the last decades: from small offices that practice bookkeeping to large firms that perform financial and financial audits. The non-financial audit has taken a steep rise in the last couple of years. CSR reporting, integrated reporting and many more non-financial assurance practices have been introduced and have given auditing a whole new platform (Ellerup Nielsen and Thompson, 2007). But this does not mean that financial reporting is of less importance. Even though the world is changing, financial statements still have to be checked. And even though financial auditing has been around since Victorian times, this does not mean that all has been researched.

An audit is finished when all the working papers are filled out and the partner signs the report (PwC guidelines, 2015). But when does an auditor feel that he has given enough assurance? And what role does team interaction play in an audit? These are all questions that Pentland (1993) asked himself. That is why Pentland (1993) started his research on micro-sociological concept of the interaction ritual. Here Pentland focused on the process of auditing rather than the outcome and this made him one of the first that saw auditing as a ritual and combining it with the comfort theory. In his research he looked at audit as a ritual. With ritual he refers to: ‘any collective activity that has the effect of maintaining social order,

no matter how commonplace or mundane it may seem’.

When analyzing rituals it is a question of interpretation, Pentland used Moore and Myerhoff’s (1977) five layers of rituals for his research. By interpreting auditing as a ritual, it looks at the social context of the audit. Pentland (1993) concludes that audit rituals produce comfort, and comfort is used as a commodity within an engagement team and the investment community as a whole. The audit engagement ends with a signature, which is regarded as “sacred”, it signifies completion, purity and of course, comfort.

Other researchers used Pentland’s work to review societal view in auditing as well. Power (2003) for example researched auditing and the production of legitimacy around four themes: the audit process and formal structure; auditing as a business, working papers and image management; and new audits. He mentioned that there is very little known about auditing in practice while accounting and its components (like, standard costing and ABC) have been researched to every detail. He uses Pentland’s (1993) paper to describe social construction of the audit process and to illustrate the importance of image management. An example that Pentland (1993) gives is that who does the work is as important as what is done. And as Power (2003) concludes: ‘auditing is far from being a self-evident set of techniques

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which require occasional improvement but it is rather a series of hopes and aspirations inscribed in its most mundane routines.’

Carrington and Catásus (2007) continue with researching the sociological strand of auditing. They carry on Pentland’s idea of auditing as a ritualistic process of producing comfort at the micro-level and investigate the notion of auditing as a comfort producing activity . They mention different levels of comfort that can be found in Kolcaba and

Kolcaba’s (1991) research in the nursing industry. The nursing industry is where the comfort theory once all started. They transformed the Kolcaba and Kolcaba (1991) levels of comfort into a comfort framework for auditing. The conclusion of their study is that the effort to produce comfort necessitates an effort to find and relate to discomforts. Also the comfort theory provides a language to discuss achieving maximal assurance.

One of the factors that play a big role in audits is the client. The client hires the auditor and can be a determining factor on the quality of the audit (Chen et al., 2010). When an auditor starts auditing a new client, he has to do a lot of research that one does not do at a former client (Carey and Simnett, 2006).

There has been a lot of research done on the influence clients have on audit quality. Deangelo (1981) is one of the first that researched auditor independence in combination with client importance. She found that client importance is related to an auditors incentive to compromise his independence. This is related to quasi-rents, quasi-rent occur when specific start-up costs are made. Because of this start-up costs the auditor can ask more for the audit but at the same time has an incentive to act opportunistic regarding the client. Because he knows that the client now has transfer costs if switching to another auditor, so this allows him to ask more for his audit as long as it does not exceed the transfer cost.

Chung and Kallapur (2003) continue on this premise and investigate the economic theory of Deangelo (1981) by using ratios of client fees and of non-audit fees and divide these by the audit firm's U.S. revenues or a surrogate for the audit-practice-office revenues as measures of client importance. They conclude that there is no significance between auditor independence impairment as a function of different client fee ratios. And this contradicts DeAngelo’s (1981) research.

Chi et al. (2012) investigated the effect of client importance in a Taiwanese setting where audit partners are required to sign audit reports to examine whether audit partners compromise their independence for economically important clients. They made a difference between Big N audit and non-big N auditors. They concluded that big N auditors did not comprise their independence but non-big N auditors did.

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However, the role of the client has not been researched in combination with the comfort theory before. Also Carrington and Catásus (2007), who did the most recent

research on the comfort theory have suggested this subject explicitly: “It is possible that the

different perspectives on relief, state and renewal relate to what kind of client the seniors were working with. We did not use this variable and this could be a possibility for future research.” That is why the research question of this thesis is:

“In what way do client types influence the comfort levels of an auditor?”

The aim of this paper is to provide information if and how clients impact the comfort levels of auditors and how it differs per client type. To achieve this goal a qualitative case study is taken where auditors of a Big-4 auditing firm in the Netherlands will be interviewed.

The interviews will be held among public accountants at PwC, who have completed their studies and have working experience in the auditing field for a number of years. By engaging auditors in interviews, auditors were given the opportunity to reflect in detail on the influence of client types on their comfort levels. Also by doing a case study research it

answers to the demand for more qualitative research on accounting subjects (Cooper & Morgan, 2008).

There has not been a lot of research done on the comfort theory (Carrington and Catásus, 2007; Power, 2003). However, it can help contributing to not only the sociological strand of audit research, it may also shed a light on other fields of research (Carrington & Catásus, 2007). This study will bring a fresh view to the extensive research done on the impact of clients on audits. This time it will not be the impact of the quality of the audit, or the audit from a client’s perspective but how the client influences the comfort of an auditor.

The study will research auditors of financial audits rather than non-financial audits because of the objectiveness of financial auditing. The combination of the objective with the subjective should ensure interesting results. Also all former comfort theory research

(Carrington and Catásus, 2007; Pentland, 1993; Power, 2003). has been done in a financial audit setting. So to extend the findings of previous research (Carrington and Catásus, 2007; Pentland, 1993; Power, 2003) this research also takes place in a financial audit setting.

This paper will hopefully lead to a better understanding of the comfort theory and increase the importance of acknowledging the comfort theory and other societal audit research. Furthermore, the present study also intends to close a research gap, as identified in

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the paper of Carrington and Catásus (2007, p.53) and may also be a trigger for further research on the comfort theory.

