1 Doctorat HEC Spécialisation : Information, Comptabilité, Contrôle et Organisation ATELIER DE RECHERCHE Jeudi 9 juin 2005 Contribution du Professeur David J. COOPER University of Alberta, Canada (Co-Rédacteur en Chef de Critical Perspectives Accounting) Professeur responsable du séminaire : Eve CHIAPELLO Ce document ne peut être utilisé, reproduit ou cédé sans autorisation du Groupe HEC
2 SÉLECTION D'ARTICLES : - M. Barrett, D. J. Cooper, K. Jamal, "Globalization and the coordinating of work in multinational audits", Accounting, Organizations and Society, 2005, 30, pp B. Townley, D. J. Cooper, L. Oakes, "Performance measures and the rationalization of orgaizations", Organization Studies, 2003, 24(7), pp A. G. Puxty, H. C. Willmott, D. J. Cooper, T. Lowe, "Modes of regulation in advanced capitalims: locating accountancy in four countries", Accounting, Organizations and Society, 1987, vol. 12, n 3, pp A. M. Preston, D. J. Cooper, D. P. Scarbrough, R. C. Chilton, "Changes in the code of ethics of the U.S. accounting profession, 1917 and 1988: the continual quest for legitimation", Accounting, Organizations and Society, 1995, vol. 20, n 6, pp D. J. Cooper, M. J. Sherer, "The value of corporate accounting reports: arguments for a political econmy of accounting", Accounting, Organizations and Society, 1984, vol. 9, N 3/4, pp D. J. Cooper, "Rationality and investment appraisal", Accounting and Business Research, summer 1975, pp T. Hopper, D. Cooper, T. Lowe, T. Capps, J. Mouritsen, "Management control and worker resistance in the national coal board: financial controls in the labour process" (document disponible uniquement en version papier et à la demande).
3 Accounting, Organizations and Society 30 (2005) Globalization and the coordinating of work in multinational audits Michael Barrett a, David J. Cooper b, *, Karim Jamal b a Judge Institute of Management, University of Cambridge, Trumpington Street, Cambridge CB2 1AG, UK b School of Business, University of Alberta, Edmonton, Alberta, Canada T6G 2R6 Abstract This paper examines how the processes of coordinating a multinational audit impacts, and is effected by, the structuration of globalization. Using a detailed field study of an audit involving multiple locations, we argue that the coordination of work in multinational firms links the local and the global in a dialectical manner. In particular, we analyze the relationship between the global and the local through an examination of two key coordinating mechanisms used by audit firms inter-office instructions and the firm s risk based audit methodology. In so doing, we discuss the local appropriation of global systems, as well as the importance of trust and professional identity in the coordination and management of the multisite audit. Our study suggests two key globalizing tendencies associated with reflexivity in audit the increased risk of litigation and the commercialization of the audit industry. These changes are intimately linked at the work practice level to changes in documentation, new technologies and methodologies, and a diversification in business advisory services requiring new skills and client relationships. We discuss the implications of these changes for the future of auditing, audit work and large audit firms. Ó 2004 Elsevier Ltd. All rights reserved. Introduction Accounting and auditing research has a longstanding interest in internationalization and globalization. This has largely been focused on national systems of financial reporting, their standardization and harmonization, or on studies of the impact of national cultures on the use of management accounting or auditing techniques. We take a different, but we believe important, approach to accounting and globalization by asking the question: how is globalization produced and re-produced in everyday managerial * Corresponding author. Fax: address: (D.J. Cooper). practices? Specifically we examine the inter-relation between coordination of audit work and processes of globalization in a multinational accounting firm. Globalization is not just a process involving nation states, international trade rules, multinational organizations (firms and non-governmental organizations) and transnational institutions, important though these features might be (Annisette & Neu, forthcoming; Arnold & Sikka, 2001; Caramanis, 2002; Catchpowle, Cooper, & Wright, forthcoming). Globalization is a process that also involves detailed everyday activity in the context of diverse local institutions. Attention to how management coordination processes affect the shape and experience of globalization is an important issue for accounting research, particularly when those coordination processes involve /$ - see front matter Ó 2004 Elsevier Ltd. All rights reserved. doi: /j.aos
