“Given the traditional view on the distance between professional auditing engagements and marketing, changes in auditors’ business environment suggest that the interests of professionalism should create room for other activities such as marketing” (Broberg et al. 2013: 67). Auditing develops within a social context. During the last century, society was always of the opinion that auditors are to detect fraud, with the auditing profession changing its path from the detection of fraud to the other side that is, denying this responsibility. Prior to 1920, fraud detection was known as the primary objective of auditing, which is clear from the view of the then auditing literature. Clow et al. (2009), in a research, compared the tendencies of auditors for marketing in year 1993 with 2004. The results of their study showed that a negative perception of auditors regarding marketing has turned into positive tendencies. This change in tendencies of auditors toward marketing intensified with more use of marketing activities and auditors improved their relations with customers.
This study tends to examine whether a balance between attitudes toward marketing and auditing activities can affect auditing as a profession. Here, the main question is that can a large number of audit firms and competition among them cause marketing activities to increase their share in the market? Meanwhile, this cannot pose adverse effect on the process of their professional activities. Also, the important point for auditors, as representatives of stakeholders, is on how to benefit from corporate governance mechanisms for more effective implementation of their tasks such as validation. The same way as the strengthening of corporate governance mechanisms is effective on the quality of financial reporting (Kent and Stewart 2008), it seems that this issue, potentially affects the decisions and judgments of auditors in various stages of auditing work and vice versa. The judgment of the auditors regarding the industry and auditor-client market characteristics is also effective on the correction or improvement of corporate governance mechanisms (Hassas Yeganeh and Dadashi 2011).
Auditor’s industry specialization
Ishak et al. (2013) seek to understand the relationship between the concentration of the audit market and Auditor’s Industry Specialization in the view of auditing in Malaysia. There are notes in this regard as follows: four large auditing firms in Malaysia, were in control of 72 % market share of audit market in 2003; while most of the clients pay average audit fees, they had low income and their assets were of average size. Moreover, in the context of auditor’s industry specialization, unlike the American and Australian counterparts, none of the four large audit firms in Malaysia are specialists in a particular industry. This is the same concept that makes it possible to, besides separating the specialist auditors and others, increase the validity of studies, including the present study.
Sarwoko and Agoes (2014) showed that auditor’s industry specialization has influence on financial and high quality auditing in detecting fraud, this is because deep perception and high auditor’s experience in special industry of client in the processes of business, business risks and important deviation risk in financial statements plays an important role. The ability of the auditor in such special fields of the client makes him/her able to select and implement ways of effective audit to discover important fraud cases and this could lead to increase of the audit quality. Yuan et al. (2016) investigated the relationship between the client business strategy and audit quality resulting from the auditor’s industry specialization. Their investigation sample was Chinese companies between years 2000 and 2010. The results showed that there is a significant negative relationship between Auditor’s Industry Specialization and optional commitment items of client. In other words, Auditor’s Industry Specialization improves financial performance of client and the transparency of financial statements. However, the above study emphasized the overall interactions of the client with specialized audit procedures that may affect audit quality.
Advertising and marketing strategies in auditing
Hay and Knechel (2010) explained the relationship between marketing activities and auditing in New Zealand. They stated the importance of education and professional accountants believe that audit crisis in the last several years has been rooted in deregulation of the government which caused audit firms to advertise their services and find new customers on their own, thereby making the audit firms to follow a commercial approach. Numerous researchers have emphasized that deregulation of the government on advertising and demands has led auditors to act more competitively, and this can be attributed to lack of related professional skills, which is related to the auditors’ recent wave of failure in the world (Healy and Palepu 2003; Palepu and Healy 2003). In other words, the auditor is expected to report questionable accounting procedures and significant errors and violations. In fact, this issue reminds professional competency and auditor’s independence. The likelihood of discovery of the breach of contract by the auditor depends on the auditor’s competence and the possibility of reporting violations discovered, and his independence. Market support of the auditor and, in fact, the demand for audit services continues until he/she is able to detect and report cases of breach of contract (Watts and Zimmerman 1986).