The remainder of this study will be structured as followed. First, the literature review will go into more detail about the comfort theory and client types. The methodology will describe the importance of qualitative research and how the research will be conducted. This is followed by the case analysis and it findings. The findings will be divided in changes compared to former research and how client types have influenced the comfort theory . The research concludes with a summary of key findings and contributions, limitations of the research and some suggestions for future research.

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5. Literature review

This section will provide an overview of the relevant theoretical insights, extracted from the existing literature. The first part will discuss both quantitative and qualitative research papers on creating comfort in auditing. Although the literature review presents the comfort theory in a variety on contexts, this paper will primarily focus on creating comfort during an audit and its relation with the client. Subsequently, this literature review will thrive to create a deeper understanding on client types.

5.1. Comfort theory

5.1.1. Origination of Comfort theory

Pentland (1993) is one of the earlier writers examining the creation of comfort in the process of auditing. He wanted to give an alternative view on auditing, by offering an

interpretive approach to auditor behavior that emphasizes the social and contextual aspects of the work. Pentland (1993) did field observations of two audit engagements and used Collins’s (1981) theory of interaction ritual chains to create a new theory about micro-level

interactions within an audit team and its effect on macro-level of auditing. Pentland (1993) wanted to contribute to the understanding of the audit ritual on both empirical as theoretical grounds. This results in a better understanding of the social construction of the audit process. By focusing on the micro-sociological perspective offers a completely different view of formatting an audit opinion. Pentland (1993) is of opinion that micro-interactions within the engagement team create comfort, which makes the order of macro-level of capital markets and other financial institutions.

Professional auditing standards speak of “risk of misstatement” and obtaining

“assurance”, (Vera-Muñoz, et al., 2014) while according to Pentland auditors speak in terms of comfort. Numbers do not speak for themselves and auditors give a meaning to them. By using emotional language for a relatively rational process, auditors give an important layer of meaning to their work. By using audit rituals the clients data can be transformed into “clean” data and can make the auditor comfortable (Pentland, 1993).

Pentland (1993) sees auditing as an interaction ritual among auditors to create comfort for the engagement team, the audit firm and finally the public. Collins (1981) implemented

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the interaction ritual as an approach to understand macro-level phenomena in a micro-level way. Collins (1981) is of the opinion that the emotional part, rather than the rational part, is main process through which social order is constructed. Something which Pentland agrees upon in the process of auditing.

As mentioned before, Pentland (1993) researched team interactions during an audit. Within the teams, comfort was traded as a commodity and up the chain of command.

Pentland (1993, p. 610) even mentions that a partner does not achieve comfort by reviewing working papers but by repeated interactions with members of his team. And comfort is not only passed on as a commodity but also achieved by team interaction. By discussing certain discomforts, comfort can be achieved and passed on. Not only to the partner, but also to other engagement teams, the client and finally the public.

Pentland (1993, p. 612) also mentions the importance of the person performing the “ritual”. The audit (ritual) is only valid when performed by the auditors of the firm. This is the case, because auditors are trusted to perform the right steps and the clients management may act opportunistically and can even be motivated to deceive the auditor. This is amplified by the strict separation of the auditor and the client during the audit process. This also results in an enlarged feeling of, us against the rest.

Pentland (1993) thinks that using the word comfort can suggest that auditors trust on their “gut feeling”. A reaction on a feeling without using ones rationale. Getting a bad “feeling” about something results in discomfort and vice versa. According to Humphrey and Moizer (1990) identifying the gut feel is an important factor during the planning of and audit and the findings of Pentland (1993) even suggest that it is important throughout the entire audit. As Pentland (1993, p. 619) states: “The essential point is that auditors need to achieve an emotional state with respect to their work, not just a cognitive one.”

Pentland’s theory (1993) also describes the interaction between the auditor and the client in the area of validation. Inventory taking for example, is done by the client with observation of the auditor. Pentland (1993) describes this as ritual purification. Because an auditor cannot review all systems and procedures, he has to rely on the client to explain how the business works and he has to trust on his feeling and experience if he deems the

explanation reasonable.

The sacredness of the signature is another subject that Pentland discusses in his research. He sees it as the key to understanding the audit ritual. Since comfort depends on others finishing the ritual it is a vital part of “getting comfortable”. So when a partner signs it can be seen as a symbol for the end of the audit were all auditors are comfortable.

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And as Pentland (1993) mentions in his conclusions,: “For any given rule, one must

decide when to apply it, which requires more rules, each of which requires more rules.” So

even though auditing is a profession with many rules and regulations, one must also trust on emotions and their “gut feel”. Auditing is a way to create comfort, for the engagement team, the audit firm and finally the public.

5.1.2. Comfort Theory and legitimacy

Where Pentland (1993) focused on the ritual of auditing and how it creates comfort, Power (2003) looks at how legitimacy is created by auditing. Power describes legitimacy in his paper when financial statements come across as trustworthy because of the audit done by the auditors. Where comfort is more upon the auditors themselves, legitimacy is more about how audits come across towards the public. And as Pentland (1993, p. 612) describes, an audit an audit is only valid and perceived trustworthy when it performed by a certain individual.

Power (2003) looks at legitimacy around four themes: The audit process and formal structure; auditing as business, working papers and image management; and new audits. With the focus on legitimacy, he looks more at the societal view of auditing than the common numerical based research.

When taking the audit process and its formal structure into account one subject primarily arises: the structure-judgement debate. This examines to what extent the audit process should be structured and if there should be formal guidelines (Power, 2003). Power (2003) sees a trend towards more structure in auditing, but papers with a more societal view argue that more structure and regulations do not improve the audit quality and legitimacy (Herrbach, 2001; Pentland, 1993; Vanstraelen et al., 2012). Previous literature focused on the financial background and compared audit quality from US GAAP firms, which have stricter guidelines and rules, to non-US GAAP firms. They found that audit quality is higher at US GAAP firms (Bradshaw and Miller, 2008; Holthausen, 2009; Lang et al., 2006). So whether it is better to implement stricter regulation is not clear. If this increases comfort is also still the question, and this could be a possibility for future research.

