Background

Scandals of Enron, and most recent Silicon Valley Bank have shown the effect of a top management not pursuing the best interest for the company or its shareholders. As these incidents sparks the debate of appropriate management. The Swedish practice, obligate companies with mandatory management audit in addition to their regular financial audit to ensure they act in the company’s best interest. The current legislation of this practice is heavily relied on the auditor’s own judgment of deciding relevance to securely entrust the top management are acting in best interest of its shareholders. While the practice entrusts audits use their professional judgment to obtain comfort, regardless of the amount of experience they possess to professionally conduct their audits. 

Purpose

Current research discusses how auditors find comfort through professional judgement in their decisions. Less research find clarity in how comfort through professional judgement and structure guide the audit to find what is of relevance in a management audit. This thesis aims to clarify how auditors, among different levels of experience rely on their professional judgment through their structure and experience to obtain comfort in what is relevant for the companies they audit. 

Method & Data

To answer the thesis question, a thorough theoretical background was established to collect a wide collection of relevant data of professional judgment, structure, and experience as key concepts on management audits. Semi-structured interviews were conducted with auditors with experience levels between 1,5 years to 23 years as an authorized auditor. The findings were coded and thematized to create aggregate dimensions. These dimensions were later analysed together with existing theoretical framework to build a conclusion. 

Conclusion

The findings provided evidence of how auditors rely on the structure of management audit to develop their professional judgment together while obtaining experience by working in the field. More experienced auditors can more easily rely on past experiences and use them to reflect on similar situations to find a solution to their problems. Less experienced auditors are keener to seek verification by deepening their knowledge related to the subject or seeking confirmation from more experienced colleagues. Through structure and professional judgement, the auditors navigate through information to find what is relevant in an audit, though it was proven that a higher degree of professional judgment helped the auditor find comfort in their analysis and decisions.