Broberg et al. (2013) in Sweden investigated the relationship between attitude toward audit activities and marketing among auditors. The results of their study showed that, from the conventional viewpoint of the gap and difference between professional auditing contributions and marketing, some changes have been created in the business environment of auditors that show specific interests, and have provided opportunities for other activities such as marketing. After the abolition of the statutory audit in 2010 in Sweden, it became more important for auditors. The results of the aforementioned study showed that auditors in Sweden have adjusted to new market conditions and have positive attitude toward marketing, as well as understanding the importance of marketing as part of professional responsibility. The studies of Broberg et al. (2013) showed that auditors with a positive tendency to marketing and the auditors, who assume that marketing is important, are largely able to strike a balance between time spent for inherent tasks of auditing and marketing activities.
Research findings have indicated that auditors create a balance between audit responsibilities and imposed marketing activities. Studies have investigated several ways of improving the auditing profession and pointed out that accepting marketing as an important part of professional services is essential in this regard. In addition, previous research has pointed to the fact that the notion of different activities among the auditing professions depends on the age of auditors (Clow et al. 2009). Therefore, it would be interesting to examine how the tendencies of auditors have changed in Sweden. Customer attraction dimension can also be other areas of the audit profession that has an effect on the perspective of auditors on sales and sales growth. Moreover, it is important to understand how changes in tendencies to marketing in the auditing profession can have an effect on audit quality. It is noteworthy that Broberg et al. (2013) evaluated the attitudes of auditors regarding marketing activities and audit using a questionnaire. In this questionnaire, they addressed variable making, and through explicit regression equations, investigated the effect of independent variables on the dependent variable.
Marketing strategy involves issues such as pricing, sale and distribution of a product or service. A company benefiting from market development strategy can acquire a significant market share of current products and services through market saturation and market penetration, and create new markets for current products and services (Khorshidi and Moghaddami 2002). Audit firms also, can use the same strategy to improve the quality of services provided and expand the market of their respective activities as well. The relationship between audit firms and clients is a kind of agreement, in terms of marketing concepts, that happens within a period of time. These agreements take place in the form of concluding auditing agreements and contract.
Personality traits of auditors
Entrepreneurship and gender of auditors are related to the part of auditors’ character and the part that affects their character. Entrepreneurship and audit activities over a long period will lead to social development of humanity. Audit plays an important role in improving and increasing the transparency of business environment, especially since ancient times, when ways to better manage assets have been developed. At present, basically accounting and auditing has been defined as a science that moves towardits evolution even after thousands of years. The term “audit” is derived from the Latin word listening; however, it is used on a large scale since the Assyrians and Egyptians. Homocianu and Airinei (2014) showed that the dynamic and responsible nature of financial auditors in the role of experienced and professional entrepreneurs can remove the urgent needs of each company to offer fair financial reports and statements in accordance with legal frameworks that investors, creditors, government and people benefit from. Also, the results of their study showed that the need to provide services with a high level of objectivity will force audit firms to take advantage of entrepreneur auditors. In accordance with the professional and ethical requirements, entrepreneur auditors design and implement the audit work to further increase confidence in the audit reports content.
An entrepreneur, who is a person with a capitalism spirit, is able to provide the necessary resources to perform various acts. Entrepreneurship skills and attitudes often exist in the nonprofit sectors, but at present, due to changes in business approaches, entrepreneurs are the key solution to financial and non-financial problems of organizations. Popescu et al. (2015) showed that in the study of entrepreneurship in a modern competitive economy, no profession is more suitable than financial audit profession. Financial audit is the real meaning of an entrepreneur. Their fate and that of their client is in their own hands. Due to the independence necessary for their work, professional and ethic codes require that he does not sound like company employees by whom he is audited. The results of their research showed that with increasing competition among auditors, the marketing process that introduces the skills and competencies of auditors in Romania is based on the issue that by attracting entrepreneur auditors, one can get a good share in the audit market.