4 2 M. Barrett et al. / Accounting, Organizations and Society 30 (2005) 1 24 multinational accounting firms and a core product of accounting, namely audit. Much analysis of globalization has been fairly abstract and based on limited systematic evidence, leading to accusations of globalbaloney. Beck argues that, the pill to be used against abstractness, including the abstractness of the global, is examples (2000: 26). Accordingly, in this paper we explore globalization process through a detailed, empirical, analysis of some key work practices (Barley & Kunda, 2001) in global coordination. We are also concerned to link this detailed empirical analysis to wider organizational and social transformations. 1 Specifically, we analyze how a project involving multiple locations (in this case, the audit of a multinational client) is organized and coordinated. In so doing, we discuss some of the impacts of these detailed processes on the audit firm and the individuals who work in it. This paper contributes to an exploration of what globalization means to auditors as managers how it impacts them and affects their identity, decisions and practices. Many people around the world have confidence that the audit product has integrity and legitimacy, even in the face of audit scandals and abuses. The range and diversity of the people involved in its production, the different interests that they may have, and the complex processes needed to produce the service, suggests to us that a credible audit is a considerable management achievement. We thus seek to explain how firm wide systems of coordination of the audit are differentially used and made sense of in different locales, and yet yield an acceptable global product. In this way, our paper builds on the international management literature, for example Bartlett and Ghoshal (1989), particularly its focus on coordination mechanisms (Martinez & Jarillo, 1 There are many examples of accounting research that has linked the specifics of accounting to wider social transformations Burchell, Clubb, Hopwood, Hughes, and Nahapiet (1980, 1985), Tinker, Merino, and Neimark (1982), Berry et al. (1985) and Miller and O Leary (1987) are influential examples. Mainstream organization and management literature has rather belatedly re-discovered the importance of such linking see Stern and Barley, ). We offer a perspective, however, that is informed by social theory rather more than the political and economic understandings that underpin the literature in international financial accounting and management. The focus of social theory is on understanding the processes of globalization and the impacts on nations, communities, corporations and the individual. The emphasis is on interaction, sometimes described by the shorthand of the global local dialectic (Giddens, 1991). The question is whether, and how, globalization, variously defined in terms of the perceived shrinking of the world, the separation of time and space, or the interdependence of major national economies, has simultaneously impacted nations, communities, corporations and the individual. The focus on the impact of globalization addresses the question of whether, and in what ways, globalization has resulted in increasing homogenization and convergence at all levels of society (Guillen, 2001). The particular insight of Giddens has been on emphasizing the structuration of globalization, that is how global tendencies are produced and reproduced through the actions of individuals, how individual actions are informed by local understandings and experiences of globalization, and yet simultaneously affect how globalization subsequently evolves. 2 We concentrate on the firm, professional and individual levels identified by social theory, and leave the community, national and transnational levels to future analysis. Thus, we limit our examination to how a global audit, perceived as satisfactory by the auditors and the client, is produced, and some of the effects on the producer firm and individuals. Our analysis of the structuration of globalization is not intended to celebrate the empirical detail, but to draw out how globalization works, and what some of its implications might be for the management of audit work and the identity of auditors. 2 Note that an examination of globalization processes using our perspective does not necessitate study of many countries or involve what is sometimes referred to as international accounting or management.