Auditing as business is the second theme Power (2003) describes in his paper. Power discusses the cost-quality dilemma. Audit firms become more and more profitable businesses, but it is not clear how this will affect audit quality. Humphrey and Moizer (1990) interviewed practitioners about the audit planning process. They criticized the gap there is between what

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officially needs to happen in the audit process and what happens in practice. Audits are meant to assure financial statements and give comfort to the public, but there is the danger that the focus is shifting towards making profit instead of the quality of the audit. This could lead to a decrease in independence, what will lead to a decrease in audit quality (Deangelo, 1981).

Power (2003) continues with image management and working papers where he clasps back to Pentland’s research (1993). First, Power mentioned how important the image of auditors is. He uses an example from Pentland’s paper (1993). “working long hours with

short breaks may be needed to get the work done in some technical sense, but this also has an important social function. The impression of audit is much less of a practice comprised by careful and considered judgement, as by relentless application and effort. In place of, or at least in addition to, cool cognition, we see elaborate displays of hard work”(Power, 2003,

pp.385-386). Power (2003) agrees with Pentland on the notion that auditing is a “certification

of the unknowable” (Pentland, 1993, p. 611). To create trust among the public the image of

an auditor is almost just as important as what he really does.

Where different dimensions of an audit emerge is in the production of working papers (Power, 2003). Van Maanen and Pentland (1994) did research on the role of documentation in representing practice. Working papers give a script of what has been done in the audit and can give the public increased trust. But because of the importance of working papers this can also lead to a too big focus on creating working papers and a decrease in focus in doing the audit (Francis, 1994). But all of this does confirm Pentland’s notion of the importance micro-interactions in auditing and their consequences for macro-constructions.

The last theme Power (2003) discusses in his paper is new audits. Till what level do people want to extent auditing into new areas? By auditing something, it gives people more comfort but the question is whether everything auditable? Power (2003) sees more and more new spaces being audited and where this is not possible it still gives an important foothold. Nowadays you have several types of auditing in new spaces as Power predicted, particularly in the areas of efficiency auditing and corporate sustainability reporting. Claims are made that the well-developed global standard and professional ‘independence and ethical requirements’, made public accountants as ‘higher quality’ assurance providers (DeAngelo, 1981; Simnett et al., 2009; Watts and Zimmerman, 1986).

Power (2003) is of the opinion that, while auditing seems to be a very technical and thought-out process, it often is not. Pentland (1993) and Power (2003) agree on this subject, which implicates that the comfort level of an auditor is more important than it might seem. If auditors will not follow outset blueprints but rather follow their own instinct, establishing

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their comfort levels and when they are achieved is very important. But it is important that the symbol of comfort is created by a credible and independent authority to create any value (Power, 1999).

5.1.3. Comfort framework

Carrington and Catásus (2007) continue with the research on the comfort theory. Carrington and Catásus (2007) develop a ‘comfort framework’ based on the work of Kolcaba and Kolcaba (1991). Kolcaba and Kolcaba (1991) developed the original comfort theory for the nursing industry. In their research comfort was taken more literal and used to describe the state of comfort of a patient. Pentland (1993) transformed the theory to make it useable for describing the audit ritual. Carrington and Catásus (2007) combined both and made a

framework consisting of three types of comfort, namely: The state sense, the relief sense and the renewal sense.

With the state sense, all possible outcomes of comfort are described. It does not directly mean there is an absence of discomfort, but it is rather determined by the conditions that build comfort. The state sense suggest that at any given time there is comfort and

discomfort and the state sense is record of all comfort and discomfort. In auditing, this relates to the situation when enough effort has been invested to come to an opinion. So when the audit has created a large enough sense of comfort to produce a clean sheet. Therefore this sense aligns with the view in auditing that 100% assurance of the audit is impossible.

The relief sense refers to the acts that relieve discomfort. By decreasing discomfort, an non-acceptable level of comfort can be turned into an acceptable level of comfort. Relief aims in this sense, to eliminating discomfort. In the audit practice this leads to “teasing out

the acts that are obligatory to perform” (Carrington and Catásus, 2007).

And last, the renewal sense of comfort indicates the revitalization on how comfort is perceived. It is about new views on both the state and relief sense. In auditing this can be seen as creating new definitions of what is acceptable during an audit. It is possible that an auditor is comfortable with something at first but this changes over time. It can also been seen as an example of a pro argument for auditor rotation ( Myers et al., 2003). This is because the tenure and audit quality relation suggest that the longer an auditor has audited a specific client, the less likely he is to sign a qualified audit report.

Carrington and Catásus (2007) offer a good analogy to describe the differences between senses of comfort. “A high jumper may help illustrate comfort theory as applied

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here. The height of the bar is where the state of comfort is set in every particular audit (or even account). The auditor has to succeed in attaining this height to attain a comfortable state. Comfort as relief concerns what it takes the auditor to reach this height and how s/he goes about doing it. For the high jumper this may imply a certain type of shoes and

a specific distance for the run-up. The changes in the level of comfort can be understood as changes in the height of the bar. This situation corresponds to the notion of comfort as renewal.”

Carrington and Catásus (2007) used their framework to give a fresh view on the comfort theory. “we have made an effort to qualify our understanding of the actors who

influence the level of comfort, how comfort is attained and how the comfort level differs”

(Carrington and Catásus, 2007, p. 39). Even though the comfort theory, as used by Carrington and Catásus (2007), is created by Pentland (1993), Carrington and Catásus (2007) found that the auditors do not view auditing as a ritual and see the comfort theory as something else.

The comfort theory is according to Carrington and Catásus (2007) something more than used rituals. The perspective of their subjects is that the comfort production is much more than signing the report. The role is according to Carrington and Catásus (2007) much smaller than described by Pentland (1993). Many actors are involved and an audit is not finished until all relevant actors are convinced.

