Corresponding author: Olof Bik ( o.bik@nyenrode.nl ) Academic editor: Chris Knoops
© 2018 Olof Bik, Jan Bouwens.
This is an open access article distributed under the terms of the Creative Commons Attribution License (CC BY-NC-ND 4.0), which permits to copy and distribute the article for non-commercial purposes, provided that the article is not altered or modified and the original author and source are credited.
Citation:
Bik O, Bouwens J (2018) Bridging the knowledge gap between academia and practice: how research can help develop the auditing profession (vice versa). Maandblad Voor Accountancy en Bedrijfseconomie 92(7/8): 221-228. https://doi.org/10.5117/mab.92.30360
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Conferences are an excellent opportunity to bridge the gap in knowledge between academics and practitioners, says Steven Salterio (Queen’s University, Canada). During the third international conference of the Foundation for Auditing Research, Salterio was one of the keynote speakers, talking about overcoming barriers in communication between academics and practice: Moving beyond the Lab.
Salterio based himself on three papers about knowledge transfer between academics and practice when performing auditing research, which he recently wrote with several co-authors (Gondowijoyo, Hoang, Luo, and Sylph – see reference list). Essential reading for everyone in auditing who is trying to answer the question: how can we strengthen the bridge between practice and academia in an attempt to further improve audit quality? After all, the aim of academics is to effectively scientifically inform policy-makers in and around the profession.
Salterio’s papers and his contribution to the conference, lead us to reflect about the following questions:
The authors use this as a basis to sketch the status quo. This is followed by examining four means of knowledge transfer and their effectiveness. We then ask ourselves what auditing research can learn from evidence-based medicine. Finally, we present our own practical case study: field research carried out by the Foundation for Auditing Research, which involved academics collaborating intensively with the auditing profession.
Professor Steven Salterio is the Stephen J.R. Smith Chair of Accounting and Auditing at Smith School of Business at Queen’s University in Kingston, Ontario, Canada. His research investigates, among other areas, corporate governance with special attention to the role of the audit committee and external auditor; negotiations between auditor and client management on financial reporting issues and the effects of enhanced disclosure on the quality of corporate governance; and judgemental effects of performance measurement systems. Salterio has five years of direct practical audit experience and 20 plus years of consulting to audit firms, from Big 4 to regional. He is also an enthusiastic blogger, see his blog Musings on accounting research by Steve.
According to Salterio’s figures, 24,000 academic articles have been published about auditing since 1970. However, the findings of these papers have only trickled down scarcely to practice, public debate and related (public) policy-making. Is this the fault of academics? Yes, partly, says Salterio. In one of his papers, he states: “Currently, based on its apparent low influence on policy makers it appears that auditing academic research is seen as neither a relevant nor a reliable source of knowledge” (
According to Salterio, poor knowledge transfer cannot only be attributed to academics; audit practice also plays a role. It is fair enough to say that audit practice may be overloaded with academic research (how does one choose from many sources of information?), which is not always practically worded either (“research is in a form that is unfamiliar to the potential user, thus creating a barrier to his (her) knowledge acquisition”;
What is the solution to this communication problem between academics and practice?
“The solution (e.g.
During the conference, Salterio emphasised that communication is not about one-way transmission, but is a two-way process between sender and recipient. Both the sender (the academic) as well as the recipient (policy-makers and practitioners) have a responsibility to share knowledge. A lot can go wrong during this communication process: the sender encrypts his/her messages; the recipient must decrypt them again, and vice versa. A lot of academic research is sticky, says Salterio: the recipient must first translate the scientific research findings into practical recommendations before it can be used for problem solving.
In this regard, Salterio identified two types of knowledge. Codified or explicit knowledge is easy to formulate, document and distribute, like accounting and auditing standards. Tacit or implicit knowledge is concealed within people’s skills, ideas and experiences. This implicit knowledge is particularly crucial when transferring knowledge from academic research, while practitioners need a lot of tacit knowledge to interpret research and translate it into practical applications. This involves becoming aware of the value of this knowledge, good personal contact in practical situations, and mutual trust for a proper learning climate.
Knowledge transfer (or, more precisely, its absence) not only involves two types of knowledge, but also two (closed) circles, which do not touch each other (see figure 1). Academics primarily focus on production: collection and synthesis of knowledge. Practitioners primarily focus on action: knowledge as problem-solving. According to Salterio, the gap in knowledge is created by differing interests.
A purposeful strategy is needed to bridge this gap in knowledge.
