Cultural impact on the audit planning phase : An empirical study in China and France

Abstract: China and France have both adopted the International Standards on Auditing (ISA). Thelargest firms in auditing and accounting in the world, known as Big Four, are established inFrance as well as in China. Auditors from those firms apply procedures that have beenharmonized worldwide within Deloitte, PricewaterhouseCoopers, KPMG, and Ernst &Young. When it comes to audit, French auditor and Chinese auditor talk the same language,use the same software, boundaries seem to be knocked over. On the other hand, what BigFour firms are not able to standardize is the culture of their auditors. Does auditor’s culturemay shatter all efforts that have been put to deliver the same services throughout the world?Does auditor’s culture may call the work of the International Auditing and AssuranceStandards Board (IAASB) into question? Do either French or Chinese auditors enable ahigher audit risk to the audited client? Many other questions could be raised about the effectof cultures on the audit process. The purpose of this research is to explore, measure and analyse the cultural impact on theaudit process. In order to highlight the difference(s) of the audit outcome due to culture,countries have to exemplify a certain numbers of cultural differences. China and France havebeen chosen because their belonging to the Eastern and Western clusters, and as we know,Eastern and Western countries have substantial cultural differences (Hofstede, 2001).According to Hofstede’s cultural dimensions, Individualism (versus Collectivism) andUncertainty Avoidance are the two dimensions that get the higher cultural differences whenhe compares Chinese and French Culture. We want to discover how Chinese and Frenchauditors rely on analytical procedures and assess audit evidence and internal controlenvironment. We want to study if their audit results reflect the cultural differences betweenChina and France based on the two cultural dimensions. In order to manage our empirical research, we use a sample of 28 Chinese auditors and 14French auditors. We use primary data collection through our design questionnaire. Theauditors’ answers were analysed using a quantitative approach to reveal the eventual existenceof a connection between the auditor’s cultural background and how the audit process iscarried out. Our findings about cultural differences within Big Four companies are not so categorical. We did not find significant differences regarding Chinese and French auditors’ culture. However,Chinese auditors appear to have a higher willingness to refuse a misstatement in the client’s financial statements, due to collectivism cultural dimension, than French auditors. Auditors from both countries assess in similar way audit evidence, but they do not consider of the same importance some components of the internal control environment. French auditors considerof greater importance components that can directly influenced the accuracy of the accountingreporting process, because an individualism society as France tends to “encourage”accounting and cut-off errors within organizations.