5.2. Client types

5.2.1. What are client types?

When speaking about client types in the business of auditing, multiple types can be meant. First of all, the size of a client is a type, the size does exert influence on the audit and its quality (Reynolds & Francis, 2000; Francis, 2004; Knechel et al., 2012). Also, there is a difference in risk between clients and the pressure a client applies to the auditor (Blay, 2005). The tenure of the auditor also plays a role in auditing and there are contracting results when it comes to this subject (Deangelo, 1989; Gosh & Moon, 2005).

As can be seen there has been a lot of research on client types and their influence on audit quality. But almost none of these are qualitative studies. This thesis divides clients in different industries and therefore answers to the need for more qualitative research in the field of clients and their influence on auditing.

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5.2.2. Client size and their influence on the audit process

A lot of research (Chung and Kallapur, 2003; Deangelo, 1981; Reynolds and Francis, 2000) has been done on the influence of client size on the audit process. But whether there is a positive or negative influence on the audit quality is not clear. As Chung and Kallapur (2003, p. 937) mention, there are positive and negative consequences on auditor independence of having a large sized client. On the one hand, larger firms are more important to the auditor, which may lead to more pressure from that client on the auditor to deliver a positive outcome on their audit. But on the other hand, larger clients also have an increased litigation risk which encourages auditors to be more conservative (Reynolds & Francis, 2000). Reynolds and Francis (2000) and Chung and Kallapur (2003) could not find significant evidence that client size influences the independence of the auditor, while Reynolds and Francis (2000) do find significant evidence that auditors act more conservative. This suggests that reputation protection dominates auditor behavior.

Besides the pressure a larger client could exert, larger clients are also more complex and harder to fathom. This can lead to a lower quality audit because it is harder to be aware of everything in the company (Carcello & Nagy, 2004). However, with bigger clients an audit firm has more budget and can make more use of industry specialized auditors (Balsam et al., 2003).

A smaller client has overall a lower quality of financial statements and more work needs to be done to change the financial statement so that an unqualified opinion can be handed out (Stein et al., 1994). McKeown (1991) found that larger clients are less likely to receive a going‐concern opinion, even after controlling for the effect of client size on the probability of business failure.

The overall opinion is that client size has some influence on the auditor. Whether this is positive or negative is hard to say. It is also hard to determine, by using previous literature, whether client size has an impact on comfort creation. More pressure should lead to a harder to reach comfort level as being conservative would. But using industry specialized auditors should bring some relief and should increase comfort levels (Balsam et al., 2003).

5.2.3. Client risk

In this thesis, client risk is seen as the risk whether accepting the client will lead to the audit firm suffer a loss on the engagement through a lack of engagement profitability or future

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litigation (Johnstone, 2000). This client risk is determined by client-related risk related to internal control and financial viability (Johnstone, 2000). The risk is based on client characteristics as: financial condition, levels of accounts receivable and inventory, sales growth, market value of equity, and variability in the client's stock returns (Pratt and Stice, 1994). By examining client characteristics, a judgement about the client risk can be made by the auditor. This often consists of two types, “risky and safe”. This judgement leads to the valuation of the audit fee (Pratt and Stice, 1994). In the “post-enron era” and in times of increased regulation risk, tolerance of auditors has decreased (Landsman et al., 2009). Landsman et al. (2009) also found a shift in client acceptance, towards a preference of less “risky” clients.

5.2.4. Tenure

The tenure of the relationship between client and auditor is something that also exerts influence. Independence can decrease because of a relationship between the client and auditor, which leads to lower audit quality and even earnings management in some cases (Myers and Myers, 2003).

Ghosh and Moon (2005) found that investors and information intermediaries are of the opinion that audit quality increase with tenure. They found that investors perceive earnings quality as improving with auditor tenure, this is because by analyzing the earnings response coefficients from returns-earnings regressions increases with auditor tenure. They also concluded that financial analysts perceive earnings quality improved when there was a longer auditor tenure.

Knowledge is something that is also of great importance for an audit, especially

knowledge of the client’s accounting system and internal control structure (Johnson et al., 2002). This knowledge is client specific. Although auditors use different types of knowledge (such as general knowledge and industry knowledge) to produce an audit, client-specific knowledge is needed to conduct an audit (Knapp, 1991). So auditing a new client, this can result in significant start-up costs (DeAngelo, 1981). Less client-specific knowledge in the beginning of an engagement may occur in a lower likelihood of detecting material

misstatements, which lead to giving auditors a comparative advantage in detecting errors over time as they obtain a deeper understanding of the client’s business (Beck et al., 1988).

But even though there are positive points to auditor tenure, there is mandatory auditor rotation. Myers et al. (2003) for example did not find a significant relation between auditor

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rotation and the need for identifying restatements and thus found no support for auditor rotation. Camaran et al. (2014) found even adverse consequences of mandatory rotation. This is because implementing this regulation and executing it is very costly. And there are almost no improvements in the quality of the audit.

5.2.5. Industry type

The industry type of a client also has impact on the audit (Cooke, 1992). In some industries, delivering a faulty financial statement, could have a bigger impact than in other sector. An example is the financial service industry, which includes banks and insurance companies. This industry also asks for more industry specialized auditors than a “simple” production company for example (Balsam et al., 2003).

Stein et al. (1994) also found that the measurement of risk and its impact on audit production varies across industries. In the financial industry, for example, the fact that a client is publicly held is not important for the audit while the audit production is affected when the financial client report a net loss.

Every type of industry has its own specific processes and controls. The risks of an industry differ and should be accounted for (PwC guidelines). An auditor specializes over time in a certain industry by retrieving industry specific knowledge and receiving training on a specific industry (Solomon et al., 1999). The fact that there are industry specialized auditors only confirms that there are differences between the industry. But how this specifically impacts the auditor and namely its comfort level is something that is not clear and hopefully can be answered at the end of this thesis.

Overall, clients differ in many ways, size, client risk, tenure of auditing a client and the industry of the client. It is obvious that these characteristics have an impact on the audit but the way this impacts the auditors comfort level is not clear yet.

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6. Methodology

In this chapter the methodology of this thesis will be described. First, the importance of qualitative research will be outlined and why this type of research complements the answering of the research question. This will be followed with how the data of this

researched will be collected. The chapter then will continue with describing the case study that will be used and the chapter ends with the analysis of the case.

