Fostering a Healthy “Tone at the Top” at Audit Firms

I have talked before about the importance of tone at the top at issuers. But a healthy tone at the top is of paramount importance at public accounting firms as well. Indeed, academic research has “long stressed the crucial role that tone at the top, set by leadership, plays in influencing firm culture and how it is ultimately reflected in the actions and behaviors of [auditors].” The tone at the top of an audit firm determines whether the culture is focused on delivering high-quality audits or is a profit-center chasing the short-term bottom line, and whether “top management extols the important role audits play in the capital markets” or acts as if audits are little more than compliance “commodities.”

For example, setting a proper tone at the top is critical in supporting auditors’ ability to exercise professional skepticism—having an attitude that includes a questioning mind and a critical assessment of audit evidence at all times….

Source: SEC.gov | Fostering a Healthy “Tone at the Top” at Audit Firms