5 M. Barrett et al. / Accounting, Organizations and Society 30 (2005) Our research studied the management of a multinational company audit in multiple offices of what was at the time a Big Six 3 accounting firm, which we subsequently refer to as AuditFirm. We examined the technologies and methodologies used to manage a complex, multisite audit. A particular focus of the study was to examine how an accounting firm coordinates work. At the time of our empirical work the then Big Six accounting firms each operated with about seven to eight hundred offices across the world. These firms are concerned to ensure consistency across offices, particularly in relation to major projects, including audits. While these firms have expanded into a wide range of business services, audit work remains a significant element of these firms, provides an important basis for their claims (across all areas of work) to be professional and objective, and is said to fundamentally influence the culture of these organizations (Hanson, 1989). We provide an in-depth examination of audit production across multiple offices in the US and Canada, and between these countries and the lead office in Europe, which manages the worldwide audit. 4 We focus on two key coordinating mechanisms at AuditFirm inter-office instructions and its audit technology, known as REDESIGN. The former reflect the hierarchical nature of an audit involving multiple sites, outlining how the audit is to be consolidated. Inter-office instructions specify, for example, the scope of the audit, what is to be audited, likely critical elements and timelines for major reporting. A series of inter-office instructions cascade through the hierarchy, from the world- wide lead partner, to country engagement partners, and thence down to partners responsible for local subsidiaries within a country. Individual partners at each level use a variety of planning 3 Since the empirical component of the research was completed, mergers have resulted in the Big Six becoming the Big Four. Our descriptions of these firms relate to the time when there were six major firms, but we have no reason to believe the processes analyzed in this paper are dependent on the number of large, multinational accounting/audit firms. 4 We were unable to gain access to study other offices involved in this audit outside of the lead European office and those in North America. tools to determine the audit steps to implement the instructions. REDESIGN is a recent enhancement to the firm s risk based audit technology (which the firm describes as a methodology), which has been rolled out across audit offices worldwide that not only facilitates, but also raises new challenges for, coordinating work. As an integral part of AuditFirm s general strategy, the audit technology seeks to improve the efficiency of audit processes (to enhance the profitability of this business) and to further develop its business services to audit clients. This strategic audit approach provides a re-engineered approach to auditing and focuses on encouraging auditors to identify and provide additional, non-audit services, to the client. These are two prominent examples of the mechanisms used by Big Four firms to ensure the coordination, standardization and control of work not just in auditing, but also in many other aspects of their work. Such mechanisms have enabled them to promote an image of a seamless organization, and this view is reinforced when researchers focus on the formal systems of management, such as organizational structures, strategies, incentive schemes and production systems. There have been few in depth field studies (Power (2003) offers a useful review) that shed light on the detailed work practices of audit. Our study of a large multinational audit where work is done by many auditors, located across multiple locations, and with the engagement partner relying on the work done by other, perhaps remote or even unknown, partners and their local teams suggests that the coherence and effectiveness of the audit is an ongoing, but always problematic, achievement. For example, lack of familiarity and various forms of stereotyping can reduce the confidence that one auditor can place on the work of another, even when the other is a partner in the same firm (Cooper, Brown, Greenwood, & Hinings, 1998). Systems of peer review and inter-office review, as well as fears of litigation, can mitigate the difficulties of coordinating work, but not completely. By examining actual work practices, our field study of audit work supports the argument of Barley and Kunda that significant shifts in the nature of work should coincide with significant changes in the way organizations are
6 4 M. Barrett et al. / Accounting, Organizations and Society 30 (2005) 1 24 structured and in how people experience work. (2001, 77). In particular, we track the inter-connections between globalization of the management of the audit and shifts in the identity of auditors. Thereby, we show that auditors are not passive followers of instructions, but exercise considerable discretion in response to local relationships and risks. Local responses impact the global audit, and affect the ways in which auditors conceive of themselves as professionals, of who is the client and how they identify with the globality of their own firm. The shifts in the nature of work affect how the major accounting firms are structured. Our study suggests an intensification of both globalization and localization. All levels of auditor seem to recognize how local audit work fits into the global, but they also are sensitive and proud of some local audit specificities. This causes some problems for the audit firms themselves. They seek to balance the desire to be responsive to multinational clients, international standard setting and capital markets, and litigation pressures with a wish to allow local autonomy in developing clients and local markets. For local markets, local offices and smaller clients can still be extremely profitable. This causes significant strains within the multinational firms themselves. Audit work is itself changing, beyond the much-hyped technological changes and shifts to a strategic audit approach (Bell, Marrs, Solomon, & Thomas, 1997). Auditors are expected to develop new skills, not only in such obvious dimensions as marketing and business consulting but also in interpersonal skills such as presenting themselves well in face to face interaction and being able to read body language of clients and juniors. Furthermore, managing evidence and documentation is increasingly important. At the same time, the boundaries between auditing and services previously considered to be consulting are increasingly confused (as well as inflected by local traditions and rules), as are the boundaries between professionalism and commercialization. The rest of the paper is organized as follows. The next section outlines the empirical study at AuditFirm and its multinational client, ABC. Our research method, a year long observation of the annual audit cycle, is then outlined. In the following section we discuss those aspects of Giddens work that are central to an analysis of the structuration of globalization. We can then proceed to our analysis of how two mechanisms are used in the coordination and control of the audit, emphasizing the implications for globalization. We conclude by highlighting the usefulness of our theoretical approach in making sense of our case study, and discuss the implications of our findings for auditing, auditors and audit firms, as well as wider processes of globalization. Research methods Field sites The present study involves a Big Four firm we call AuditFirm. We obtained agreement from the Canadian member firm of AuditFirm to conduct a detailed study, in real time, of the audit over a period from July 1996 to September Through the Canadian firm, we also obtained access to the worldwide engagement team and the US audit team. We had full access to the current (and past) audit working papers and files of ABC, AuditFirm s audit client. ABC is a fairly decentralized, multinational manufacturing company operating in eight countries with revenues in 1997 of approximately US $1750 million. ABC s corporate headquarters are in a European country, referred to as Ruritania, 5 and the worldwide engagement partner and controlling audit team of AuditFirm are also based in Ruritania. Country engagement partners report to the worldwide engagement partner, and where there are geographically dispersed operations of ABC (as in the USA and Canada), partners of local offices within each country report to the country engagement partner. Our study focused on the audit of the Canadian and US subsidiaries of ABC, which are consolidated at the North American headquarters, located in the US. In 1995, the North American operations had revenues of about US $600 million, 5 The condition of our access to ABC s working papers was that we maintain the anonymity of the firm.
