Lobbying on audit regulation at IAASB

ABSTRACT The main goal of the paper is to analyze whether the positions of auditors and regulators, and their respective coalitions, regarding the proposals of the International Auditing and Assurance Standards Board (IAASB) in the last phase of the public consultation “Improving the Auditor’s Report” are significantly different, as well as the effectiveness of a lobbying strategy using comment letters. The relevance of this research lies in providing evidence on whether or not the IAASB is influenced by the lobbying strategies of different interest groups carried out via comment letters, especially auditors and regulators (both individually and in coalitions). The results show that both auditors and regulators attempeted to influence the IAASB’s decision-making process, with their coalitions taking a different position on some questions. However, none of these interest groups predominated in terms of the effectiveness of the lobbying carried out, hence the results are consistent with institutional theory, in that the IAASB seeks legitimacy in its actions and tries to accommodate several different interests, but does not let itself be captured by any specific group. We analyzed and classified the comments (from a total of 86 letters) to nine questions proposed by the IAASB into a five-point Likert scale. This classification was independently cross-validated by a second researcher. We applied ANOVA tests to analyze the position of the interest groups, and chi- squared tests for the position of their coalitions. This paper addresses lobbying within the process of auditing standards settings, thus expanding the current literature on lobbying in accounting, which is mainly restricted to accounting regulations. It also contributes methodologically by using a new five-point scale for the dependent variable instead of the usual binary approach.