Home Business Offering bonuses demotivates highly driven auditors
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Offering bonuses demotivates highly driven auditors

by uma
Editorial & Advertiser disclosure

Audit bonuses can improve the work of auditors with little self-motivation, but damage the performance of highly driven auditors, research from Nyenrode Business University reveals.

Professors Herman Van Brenk and Barbara Majoor examined the impact of providing an audit quality bonus. Findings of their experimental study on 420 auditors based in the Netherlands show the effects are dependent on a combination of situational and personal factors.

“Incentives that are contingent on performance have the potential to improve performance, as they are a signal of trust and acknowledgement of people’s competence”, say the professors.

“Traditionally, the predominant practice has been to apply penalties for audit failures. However, rewarding auditors for high audit quality is increasingly being perceived as a good way to induce auditors to focus on audit quality”, says Herman Van Brenk.

In the situation of low time budget and compliance pressures, the findings suggest bonuses provide external motivation to auditors with a lower tendency to set themselves targets for high audit quality. However, these external incentives undermine the performance of highly driven auditors by lessening their feelings of autonomy and self-determination. But otherwise, the effectiveness of an audit quality bonus is limited.

The implications of this study, published in European Accounting Review (https://doi.org/10.1080/09638180.2022.2044364), present an opportunity for audit firms to rethink strategies for motivating their employees.

It is of particular relevancy to the Big 4 accounting firms who started offering audit quality bonuses in 2015, and upon whose employee’s audit quality bonuses have a weaker effect than on auditors in smaller firms, the researchers suggest.


You may also like