7 M. Barrett et al. / Accounting, Organizations and Society 30 (2005) somewhat below the revenues of the previous year. The Canadian engagement partner took over this role in 1996, although she was very familiar with ABC, having been manager of this audit before she had become a partner, a few years previously. The worldwide and US engagement partners had been working on the ABC audit for many years. ABC has been involved in a series of mergers and amalgamations within the last twenty years, and during this time has used a number of audit firms as its principal auditor. At the time of our research, AuditFirm were confident about their continuing to act as auditors of ABC, although the audit of some operations of ABC were conducted by other audit firms. The audit we observed is regarded by the Canadian audit team as fairly straightforward and low risk, raising few contentious matters. The Canadian auditors regard the accounting staff in the Canadian subsidiaries of ABC as very competent, and AuditFirm and ABC have a very cooperative relationship. Clearly our study may be of a particularly smooth audit, enabling a straight forward application of the firm s risk based approach to auditing, but as such, this only serves to accentuate key issues about challenges in audit planning and coordination. Both the client and AuditFirm believed the audit went well ; there were no major contentious issues, and the audit went according to plan. Of course, we are unable to determine whether the audit was successful for external stakeholders, and there are certainly public interest concerns about modern audit approaches (Cullinan & Sutton, 2002; Francis, 1994). But there have been no subsequent lawsuits or other controversies for ABC relating to their financial statements in the year under examination. Research process Between July 1996, when we formally obtained access, and January 1997, we spent considerable time interviewing the Canadian audit team in their offices, examining AuditFirm documentation about their audit systems, attending firm training sessions about these systems, obtaining clarifications and interviewing the management of ABC and examining and learning about their financial records and systems. Table 1 provides a chronology of our data collection, including our initial interviews to gain access. In December 1996 and January 1997 we intermittently observed (usually for periods of about three hours at a time) one local Canadian audit team as it audited the files of a number of Canadian subsidiaries of ABC. Conversations between members of the audit team were tape recorded and transcribed, as were our periodic questioning of what the audit staff was doing, and their reasons. These visits also involved brief, but repeated, interviews with the three members of the local audit field staff, and tax and IT specialists from AuditFirm who visited ABC. In February 1997, after most of the local audit work was done on ABC s Canadian subsidiary, one member of the research team spent a week living and working with four members of the Canadian audit team when they were out of town at the client s North American headquarters. A second member of the research team accompanied the lead Canadian partner when she joined the auditors for the last three days of the out of town work. For three days, a specialist tax manager from Canada also joined us, working on some tax issues relating to inter-corporate transfers. While we were accompanying the audit team out of town, we all worked together in the client firm s boardroom. This enabled us to observe interactions between the Canadian audit team, and discuss with them what they were doing, and why. We noted our observations as they occurred, and then developed our analysis after the work-day of the audit team. During this week long period, we interviewed the US engagement partner, the manager responsible for the US audit and two other members of the US audit team. We shared all meals and informal social activities with both the Canadian and US auditors. For both audit teams, their time was spent completing the audit of the Canadian and US subsidiaries, consolidating results for North America and preparing special reports for the worldwide audit team. We also interviewed three senior financial officers of ABC, their chief internal auditor and observed the
