The objectivity of accounting professionals based in India

Cristina Bailey, Richard G. Brody, Gaurav Gupta and Jonathan Nash

Managerial Auditing Journal, 2023, vol. 38, issue 6, 813-831

Abstract: Purpose - This study aims to examine the objectivity of accounting professionals based in India. Design/methodology/approach - To examine the objectivity of accountants based in India, this study performs an experiment using a well-established instrument from prior literature. The authors asked accounting professionals based in India to act as either the seller or buyer in a hypothetical acquisition scenario. Participants were asked to evaluate the obsolescence of an apparel company’s inventory, assessing both the probability of inventory obsolescence and the likelihood they would propose an inventory write-down. Findings - The results indicate external auditors and tax professionals were able to remain objective, reflected in the consistency of their assessments across the buyer and seller conditions. Internal auditors were less objective, evaluating inventory obsolescence as more likely when their client was considering buying a subsidiary than when their client was considering selling a subsidiary. Internal auditors were also more likely to recommend an inventory write-down adjustment when hired by the buyer than when hired by the seller. Originality/value - This study informs regulators and accounting professionals. Offshoring has “prompt(ed) questions regarding the factors that affect the quality of work in India” (Dickeyet al., 2022, p. 680). While the authors do not prescribe specific actions, this study provides evidence on the decision-making process of accounting professionals based in India that regulators might use to craft policy. Furthermore, this study responds to calls for additional evidence on the decision-making process of accounting professionals based in India (Spilkeret al., 2016;Mohapatraet al., 2015), and for evidence on the objectivity of internal auditors (Burt and Libby, 2021;Stewart and Subramaniam, 2010).

Keywords: Offshoring; Objectivity; External audit; Internal audit (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:maj-02-2023-3831

DOI: 10.1108/MAJ-02-2023-3831

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