Articles in journals: publish and forget
Firstly,
Committee for unlocking knowledge
In order to move away from this academic stickiness, Salterio believes things would be more effective if academics were to play a role within the profession or audit firms as members of a board or committee (‘board academic’,
Conferences and master classes
Conferences and master classes (the ‘academic-standard setter/practitioner conference’) can also play an important role when closing the knowledge gap: this interaction can help to create a bridge between academics and practitioners. However, their effectiveness will be greatly determined by how well people speak one another’s language and the extent to which both ‘sides’ are prepared to learn about each other. Once again,
For instance, the first two conferences of the Foundation for Auditing Research could be regarded as ‘social experiments’, where academics and auditors had to become accustomed to one another. But it will take time to gradually find one another after decades of limited interaction. As
How did things go at the third FAR conference? Did academics and practitioners explore opportunities to interact with one another in order to bridge the gap in knowledge? Salterio demonstrated that both worlds are still rather isolated. He believes presenting individual research during the conference only reinforces focus on production among academics. As a result, they do not pay enough attention to explicitly explaining their research to practice. But practitioners also failed to fully exploit the opportunity to actively interact and ask about implications for their daily practice. On the first day of the conference, Salterio counted the number of questions the audience asked in the formal question & answer sessions during and after the presentations. Almost half of the questions (13) came from other academics and related to methodology. The other half (14) came from practitioners and related to how the research could be applied. And what about informal interaction: did practitioners approach academics during the break and in the corridors to extract information about the practical application of academic research? Barely or not at all, says Salterio after talking to speakers at the conference: when asked, they said they had received few questions from practitioners in informal settings.
Inclusive call and supply side response
Finally, Salterio’s papers refer to the ‘inclusive call’ (
When it comes to effectively informing the profession, the papers of
As a result, the auditing profession does not have to work miracles, but merely has to examine the evidence-based approach adopted in medical science. In this approach there are no closed circles in the production and use of knowledge, but collaboration and close interaction between academics and practice. Knowledge is developed in a widely supported cycle, as demonstrated in the model that Salterio presented during the conference (see figure 2):
EBM is based on identifying already available academic evidence in a systematic, balanced and comprehensive manner: “EBM knowledge translation practices requires “a systematic review of all pertinent evidence (not just the evidence that supported a particular position), a critical analysis of the quality of the evidence, a synthesis of the evidence, a balancing of benefits and harms, an assessment of feasibility and practicality, a clear statement of the recommendation, and a detailed rationale” (
An important step in this involves defining a good research question based on intensive interaction between practice and academics (“there needs to be ongoing involvement with the policy-makers by the researchers so that underlying tacit knowledge about research and standard setting is transferred as part of an iterative process that allows each to understand the other’s concerns at a deep level” (
The evidence-based approach is informative, but not all-powerful. As Salterio stated during the conference, “academic research is unable to answer every question”. “To do this, it is sometimes necessary to draw upon other disciplines and sources, such as knowledge from practice, supervisory bodies or other policy-makers. That is when evidence-based knowledge development evolves towards evidence-informed knowledge development”.
Salterio describes this as follows in the papers: “The transfer of knowledge from research to policy-makers will only rarely decide an issue” (
The evidence-based approach can lead to a much greater wealth of information than ‘traditional’ research methods in the auditing profession, concludes Salterio. The profession thus also needs new ways of doing research; he states: more contact between sender and recipient, more research ‘upon order’ and more attention to synthesising research so more comprehensive evidence and more alternative sources can be obtained.
Therefore, in order to effectively offer research information to practitioners, one clearly needs to do research in and with the concerned practitioners - thus in and around the profession. And this requires intensive interaction.
“The researcher’s extensive engagement with the practice community enables them to identify key issues that practitioners are grappling with. (…) Their awareness of the institutional contexts that their informants are embedded in helps the researchers contextualize their informants’ responses. This means that they will be much quicker in systematizing what they hear and observe in the field than researchers that do not have similar sensitivity to the accounting context. (…) The behavioural accounting researchers’ competence in recruiting practitioner participants also helps them develop trust and rapport with their potential informants in a qualitative field study. This ability also aids them in securing (the often elusive) access to the field research site(s) and managing the prolonged engagement with the field”.