6.1. Importance of qualitative research

Case studies can produce much more detailed information about a few people and cases than a large-sample study can (Patton, 1990). And qualitative research can offer new insights and leads to new paths in research that quantitative research cannot. Quantitative research is based on an artificial setting and its main purpose is to generalize findings, whereas qualitative research is set in a natural environment and aimed at contextual understanding (Yin, 2009)

In this case, qualitative research is the right fit because there is limited information about the comfort theory in relationship with client types. Qualitative data research can offer more in this case than quantitative research could (Carrington and Catásus, 2007). And even though there is some resistance towards qualitative research, the pro’s still outweigh the con’s ( Denzin and Lincon, 2009).

This case study wants to address the following research question: “In what way do

client types influence the comfort levels of an auditor?” The question was formulated this

way to leave all answer possibilities open. So first of all, do client types impact the comfort levels at all and if so, in what way. Yin (2009, p. 2) mentions that a good case study ensures that the investigator has little control over events and the focus of the research is on a contemporary phenomenon within a real-life context. The researcher has no control on the outcome of the research and the study focuses on a contemporary phenomenon within a real-life context. So the case study research method is in line with the purpose of the study.

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6.2. Data collection

“Qualitative research methods involve the systematic collection, organization, and

interpretation of textual material derived from talk or observation. It is used in the

exploration of meanings of social phenomena as experienced by individuals themselves, in their natural context.” (Malterud, 2001, p. 483)

The research question was analyzed through semi-structured interviews, documentary analysis and participant observation. The use of multiple sources of evidence also ensures the construct validity of the research.

The research of Carrington and Catásus (2007) explicitly asks for further research on the impact of client types on the comfort production of auditors. That is why information from their research is questioned in this researched and this dissertation will use the same characteristics of the interviewees as Carrington and Catásus (2007) did. Using the same characteristics will increase this research’s reliability. Reliability is namely an important factor of conducting research, reliability is necessary so that if the research would be replicated by subsequent researchers along the same steps again that the same results will show (Gibbert et al., 2008). This is needed to keep errors and biases in the research to a minimum (Yin, 2009). Yin (2009) describes two approaches to enhance the reliability, the first is a case study protocol and the second is a case study database. A case study protocol entails a the documentation of how the entire case study has been conducted (Gibbert et al., 2008). Therefore, in this research all relevant issues of how the case study is conducted will be specified. A case study database is put together that includes important case study documents and the narratives collected such as the recordings of interviews and interview transcripts.

The interviews were conducted in a semi-structured manner instead of a structured manner because this allows the interviews to be more flexible and allows the interviewee to help address the issues he wants to address. Considering that everybody encounters

experiences differently and by keeping the interview not too rigid, there is an opportunity to play into people’s differences. For a structured interview it is needed to see the interviewee as a subject and that there is no relationship between both the interviewer and the interviewee (King, 1994). This is not the case in this research and it is also believed that it is not possible to stay completely objective in interviews (King, 1994). Because of the familiarity of the researcher with the company, the interview was tailored somewhat to fit the company specifics. For example: using the client differentiation that PwC uses.

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6.3. Case design

The research has taken place at the big four audit firm; PwC in the Amsterdam office in the Netherlands. Access was granted by a thesis internship, this internship is developed to write your thesis at their office. This made it possible to not only interview auditors at the company but also provided the opportunity to observe auditors and their interaction with the client. This was achieved by following auditors for a week at one of PwC’s clients. During this week, communication among auditors could be observed, mainly their use of language can be of interest for this study.

The reason the research is conducted at a big 4 audit firm is that many researchers are of opinion that big 4 audit firms deliver the best quality audits ( Krishnan, 2003; Francis, 2004; Francis and Yu, 2009). Attaining a state of comfort can be seen as a creating the highest quality audit. A substantial part of former research (Carrington & Catásus, 2007; Pentland, 1993; Van Maanen and Pentland, 1994) done on the subject of the comfort theory is done with big 4 auditors. The reason that the research has taken place at only one of the big 4 firms is to filter out inconsistencies. All the firms work with different frameworks and different types of titles. By interviewing people only at PwC this all is the same while they do visit different clients. So the effect the client has on comfort levels is maximized.

In the search for the production of comfort, we targeted non-signing auditors, that is, the auditors beneath the top in the chain of command of the audit team

(Messier, 2003). The auditors recruited for participating in the interviews have 2 to 8 years’ experience. These auditors are in the midst of the audit team and keep track of the comfort levels and how to create more comfort (Carrington and Catásus, 2007). Also Carrington and Catásus (2007) used senior auditors in their research. This way the result of their research can be applied to this research.

Nine auditors were interviewed, of which one is associate, one is assistant manager, one is manager and six are senior associates. The associate has the least experience with two years and the manager has the most experience with 8 years. The author has worked with four out of the nine interviewees. There were nine interviews conducted in total and that resulted in three interviews per industry. Table 1 shows an overview of the interviewee records.

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Table 1. Interviewee selection

Interviewee Function Years’ experience Industry Duration

I1 Associate 2 years FS 00:39:35

I2 Senior Associate 3 years CIPS/TICE 00:42:24

I3 Senior Associate 6 years FS 00:40:33

I4 Senior Associate 6 years PC/PS 00:36:12

I5 Assistant Manager 8 years PC/PS 00:38:34

I6 Senior Associate 6 years FS 00:31:22

I8 Manager 8 years PC/PS 00:40:51

The interviews were conducted after the busy season1 during May 2015. This ensured the auditors still had their clients fresh in mind but were more relaxed than during the busy season. Furthermore, all the interviewees were available during this period and could almost all be interviewed at the PwC office in Amsterdam. The face-to-face interviews were held in private rooms which ensured that the interviewees could answer freely. This also warranted minimal background noise and distraction. The interviews were held approximately two days apart so the interviews could be transcribed but when starting a new interview the other would still be fresh in the interviewers mind.

Before planning dates for the interviews all people were emailed in advance to ensure they could be interviewed. This email contained a short introduction in the research of this thesis and what the interview will entail, including how long the interview will last

approximately and where the interviews would be held. By sending this email, the researcher could warrant that the interviewees would be available and if not had time enough to replace this person.

