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Horacio Molina Mar Ortíz Enrique Mesa

How good is working in an audit firm, or how good are my auditors? The big 10 audits firms’ dilemma when disclosing working conditions.

In 2021, the term "The Great Resignation" appeared, describing the phenomenon of many employees voluntarily quitting their jobs since March 2021. The great resignation extended from the US to western countries, where almost 20% of employees are considering leaving their work (Tessema et al., 2022). Some authors agreed that the COVID pandemic is responsible for this tendency because people reconsidered their relationship with work and decided to move closer to family and friends and a better work-life balance (Serenko, 2022). This situation affects the audit sector, which is characterized by its high workload and long working hours and demands that trigger physical and mental reactions affecting employees’ performance and satisfaction. This paper analyzes how audit firms disclose information about their employees working conditions with the aim of understanding what they understand, like “Job Quality,” and how they are changing (if so) their working model to adapt it to new challenges raised after the COVID pandemic. To do it, this paper analyzed the sustainability reports and transparency reports from the ten biggest audit firms. We used the neo-institutional theory (Higgins & Larrinaga, 2014) to in-depth whether audit firms are disclosing about working conditions. This theory is close to legitimacy theory and allows us to analyze whether working conditions reporting is answered to a particular strategy or to a given practice within the audit sector. Our analysis is structured following the Job Demands-Resources model that differentiates between the demands, or job physical and mental requirements, and the resources that stimulate personal growth, learning, and development. This framework establishes that an equilibrium between both variables will allow to increase employees’ health-impairment process (what workers can do) and a motivational process (what workers will do). Our results suggest that working conditions reporting within the biggest audit firms is still in a prior stage. Some job resources like training, career prospect, or auditor wages are identified by the majority of the firms’ reports. However, mentions to these resources are not focused on personal growth or development but on guaranteeing that auditors are trained and can perform a better job. However, all the audit firms analyzed include references to diversity and equity. These elements are not considered factors that determine higher working conditions but are required by GRI Standard 401 about employment. Thus, it can reflect an early adopting situation where audit firms report working conditions following an apparent reporting standard to legitimate their actual working conditions instead of reporting about the factors that determine working quality. This paper contributes to the accounting literature twofold: on the one hand, the paper highlights the emerging situation of working conditions within audit firms. Our analysis identified mimetic mechanisms that audit firms follow to increase their legitimacy concerning working conditions. Finally, our work stresses that firms (and GRI) generally consider only diversity and equity issues as working conditions elements to report about, even when accepted frameworks, like Job Demands-Resources, demand more attention to factors that help employees to grow professionally and personally. Additionally, this paper has practical implications for auditing by identifying the necessity of increasing working conditions. Previous literature has partially studied job quality and audit quality, although it could not achieve an agreement because there are signs that time budget pressure impairs audit quality (Broberg et al., 2017; Christensen et al., 2021). Further research should pay attention to the potential relationship between low job quality and worse performance.