The effects of audit team structure on communication flow within the audit team

Accounting researchers are attempting to clarify the impact of increased structuring of the audit function on audit effectiveness. Increased structuring may enhance audit effectiveness by providing a more consistent audit approach and/or timely audit product, or increased structuring may diminish audit effectiveness by encouraging programmed thinking among auditors and/or an untimely audit product in atypical audit situations This dissertation examines the effects of audit team structure on audit effectiveness from the perspective of enhanced communication flow within the audit team. Given the importance of the flow of information to the audit process, an investigation of this nature may result in more effective auditing by identifying and rectifying barriers that impede the flow of information within the audit team.;Audit team structure is defined for purposes of this dissertation as the mechanistic/organic design of the team, which refers to the degree of organizational constraints present in the audit team. Communication flow refers to the process of acquiring and transmitting information. The five attributes of communication flow that served as separate criterion variables were: (a) communication with individuals and/or groups outside the audit team environment (boundary spanning), (b) the degree to which communication flows freely within the audit team (communication openness), (c) the degree to which auditors receive more information than they can efficiently use (information overload), (d) the correctness of information received from audit team members (information accuracy), and (e) satisfaction of audit team members with communication flow within the audit team (communication satisfaction). The relationships between the causal variable, audit team structure, and the criterion variables, communication flow attributes, were tested in the context of an audit team environment where the team was currently engaged in an audit or had recently completed an audit.;Three hundred twenty seven auditors representing 109 audit teams from national, regional, and local accounting firms were surveyed. The data were analyzed using Linear Structural Relations (LISREL). The results indicate that organic audit team structure is significantly and positively related to communication accuracy, but is not significantly related to information overload or boundary spanning. Since the communication openness and communication satisfaction scales did not exhibit adequate discriminate validity, these two variables were not included in the structural model and the two hypotheses related to these variables were not tested. The results should be beneficial to accounting firms as they structure their audit teams and seek means of enhancing the flow of information within these teams.