Entrepreneur auditors were determined based on questionnaires and interviews. Another issue that may affect the fee is the gender of auditors. Huang et al. (2015), in a research, sought to answer the question on whether female audit partners received lower fees than male counterparts in the process of auditing or not? By examining the data on audit fees in Taiwan between 2002 and 2011 where the name of independent auditor partners were mentioned, they found that the audit fees for female partners is significantly less than that of the male counterparts. Furthermore, they explained that the difference between audit fees in industries where fewer female partners are present is more intense and cannot be explained through audit quality and delay in audit report, and despite controlling constant effective factors, this difference in fees still remains. Their findings also provide evidence that there is discrimination against female partners regarding audit fees in Taiwan. This indicates that attitude toward female auditors and consequently the attitude of female auditors to the process of auditing is different from that of their male counterparts.
Corporate governance and auditing
Öhman et al. (2012) conducted a research with the aim of creating, testing and improving a structural equation model for the satisfaction of client from the audit and client’s perceptions of the usefulness of audit outside the organization stakeholders. Accordingly, a questionnaire was posted to clients, that is, Swedish limited liability company managers with more than 50 employees or more. The results showed that there is a strong relationship between the client satisfaction and usefulness outside the organization stakeholders. The competency of the independent auditor is positively related and his doubt is negatively related to the satisfaction of the clients and the auditor and usefulness for stakeholders outside the organization. The present study, only discussed the levels of the auditor and the audit team, and used a limited number of independent variables. These findings support the results of previous study and demonstrated that client relationships with independent auditors and auditor assistants have a positive effect on client satisfaction, but has no significant relationship with stakeholders outside the organization. As a result, it is better to consider the organization audit teams, where different members have distinct roles. This study also showed that most audit studies are yet to be evaluated explicitly. In other words, this study evaluated the distinction between the client satisfaction with audit and client understanding of the usefulness of auditing to stakeholders outside the organization, which is something novel in this respect.
Companies are increasingly looking to stand out their positive cooperation in social activities so as to exhibit the good image of the company and gain legitimacy. The concept of legitimacy enables researchers to explain social relations of an organization. According to this definition, from the mutual interaction of the organizations with society, legitimacy theory emerges. Therefore, the level of congruence between the company and the expectations of society, due to the company’s activities, represents a direct reflection of the company’s legitimacy (Malekian et al. 2015: 330). Ducassy (2015) examined the relationship between some of the mechanisms of corporate governance and social responsibility of companies. He showed that the explanation of good communication between all stakeholders, based on agency and theory of stakeholders, can strengthen the social responsibilities of the company. In this regard, some mechanisms such as ownership concentration and the CEO duality have more effect on improving corporate social performance. In this study, the role of auditors and their attitude toward corporate social responsibility for persuading company managers in order to improve corporate social performance is emphasized.
Cao et al. (2015), after offering standards of risk-based audit, instead of internal control-based audit, investigated the changes in China’s audit strategy. In particular, considerations were made on whether the auditors use risk-based audit approach to evaluate corporate governance before the release of audit resources or not? Their results showed that in the internal control based-audit method, there is a weak relationship between audit efforts and corporate governance. However, the implementation of a risk-based approach, which is obligatorily based on the new auditing standards, significantly strengthened the relationship between corporate governance and auditing efforts. Further, they pointed out that ever since the change in the auditing method, ten large auditing firms came into existence, which have demonstrated a better understanding of governance risk as compared with smaller firms, and perform their audit efforts on this basis. Empirical evidence suggested that auditors have changed their audit strategy to comply with laws and regulations, and risk-based auditing is partly accepted. Also, logical and efficient corporate governance contribute to optimization of the allocation of audit resources. In particular, audit firms should strengthen their risk-based auditing capabilities. In general, their findings showed that the vicious circle toward risk-based audit optimizes audit efforts in China.
Given the theoretical and empirical evidence, the present study’s hypotheses about auditors’ attitude are specified as follows:
H1: Auditors’ attitude toward marketing activities influences the time balance between auditing and marketing activities.
H2: A significant difference is found between industry expert auditors’ attitude and other auditors toward marketing activities.
H3: Auditors’ attitude toward marketing activities influences their attitude toward the importance of corporate governance mechanisms.