International Journal of Accounting Research

Role of Homophily in Audit Team Dynamics

Gilberto Bilara^* Department of Economics, University of Brasília, Federal District, Brazil
^*Correspondence: Gilberto Bilara, Department of Economics, University of Brasília, Federal District, Brazil, Email:

Received: 03-Jun-2024, Manuscript No. IJAR-24-26324; Editor assigned: 05-Jun-2024, Pre QC No. IJAR-24-26324 (PQ); Reviewed: 20-Jun-2024, QC No. IJAR-24-26324; Revised: 26-Jun-2024, Manuscript No. IJAR-24-26324 (R); Published: 05-Jul-2024, DOI: 10.35248/2472-114X.24.12.377

Description

The elements that affect and are influenced by the dyads that emerge between concurring and lead auditors at the top level of audit teams. Designers employ the sociology theory of homophily-innate attraction for similar others-to hierarchically constructed auditor dyads. Their regression studies demonstrate that, in addition to what would be predicted given the features of the available auditor pool, having the same gender and ethnicity, as indicated by dialect, improves the likelihood of dyad formation.

Furthermore, they observe that the formation of auditor dyads with the same age is avoided, suggesting that homophily is constrained by the requirement to create a valid hierarchical relationship through social distinction. When designers examine the effects of auditor dyad formation using an instrumental variable method, they find that auditor dyads speaking the same dialect offer inferior audit quality. Draw the conclusion that homophily plays a significant role in the development of auditor dyads and may have detrimental effects on audit quality.

Uses a mixed-methods analysis approach to look into the variables that result in the formation of dyads between concurring and lead auditors at the top of audit teams, as well as the consequences for audit quality. Like other reviewer-reviewee pairs in audit teams, the concurring and lead auditor pair is arranged hierarchically. Concurring auditors evaluate the lead auditors' performance, and lead auditors are in charge of organizing, executing, and supervising the audit on site. Previous studies on behavioral auditing have looked at how the review process's layout affects the outcome.

However, the formation of auditor dyads and their consequences are not covered. Prior studies on archive auditing have focused on the impact of individual auditor characteristics on audit outcomes, largely ignoring potential factors influencing the formation and efficacy of auditor dyads. As the first step in our investigation on auditor dyads, they use interview and archive data to look at the growth and collaboration of concurring and lead auditors.

They follow the German practice of having the audit opinion signed by both the lead and concurring auditors. Both choicebased and induced homophily shape social networks along lines of similarity in traits, including gender, age, religion, education, and career. Homophily-based relationships can arise when people have the opportunity to get to know one another in a social setting, such as when they live nearby or work for the same company.

Auditing provides a great institutional framework for investigating the role homophily plays in pair formation. First of all, friendship and marriage are two examples of partnerships with equal participants that sociology usually focuses on. On the other hand, their discussions with seasoned auditors indicate that pairs of reviewers and reviewees make up the hierarchical structure of auditor dyads. The literature on hierarchical organizational structure emphasizes how important it is to demonstrate the legitimacy of hierarchical differentiation resulting from differences in position or authority. Hierarchical differentiation facilitates a clear division of labor and improves coordination and cooperation.

This requirement might make similarity-based interactions incompatible, which would lessen the significance of choicebased homophily. Second, a lot of regulations surround auditing, and these regulations stress how important it is that members of the audit team possess competence and independence. Auditing provides a great institutional framework for investigating the role homophily plays in pair formation. First of all, sociologists tend to emphasize these criteria a lot, and the fact that these formation processes are more structured than in other contexts may mitigate the effects of choice-based homophily. This raises concerns regarding the relevance of theory and the results of previous research.

Use this for your auditing process. Lastly, auditor dyads are developed within the audit business's organizational structure. The limitations of this organizational unit limit the number of potential auditor dyad partners. This setup allows us to study the effects of the number of auditors in an audit office or firm on choice-based homophilous tendencies.