The average duration of the interviews is around the 40 minutes, with outliers of 31 minutes and 43 minutes. Nine interviews were conducted and all of them in Dutch. The interviews were all conducted in Dutch because of the nature of the investigation, namely comfort levels, which focus on the emotional state of the auditor. All the auditors do their

1_{Term used at PwC to describe the busiest season of the year. The period is from December till May where the}

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day-to-day work in Dutch and Dutch is their first language. So to maximize results, the research chose to do the interviews in Dutch.

The interviews’ main focus lied on the impact of client types on the comfort levels of auditors. The types that were differentiated between were the size of a client’s firm, the industry of the audited firms and the tenure at which an auditor has been auditing the client. In this case we speak about a “big” client when it has mandatory audits and has somewhat complex processes. The audit will take several weeks or even months. A “small” client will be in this context a client that often has voluntary audits, is rather simple and the audit can be done within a week or two. Of course there a lot of companies that are not containable within either of these identities but they will not play a role in this research. The industry that were differentiated between were financial clients, public sector clients and the consumer goods and production clients.

Of all the interviews, two were conducted by conference call and the others were conducted face to face. During the interviews an interview guide was used which can be viewed in appendix 1. To ensure validity of the research respondent validation was acquired from all the interviewees. The transcripts of the interviews were emailed to the interviewee so they could give their permission to use the data from the interviews and also to give them the opportunity to make additional comments when necessary.

Any additional comments of the interviewees were included before analysis was continued. Additionally, all personal information of the interviewees and their clients were anonymized. This to ensure all interviewees would answer to all honesty and without any consequences.

Besides using interviews as data for this research, the researcher also made

observations during several working days at the clients office and working at the Amsterdam PwC office. This notes were made during the audit and used the contextualize the outcome of this research. But because narrative data is fairly uncommon to be used in quantitative

auditing research this will be used to assess the validity of the interviews, are the answers the subjects gave aligning with what the researcher saw? And to provide side notes, were

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6.4. Case analysis

After each interview was finished, the researcher made additional notes on the interview. These consisted out of the impressions the interviewee made on the researcher, e.g. gestures, pauses and facial expressions. Also notes were made if anything of meaning was said before or after the interview. After finishing an interview, it was transcribed immediately to ensure the atmosphere of the interview could still be recorded.

The transcribing of the interviews led to 58 pages of interview data. This data was coded in Atlas.ti, while using a predetermined coding scheme, as can be seen in table 2. The first code has to do with the characteristics of the interviewee. This code allows the dividing of the interviewees per experience level and industry type.

The following codes were based on the comfort framework as described by

Carrington and Catásus (2007). The first category is interviewee, where the characteristics of the interviewees are described by either experience of industry. This is followed by the themes from the Carrington and Catásus (2007) framework. The first is relief sense of comfort where a financial audit is described and how important cooperation of the client is. This is followed by the state sense of comfort were is determined when there is enough assurance acquired by the auditor and how the materiality level is chosen. The last

component of the framework is the renewal sense. Hereby the influence of the experience of the auditor with the field and client is examined. Each article had its own cluster of codes (Saldana, 2012) to ensure clarity of all the codes. The last code category is the client

category. Here client differences are incorporated. The outcomes of all the categories can be cross referenced.

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Table 2. coding scheme

Category Sub-Category Content

Interviewee Experience The experience of the auditor

Industry The main industry the auditor works in Relief sense Auditing What do you do during an audit?

Cooperation client Does the client cooperate with the auditor State Sense Assurance When is enough assurance acquired

Materiality how is materiality determined?

Renewal sense Tenure How much experience does the auditor have? And how does that impact his audit

Client Size Small vs. Large firms

Industry The type of industry of the client

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7. PwC : the case context

PwC is the second largest professional services network in the world and the organization was formed in 1998 by a merger between Coopers & Lybrand and Price Waterhouse and experienced a name change to PwC in 2010. Its main service is assurance which contains 45 % of its total operations. In this thesis the focus will be on the audit component of the assurance services at the Amsterdam offices (PwC internal portal, 2015).

The Amsterdam offices of PwC offers employment to over 2,000 people and consist of two buildings, Westgate I and II. All of the assurance practices are done in Westgate I where every industry has its own floor. The financial services branch is only accessible with an exclusive pass only provided to the employees of the F.S (PwC Guidelines, 2015). All other auditing departments are accessible to all auditors to make discussions and

brainstorming as easy as possible.

Everybody starting at PwC begins with the associate academy, a traineeship consisting out of two years were beginning auditors can experience all audit types and

industries. After these two years one becomes senior associate until he obtains his R.A., then the auditor moves on to assistant manager and then some will move on to manager, director and partner. The reviewing of other employee’s work already starts at the senior associate level but on the other hand, everybody has a coach until director level (PwC internal portal, 2015). So the people interviewed both have a supervisor and are a supervisor as reviewing and being reviewed.

The PwC auditors do spend most of their time at the client. This way the client can be asked about inconsistencies at all time. This also ensures that the auditor can experience non-financial matters as internal control mechanisms but also the companies ambiance. Only when the client is not available or certain tasks that only can be done at the office, the

auditors will be at the office, this comes down to about once a week (PwC guidelines, 2015).

7.1. PwC and its client types

PwC divides their clients by means of industry types. There are five categories of clients: TICE, Financial service, Public sector, EU&M and private companies. TICE is an

abbreviation for technology, entertainment and media and telecommunications. The TICE industry is an extremely dynamic industry with companies that are presented with daunting

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challenges to business models, supply chains, marketing operations, infrastructure, service delivery and customer experience due to the impact of the ongoing digitization.

Financial services, often named F.S., consists out of five segments itself, namely: Banking, Insurance, Pensions, Asset Management, Real Estate. This industry type often asks for a more specialized audit. It is an industry that has extra risks because of the large public interest in this sector.

The Public Sector audits companies in the public sector, hospitals and schools for example. It can be very complex because the public sector differs a lot from the commercial sector. Not only in information but also in way of working. Also the internal auditors are often people with less financial experience as F.S internal auditors for example.

