When Audit Confronts Blockchain

Crawford Spence; Erica Pimentel; Emilio Boulianne

doi:10.1108/AAAJ-12-2023-6768

When Audit Confronts Blockchain

Crawford Spence, Erica Pimentel^*, Emilio Boulianne

^*Corresponding author for this work

Accounting & Financial Management

Research output: Contribution to journal › Article › peer-review

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Abstract

Purpose: Previous work has explored the ability of auditors to expand successfully into seemingly unrelated fields, referred to as new audit spaces. The present paper focuses on how auditors respond to challenges when entering a new audit field and devising strategies to sensemake and sensegive about those challenges. Design/methodology/approach: This study builds on findings from 32 interviews with auditors and participant observation of interactions between auditors and blockchainers to understand how auditors approached a new audit space. Findings: We find that when auditors enter a new audit space, they endeavour to impose a logic of auditability. First, they determine an acceptable knowledge basis for this target audit space by developing a codified set of rules to organize knowledge, then develop a codified set of practices to verify conformity to the auditor’s set of rules. Next, auditors engage in three strategic tactics to influence members of the target audit space: appealing to the financial benefits of adopting a logic of auditability; appealing to their credentials from established audit markets; and appealing to bona fides in the target audit space to establish credibility. We posit that these sensemaking and sensegiving strategies do not take hold in the blockchain space because auditors are approaching these activities from a different mental model than blockchain natives. Because auditors are unable to adopt the mental model of the blockchain space, they are unable to devise strategies to compellingly influence blockchain natives and secure a stronghold in this new audit space. We developed a model for sensemaking and sensegiving when auditors enter new audit spaces. Originality/value: This paper challenges and contrasts prior accounts of the seemingly unending expansion of audit firms into new spaces. The study demonstrates that there are limitations to auditors’ abilities to transplant their verification skills in the blockchain field.

Original language	English
Pages (from-to)	1-30
Journal	Accounting, Auditing & Accountability Journal
DOIs	https://doi.org/10.1108/AAAJ-12-2023-6768
Publication status	Accepted/In press - 26 Nov 2024

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10.1108/AAAJ-12-2023-6768Licence: CC BY-NC

20241119 New audit spacesAccepted author manuscript, 151 KBLicence: CC BY-NC

Cite this

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title = "When Audit Confronts Blockchain",

abstract = "Purpose: Previous work has explored the ability of auditors to expand successfully into seemingly unrelated fields, referred to as new audit spaces. The present paper focuses on how auditors respond to challenges when entering a new audit field and devising strategies to sensemake and sensegive about those challenges. Design/methodology/approach: This study builds on findings from 32 interviews with auditors and participant observation of interactions between auditors and blockchainers to understand how auditors approached a new audit space. Findings: We find that when auditors enter a new audit space, they endeavour to impose a logic of auditability. First, they determine an acceptable knowledge basis for this target audit space by developing a codified set of rules to organize knowledge, then develop a codified set of practices to verify conformity to the auditor{\textquoteright}s set of rules. Next, auditors engage in three strategic tactics to influence members of the target audit space: appealing to the financial benefits of adopting a logic of auditability; appealing to their credentials from established audit markets; and appealing to bona fides in the target audit space to establish credibility. We posit that these sensemaking and sensegiving strategies do not take hold in the blockchain space because auditors are approaching these activities from a different mental model than blockchain natives. Because auditors are unable to adopt the mental model of the blockchain space, they are unable to devise strategies to compellingly influence blockchain natives and secure a stronghold in this new audit space. We developed a model for sensemaking and sensegiving when auditors enter new audit spaces. Originality/value: This paper challenges and contrasts prior accounts of the seemingly unending expansion of audit firms into new spaces. The study demonstrates that there are limitations to auditors{\textquoteright} abilities to transplant their verification skills in the blockchain field.",

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When Audit Confronts Blockchain

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