8 6 M. Barrett et al. / Accounting, Organizations and Society 30 (2005) 1 24 Table 1 Data collection Date Person/event Length (h) June 1996 Canadian Engagement Partner (2) 1.5 each July 1996 Canadian Engagement Partner and Manager 2.0 September 1996 Canadian Computer Auditor 1.0 October 1996 Canadian Engagement Partner 2.0 December 1996 ABC CFO, Canadian subsidiary Visits to Audit Team at ABC, Canada 3.0, 2.0, 3.5 January Visits to Audit Team at ABC, Canada 2.0, 2.5 AuditFirm Training Workshop 6.0 Canadian Engagement Partner and Manager 1.5 Canadian Engagement Partner 1.0 Canadian Engagement Manager 2.0 Audit Senior, Canada 0.5 Audit Junior, Canada 0.5 Computer Auditor regional specialist (2) 1.5, 1.0 ABC CFO, Canadian subsidiary 1.5 Tax accountant Canadian regional specialist 1.5 February 1997 ABC Controller, North America 1.0 ABC Accounting Director, US subsidiary 1.0 ABC VP Finance, US subsidiary 0.5 ABC Internal Auditor, US subsidiary 1.5 US Engagement Manager (2) 1.5, 1.0 US Engagement Partner 1.0 US Audit Team (combined) 1.0 Observation of closing meeting between US and Canadian Auditors 1.5 and senior ABC Managers April 1997 Canadian Engagement Partner 1.5 AuditFirm Training Workshop 3.5 May 1997 Canadian Audit Partner, Office Canadian Audit Manager, Office Canadian Audit Manager, Office Audit Senior, Canada 0.5 Audit Junior, Canada 0.5 Audit Junior, Canada 0.5 ABC CFO, Canadian subsidiary 1.5 August 1997 Audit Senior, Canada 1.0 Observation of planning meeting of Canadian Audit Team 2.5 Canadian Engagement Partner 1.5 Canadian Engagement Partner and Head of Audit 3.0 September 1997 Worldwide Engagement Partner, Ruritania 4.0 Worldwide Engagement Manager, Ruritania (2) 1.5, 1.5 Canadian Engagement Partner 1.0 formal closing meeting between the North American auditors (the Canadian and US engagement partners and managers) and three members of the North American senior management team of ABC. We continued with regular research visits to the Canadian office and the ABC subsidiary in Canada throughout the period July 1996 September These visits included formal interviews with all members of the Canadian audit team, as well as attendance at formal training sessions about new audit support technology. In May, we visited two other Canadian offices, and interviewed three members of the local teams involved in the ABC audit. In addition, all members of the research team had an extensive interview with the Canadian
9 M. Barrett et al. / Accounting, Organizations and Society 30 (2005) engagement partner and the head of AuditFirm s audit practice in August At that time, we also observed the planning meeting for the following year s audit of ABC, and had a further meeting with ABC s senior Canadian financial officer. Finally, in September 1997, two of the research team visited Ruritania, spending two days at AuditFirm s offices, including four hours with the worldwide engagement partner, a further three with the worldwide senior audit manager, and had access to their working papers for the worldwide ABC audit. Data analysis Together, the interviews, documentary analysis and observations helped us understand the audit methodologies and technologies, and to better understand how AuditFirm is organized and managed. We also had a series of interviews with the accounting staff of ABC in order to better understand its history, how it is organized and the locus of decision making (e.g. around who should be the auditor). Except for one occasion when a partner declined to be recorded, all thirty-seven interviews were tape recorded and transcribed. It was impractical to tape record the days of field observations, but we kept extensive notes. We started our analysis by searching all our transcripts for key words and themes suggested by our theoretical perspectives and research questions. By using an embryonic version of Table 2 as a means to structure our analysis, we provide theoretical generalizability, while remaining committed to our in depth empirical material. We started this project with a concern with the role of space in processes of globalization, the use of technology in planning and control, and the changing nature of professional work and expertise. We were influenced by the ideas of Giddens, who integrates these themes in his broad social analysis of contemporary society (Giddens, 1984, 1990, 1991). Our early interviews were structured around these issues, notably what we now refer to as abstract systems as coordinating mechanisms but as our fieldwork progressed we became more sensitive to issues of the local global dialectic. Issues of reflexivity and identity became more apparent when we observed the auditors at the client, and as a result of some of the later, de-briefing interviews. The researchers periodically met to try to minimize the tendency to find examples in the data that merely confirm our ideas (Silverman, 1985). Indeed, our approach has been to immerse ourselves in the data analysis and to collectively reflect on, and discuss, our observations. As researchers we must remain skeptical about what was said to us, while at the same time remaining tactful so that those we observed had some trust in our competence and good will. By nearly always working in pairs, discussing our impressions about the reliability of what was said to us and developing interpretations of our observations, we were able to sustain our skeptical attitude in data collection. Our involvement inevitably affected the conduct of this audit, but we believe our presence did not materially affect the way they worked or inter-acted. De-briefing interviews with the audit staff in Canada confirm this impression. We have also discussed our Table 2 Key theoretical concepts for understanding globalization as a structuration process Theoretical elements Main themes Local global dialectic The global reproduced in the local Local appropriation of the global Local appropriation feeds into and shapes the global Abstract systems as coordinating mechanisms Reflexivity and identity Abstract systems facilitate standardization across contexts and provide a key coordinating function Coordination mechanisms understood as processes of disembedding Importance of trust, understood as confidence in persons and abstract systems Institutional reflexivity is interrelated with the ongoing construction and reflexivity of identity Local appropriation of abstract systems can both facilitate and undermine their use