Energies, utilities and mining, or abbreviated EU&M, is also a very specific industry. It is an industry that changes quickly and is not always the most stable industry (Bradford, 2006).

The last industry type is private companies, or P.C.. These companies have voluntary audits and are not listed. These companies can have multiple reasons to want to be audited, for example the owner/manager asks for an audit because the bank wants to review the company or the owner/manager can use an audit as an extra control measure.

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8. Findings

As Eisenhart (1989, p. 763) states: “Analyzing data is the heart of building theory from case

studies, but it is both the most difficult and the least codified part of the process”. So to

enhance the findings in quality and clarity the findings are organized by using the framework as described by Carrington and Catásus (2007).

The first subchapter will be comfort as relief, where the process of creating comfort and the cooperation of the client will be discussed. This is followed by the state sense of comfort, when is enough assurance acquired? This will be the primary question to be

answered. Also the difference between materiality levels per client will be presented. And the final subchapter will be the renewal sense of comfort. Here the role of experience with the client will be discussed and how this can influence the audit. All of the elements of the Carrington and Catásus (2007) framework will mention how client-, size tenure and industry play a role. To make the above information more clear all of it is summarized in the

following table.

Table 3: framework

Comfort type Components Client types State sense Materiality

determination

1. Size 2. Industry When is maximal

assurance achieved Relief sense Cooperation of

client

1. Size 2. Industry Renewal sense Experience with the

same client

1. Size 2. Industry

8.1. State sense

The state sense suggest that at any given time there is comfort and discomfort and the state sense is record of all comfort and discomfort. (Carrington and Catásus, 2007). In auditing, this relates to the situation when enough effort has been invested to come to an opinion. So when does an auditor feel comfortable enough to give out an opinion?

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An audit itself consist out of a kick-off meeting, the checking of posts, the reviewing of this checking and a final meeting where the opinion is determined and all the findings are discussed with the client (de Zoete, observation, 14-04-2015). An audit is done when:

“we have acquired enough reliable information to give an opinion on the financial statements” (I2, S.A.)

“We link the qualitative with the quantitative, so linking the processes to the numbers in the financial statements, so when that is all clear and done you sign off and make sure all mistakes are out of the financial statement for the users of that financial statement.” (I7, S.A).

But when the researcher asked more in depth about when do you have enough reliable information, it was apparently harder for the interviewees to answer.

“it stays hard to determine, but at a certain point we can say, the risk that there still is a material mistake in the financial statements is almost zero. So then we have done enough to get that 95 % assurance. But after all, it is a feeling, a consideration you have to make also about the conversations you had with the client. But then you get to a point and you can say, now it is good, but of course it is a grey area.” (I3, S.A.)

“you are finished when you and the client are comfortable with the results.”(I5, Assistant Manager)

So, it is not only important for an auditor that all information that needs to be acquired is acquired but also to obtain a sense of comfort. And also that not only the auditor feels comfortable but also that this comfort can be passed on to the client.

Messier (2003) States that the amount of work put into an audit should correspond to the risk level of the client. This means that every audit differs in work needed and this is confirmed by the auditors.

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“Every client is different and has its own specifics. A bank for example has a lower threshold for risks but that is also mandated by AURA2. And there are also difference between PC and PS clients compared to larger firms. This leads among other things to different materiality levels.”(I4, S.A)

As mentioned by the interviewee all clients have different materiality levels. Materiality is determined by the team during the kick-off meeting and certain criteria play a role during this determination. Examples are; How has the client performed in the past, are there certain specific risks and how is the quality of the internal controls? This leads to a materiality level whereby the team feels comfortable that they will find all material mistakes in the financial statement.

“When starting with an audit you look at the inherent risk. What are the risks and what does management do to minimize these risks? So as auditor you judge the internal controls at the client. And after judging these controls you have to stand still and determine what they mean for you as an auditor. What do we have to do to acquire enough information? And this steps are mentioned in the PwC audit guide and this is based upon the ISA guidelines. (I4, S.A.)

“At PwC we use 3 types of materiality that we determine at the beginning of the audit. The 3 levels are: overall materiality, the highest level, performance materiality and sum materiality, obviously insignificant. We almost never discuss anything under sum because it is statistically determined that anything beneath that line will not lead to a material mistake in the financial statement and will affect our opinion. Things that are of performance materiality do not have to be changed by the client but we advise them to do so. And if they don’t we will make a note of it and take it with us in determining next year’s materiality. (I1, associate).

Even though determining the materiality is a carefully thought out process there are still instances whereby an auditor looks at a post under materiality. The main reason the interviewees gave was to increase understandability and as mentioned before,

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understandability is key for a good quality audit. One of the interviewees gave the following example for looking at posts under materiality:

“an example for looking at a post under materiality is at real-estate clients you will look at the valuation of real-estate but also at some provided services. And I always want to look at what exact service is delivered? Services are a superficial term and if you do not comprehend it fully you do not get a feeling of what is playing at the firm. That is not something that you have to do because of regulation but it comes forth out of my on critical perspective, that I understand what is happening.” (I6, S.A.)

“ normally you follow Aura when performing your tasks but sometimes you want to look into something a bit deeper and this is a feelings issue. When your speaking with the client or you see something and it’s not clear, you want to figure out how and what it is. Of course it still is a consideration if you look at it because it is probably not material. It is something that is more of a personal interest then something mandatory.”(I5, Assistant Manager).

This confirms the importance of the comfort theory because the feeling of an auditor after an audit is important for him. An auditor does not just want to follow the rules and come to an opinion but want to achieve a feeling of comfort too. But this makes it harder to determine when enough assurance has acquired. As the interviewees state: “it is a feeling”.

8.1.1. Size

The first type differentiated in this paper is if the size of client impacts the state comfort level of an auditor. As mentioned before, materiality is determined ahead of time by the quality of internal controls. In large companies internal controls are more extended, which makes it harder to make a judgment of the quality. The internal controls are more complex and harder to keep up to code.

“During the interim control we can form a picture of the company’s internal controls which can help us determining the materiality. Larger companies are more complex

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and this can lead to a lower materiality because their controls are not sufficient for their company size.” (I3, S.A.)