The Foundation for Auditing Research finds itself in the midst of the knowledge transfer challenges when trying to improve interaction between academic research and the auditing profession. To show how this can work in practice and what is needed, we would like to highlight the three following experiences of the FAR thus far:
Academics and practitioners can benefit from each other by doing research together. For instance, discussions between the FAR and audit firms took place in 2017 about which type of data the FAR would request for their research. For example, FAR research groups examine how and when audit-file-related comments from individual audit team members have an impact on activities. The exact details of discussions and ‘negotiations’ about audit findings (with the audited organisation) are also being examined. In this regard, we asked firms how they registered comments and discussions. The response of a concerned audit leader was as follows: “We do not always register this in our systems but, come to think of it, it would offer major advantages if we were to do so. At this moment in time, we have to dig very deep if we want to perform a root cause or error analysis. Such registration could help to improve and speed up this process”.
Academics also learn a lot from such discussions. Just like Salterio is critical of his own profession and says that academics speak a language that not many practising auditors understand, FAR experiences that its research fellows use academic standards, for example, to measure the quality of audit teams. This means practising auditors have difficulty recognising their own work. For example, academics measure ‘discretionary accruals’ which regard unexplained abnormalities in financial statements as quality-related issues in the audit. However, auditors claim these findings actually say nothing about the work they perform. If academics use such standards to measure quality, practising auditors are unlikely to show understanding for their approach.
In short, FAR experiences that academics and practising auditors can learn a lot from each other on this front. Here is an example. An audit firm sets up an engagement registration system, which performs a real time comparison between performed audit activities and the audit plan (including worked hours). In case of abnormalities, the audit team is asked to explain the abnormalities in question (for which there may be a good reason, of course). The team concludes that audit quality had improved after the engagement registration system was introduced. In this case, an academic would ask: what is the cause and effect? Can the improvement really be attributed to the introduction of the engagement registration system? Academics can help to answer this question because they possess research techniques that can determine this causal relationship. For instance, an academic will ask firms to perform some audits with the new registration system and some without it. This will allow the researcher to determine whether the improvement in audit quality can be attributed to the introduction of the engagement registration system. Without this research, the improvement in quality might wrongly be attributed to the introduction of the new system. I.e., the wrong policy measures might be taken.
In total, over two years were invested in creating robust foundations for the collaboration between FAR researchers and audit firms. As of spring 2018, the first useful (archival) research data are being delivered to research teams, which can now be used to start their studies. A lot has been learned and achieved in the meantime. An example is the enrichment of management information systems of the firms themselves, because the FAR requests certain information. This has gotten the firms thinking: should we not know this ourselves when managing and monitoring quality? As a result, it is very well possible that information that is currently collected manually, will soon be more easily available from a central information system.
Initial interim or provisional results from several early research projects were shared at the FAR’s 3rd international conference (see the articles elsewhere in this special MAB edition.) Does this mean the FAR has now passed the ‘tipping point’ of the learning curve? In any case, the first major hurdle has been cleared. To be fair, however, joint audit research will only be possible in the future if there is clear commitment from, and close interaction between, the involved researchers and the concerned audit firms. Academic research can only be made less sticky by working together, as Salterio argued at the FAR conference.
After the introduction by Steven Salterio, Michael de Ridder (FAR board member representing PwC) led the subsequent discussion with the audience. But he first focused on practitioners. How can they be more involved in academic research? Salterio: “There must be a two-way exchange between academics, on the one hand, and the practice, supervisory bodies and standard-setting bodies, on the other hand. They know the real problems and vexed issues. At the moment, academics are often asked: tell me everything you know about an issue, but the research question must be a lot more specific and question-based. At the start of the research, work more intensively with one another to specify the question. Do not start with a literature review, but examine what is going on in practice.”
Foreseeing the future means going back to the past. A participant of the conference asked which role Salterio foresees for research into the impact new technologies will have on the auditing profession and how resulting insights can be integrated into day-to-day practice. “This involves better understanding the lessons from the past”, stated Salterio. He looked around the auditorium: “Does anyone still know what EDP is? Many years ago, people said that Electronic Data Processing would change the profession forever. We cannot foresee the future. For example, I do not know how blockchain will influence the auditing sector. Will it, for instance, take over valuation activities? Who knows. However, we can examine patterns of change by better understanding the past”.
De Ridder concluded by saying that he was impressed by the comparison with the medical sector, as a means of closing the gap between academics and practitioners: one of the FAR’s main objectives. “Let’s see how we can get this process started”.
Prof. dr. J.F.M.G. Bouwens is a professor of management accounting at the University of Amsterdam and Managing Director of the Foundation for Auditing Research.
Prof. dr. Olof Bik RA is a professor of Behavioral Research in Auditing at Nyenrode Business University and Managing Director of the Foundation for Auditing Research.