10 8 M. Barrett et al. / Accounting, Organizations and Society 30 (2005) 1 24 findings (including earlier versions of this paper) with representatives of the Canadian AuditFirm firm, which led to some modifications. Theoretical approach We draw on Giddens (1990, 1991, 2000) social theory on globalization in analyzing our empirical fieldwork. Giddens emphasizes the importance of the local global dialectic as being fundamental to the process of globalization. He defines the local global dialectic as the oppositional interplay between local involvements and globalizing tendencies. Rather than viewing globalization as involving linear convergence or a unilateral, onedimensional analysis, Giddens (1991) suggests that the local both feeds into and shapes the global, and the global constrains and enables the work done at the local level. Furthermore, he highlights that globalization as a process involves intensification of the interconnections between the globalizing tendencies and the transformation of self-identity. As we show in later sections, this conceptualization of globalization and the local global dialectic is particularly useful in our study of managing a global audit by focusing on the inter-connections between processes of globalization of audit work and transformations of the identity of auditors. Giddens suggests that globalizing tendencies are inherent in the dynamics of modern life and involve the disembedding of social institutions the lifting out of social relations from local contexts and their rearticulation across indefinite tracts of time space (1991: 21). The separation of time and space, which Giddens refers to as time space distanciation, is facilitated by the development of abstract systems, and discussion of these is central to our analysis of the coordination of audit practice. Abstract systems are mechanisms that enable disembedding, separating interaction from the particularities of locales (Giddens, 1991, 20). He further suggests (1991, pp ) that modern institutions are increasingly globalized through mechanisms of administrative power (notably surveillance) and control (including self control). Thus abstract systems encompass much more than formal organizational systems: they include issues of self-control. The idea of self control, first introduced in the accounting literature through Miller and O Leary s discussion of the governable person (1987), also means that systems of management affect the dilemmas of the self (Giddens, 1991). We are all affected by a multitude of abstract systems, and, since these systems are increasingly produced by specialist experts, we can only partially understand their technicalities. These systems thus depend upon trust for their operation, where trust is defined as having faith in the working of systems, despite possessing only limited knowledge of these systems (Giddens, 1989). As we will show, people can have confidence in differing systems at different times and places, so trust has multiple dimensions and emphases, yet some form of trust is crucial in both social and system integration. Social integration refers to social relations in conditions of co-presence, which in contemporary society is augmented by forms of system integration, involving coordination and reciprocity across time and space. Our study demonstrates how concerns about social integration simultaneously contribute and undermine the firm s mechanisms of system integration. Whilst acknowledging the development and spread of abstract systems in modernity, Giddens suggests that the individual, in appropriating these systems, does not necessarily succumb to them; rather there is a genuine transformation of the nature of the personal itself. The self has become a reflexive project in modernity, involving changes in self-actualization and anxiety (for example, about what it means to be an auditor, and what is the nature of audit work). This reflexive project extends to, and connects with, institutional reflexivity, the idea that in modernity people and organizations not only attempt to know themselves, but constantly strive to change as a result of this self-knowledge. Institutional reflexivity affects use of abstract systems such as common audit systems, since these may both be facilitated and undermined by local knowledge and practices. For example, knowledge about the local audit client and an auditor s confidence in local client management can undermine abstract systems such as