But on the other hand, smaller companies often have 1 or 2 members in their accounting team, this can make fraud easier for example. Also by speaking to more people about their decisions and how the company works a better picture can be formed on the company.

“At the bigger client you speak to more people because everything at the firm is bigger. While at smaller companies you often speak to 1 controller and that is it. This sometimes give you an insufficient picture of the clients’ whole company.” (I7, S.A.)

Concluding, size does impact the state comfort of the auditors. To achieve enough assurance and comfort materiality has to be determined. This is done on basis of internal controls and other information. And while a smaller company is easier to fathom, they also have smaller accounting departments what could increase fraud and decrease the overall picture of the company.

8.1.2. Industry

As mentioned before, the industry types that this thesis focusses on are financial clients, public sector clients and the consumer goods and production clients. When creating comfort as a state, especially the F.S industry differentiated compared to the other industries. First of all this can be found in the PwC guide as mentioned by interviewee 4. The PwC guideline mandates lower risk thresholds at F.S clients.

“The F.S sector is very specific, it has more rules and regulations and the subject is not as tangible as a production company for example. This can be harder to fully comprehend especially when starting out as an auditor.” (I6, S.A.)

Because the F.S sector can be harder to understand it can acquire some extra work and information to create the same amount of comfort as in the other sectors. This can also differ between auditors, as Carrington and Catásus (2007) mention: “what may be comfortable for

one person may not be for another.” But the experience and expertise of other auditors can

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“ You can learn a lot from your team and specialist when auditing with them, everybody has their strengths and weaknesses but you can learn a lot from each other”. (I6, S.A.)

And as Pentland (1993) mentions in his work, it is a team effort. “A cohesive, tightly

knit audit team is essential to the creation of a coherent set of working papers and a successful engagement.”(Pentland, 1993, 614).

8.2. Relief sense

“The concept of comfort as relief is about the acts that enable attaining a state of

comfort” (Carrington and Catásus, 2007). In the previous subchapter is was discussed when

enough assurance and comfort is created. In this subchapter the main question is: How to achieve this comfort?

As mentioned before, acquiring enough information to come to an opinion is the key. During an audit the financial statement and related information is provided by the client (de Zoete, observation, 14-04-2015). So auditors are highly dependent on the input and

involvement of the client. They are involved during the whole process:

“the client is in a big way involved during the whole process. The client understands the business and knows what is going on. He should provide me with information and that is why it is important to have a good relationship with your client. They should know what we expect from them and what they can expect from us.”(I6, S.A.)

To achieve comfort the client must cooperate to great extent with the auditor. Not only does the audit depend on the information given by the client but the client also needs to use this information to adjust the necessary in the financial statements.

“a client cooperation is important for an audit because in the end you need enough information to grant an opinion. And when you get your information delivered untimely or of low quality it will take you longer. Also this impacts the view of me on

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the client, when mistakes arise again and again, you are expecting the worse to come. But when everything is organized and well substantiated, the risk that there is

something wore declines.”(I3, S.A.)

As indicated by interviewee 3 it is important for an auditor to receive timely and high quality information of the client. This otherwise could increase the risk and this in turn will lead to a decrease of comfort. As Pentland (1993) mentions, an auditor does not have the time to do test every process and item himself so it is important that an auditor can rely on the client to explain how the business works and what accounts are used for.

Also the way a client reacts to questions can determine the comfort levels of the auditor. When a client reacts very hostile regarding questions this could indicate that something is wrong and lead to a decrease in comfort.

“Alarms bells start ringing when a client acts very hostile. Why would he react in such a way? When he reacts in such a way, I get a feeling that I need to do some extra ground work to ensure that nothing is wrong and get comfortable with the audit. (I9, S.A.)

8.2.1. Size

According to the interviewees, there is a big difference in the quality of information provided by the clients and that there is a relation to the size of the firm.

“I have the feeling that smaller clients do not fully comprehend what we are doing and that they are paying us to audit them. I think that leads to not giving us the right documents on time. While at a big firm they understand the necessity of an audit and that we are there for them and that they better work along. Also they have the

capacity to hire real financial people while smaller firms have not what also leads to in a difference of the quality of delivered information.”(I7, S.A.)

“the quality of the information delivered is less at smaller clients.” (I9, S.A.)

On that account, smaller clients deliver lower quality information. Also, they deliver the information less timely then the larger firms do. One could blame this on the fact that bigger

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firms have a bigger budget to higher financial professionals and have bigger internal audit teams. Also the smaller clients do not completely understand the necessity of the audit and therefor deliver lower quality information in a less timely manner. As one of the interviewees states:

“Sometimes smaller clients see us as a company that comes in and correct their mistakes, ‘do not worry about it, the auditor will come and correct our mistakes’ while larger clients just want us to confirm the quality of their performed work and that all their finances are in order, so our real job. Therefor the quality sometimes is lower at smaller firms.” (I6, S.A.)

Concluded can be that in the relief sense of comfort size of the client matters. The quality and timeliness of the delivered information is lower at smaller clients. Therefore more measures have to be taken to create comfort.

8.2.2. Industry

When taking comfort as relief into regard there are primarily differences between financial clients and clients from the public sector. As mentioned before, it is probable that the financial industry has more specialized personnel that handle their accounting. This leads to provision of higher quality information.

Rules and regulations are also stricter in the F.S industry compared to the other industries. So while the information is often timely acquired and of good quality and can be hard to fully comprehend the information. The F.S industry audits also hire specialized auditors because of this reason.

“The financial services sector is a specific sector with extra rules and regulation. This can make it harder to fully comprehend what is going on.” (I6, S.A.)

“A production company is easier when it comes to acquiring the right information and understanding it. Valuation of real estate for example is an art by itself and needs more judgement than a cash post. So that is one of the reasons we use internal

The comfort theory revised : how client types influence auditors’ comfort levels

The comfort theory revised

How client types influence auditors’ comfort levels

1.

Statement of originality

2.

Abstract

Table of Contents

3.

Abbreviations, definitions & list of tables

4.

Introduction

5.

Literature review

6.

Methodology

7.

PwC : the case context

8.

Findings