Accepted Manuscript

Title: Performance Feedback in the Audit Environment: A

Review and Synthesis of Research on the Behavioral Effects

Author: Lindsay M. Andiola

PII: S0737-4607(14)00002-0
DOI: http://dx.doi.org/doi:10.1016/j.acclit.2014.07.001
Reference: ACCLIT 10

To appear in:

Received date: 23-5-2014

Accepted date: 15-7-2014

Please cite this article as: Andiola, L. M.,Performance Feedback in the Audit
Environment: A Review and Synthesis of Research on the Behavioral Effects, Journal
of Accounting Literature (2014), http://dx.doi.org/10.1016/j.acclit.2014.07.001

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 Performance Feedback in the Audit Environment: A Review and Synthesis of
Research on the Behavioral Effects
Lindsay M. Andiola*
Bentley University

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Abstract: This paper synthesizes the extant feedback literature, focusing on how feedback affects

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an individual’s learning, performance, and motivation. Performance feedback is an important
component in the auditing environment for ensuring quality control and for developing and

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coaching staff auditors. However, the literature on feedback in the audit environment is fragmented
and limited making it difficult to assess the behavioral effects of feedback on auditors. This paper
has three main objectives. The first is to review some of the influential research in psychology and

us
management to identify key variables and issues that appear to be critical in the study of behavioral
consequences of feedback in organizational settings. The second is to review performance feedback
research specifically in auditing to identify the areas previously examined and synthesize the

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findings. The third is to suggest a variety of future research opportunities that may assist in
developing an understanding and knowledge of the behavioral effects feedback has on auditors.
The compilation and integration of evidence, both inside and outside the audit discipline, reveals
significant implications for audit research and practice. This research can provide important
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insights into understanding who, how, and when performance feedback should be given to improve
the effectiveness of feedback and coaching in the audit environment.
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Key Words: Performance Feedback, Audit Review, Feedback Methods

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* Contact Information:
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Lindsay M. Andiola
Bentley University
Accounting Department
175 Forest Street
Waltham, MA, 02452
Phone: 617-922-3791
E-mail: andiola_lind@bentley.edu

Page 1 of 69
 Performance Feedback in the Audit Environment: A Review and Synthesis of
Research on the Behavioral Effects

Abstract: This paper synthesizes the extant feedback literature, focusing on how feedback affects
an individual’s learning, performance, and motivation. Performance feedback is an important

t
component in the auditing environment for ensuring quality control and for developing and

ip
coaching staff auditors. However, the literature on feedback in the audit environment is fragmented
and limited making it difficult to assess the behavioral effects of feedback on auditors. This paper

cr
has three main objectives. The first is to review some of the influential research in psychology and
management to identify key variables and issues that appear to be critical in the study of behavioral
consequences of feedback in organizational settings. The second is to review performance feedback

us
research specifically in auditing to identify the areas previously examined and synthesize the
findings. The third is to suggest a variety of future research opportunities that may assist in
developing an understanding and knowledge of the behavioral effects feedback has on auditors.

an
The compilation and integration of evidence, both inside and outside the audit discipline, reveals
significant implications for audit research and practice. This research can provide important
insights into understanding who, how, and when performance feedback should be given to improve
the effectiveness of feedback and coaching in the audit environment.
M
Key Words: Performance Feedback, Audit Review, Feedback Methods
d
p te
ce
Ac

Page 2 of 69
 1. Introduction
Performance feedback is important in virtually all organizations as both a developmental

and motivational resource. Research demonstrates that performance feedback can aid in learning

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(Ilgen, Fisher, & Taylor, 1979), improve performance (London, 2003) and increase motivation and

job satisfaction (Kluger & DeNisi, 1996) of individuals. Also, of particular relevance to auditing,

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feedback assists in improving judgment and decision making (Bonner, 2008).

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In the audit environment, performance feedback is quite prevalent. It is viewed as both a

quality control mechanism (Gibbins & Trotman, 2002; Rich, Solomon, & Trotman, 1997) and a tool

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in developing and coaching auditors as they progress through the organizational hierarchy (Hunt,

1995; Westermann, Bedard, & Earley, 2014). As such, both audit quality and the development of
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audit professionals may be affected by performance feedback. However, our knowledge of the

effects of feedback on auditor learning, performance, and motivation is fragmented and limited.
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Audit studies to date focus primarily on knowledge acquisition, with little attention paid to the
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motivational (or demotivational) and performance changing (both positive and negative)
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properties of feedback (Bonner, 2008). The purpose of this paper is to synthesize the literature on
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performance feedback to identify the overall findings to date and suggest future research

opportunities.
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This paper will accomplish this objective by first reviewing the influential research in

psychology and management to identify key variables and issues that appear to be important in the

study of the behavioral effects of feedback in organizational settings. Then, this paper reviews and

synthesizes the performance feedback research in auditing to identify the areas previously

examined and key findings. Finally, this paper suggests future research opportunities that may

assist in developing an understanding of the behavioral effects feedback has on auditors.

Page 3 of 69
 Performance feedback is defined in the extant literature in a variety of ways. For purposes

of this review a broad definition is used. Performance feedback is a message conveyed by an

external agent(s) that provides information regarding some aspect(s) of one’s performance (Kluger

& DeNisi, 1996). While it is generally assumed that performance feedback has uniformly positive

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effects (Ilgen et al., 1979; Taylor, Fisher, & Ilgen, 1984) systematic reviews such as Kluger and

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DeNisi’s (1996) meta-analysis indicate that this is not necessarily true. In fact, some research

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suggests performance feedback can have detrimental effects on an individual’s learning, motivation,

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and performance (Ilgen & Davis, 2000). Therefore, it is important in the audit setting where

performance feedback is heavily relied upon to understand the factors that affect feedback seeking

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and use.

There are several key reasons to examine the effects of performance feedback in the audit
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setting. The first is the importance of performance feedback as a quality control mechanism in audit

firms. Feedback, through the workpaper review process, is an imbedded piece of the quality control
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environment required by auditing standards (PCAOB, 2010c; AICPA, 2006). Supervising auditors
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oversee and provide comments on the work product of subordinate auditors to maintain the overall

quality of the audit. Psychology and management research suggests that the source of the feedback,
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the recipient of the feedback and the feedback message all contribute to the likelihood of
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subordinate auditors using the feedback. If auditors do not use the feedback to gain knowledge and

improve performance then audit quality is likely to suffer.

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Second, the audit environment offers unique opportunities that are not otherwise

observable in many work settings, suggesting it is a context ripe to examine certain feedback

variables. For example, it is common in the audit environment for auditors to have frequent

assignment changes. This often results in staff auditors having multiple different supervisors

evaluating their performance during the year. In addition, auditors receive formal feedback more

frequently when compared to other work environments in which a semi-annual or annual review

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may be the only structured feedback received by an employee. Staff auditors (i.e., associates and

seniors associates) receive feedback in the form of coaching notes or review comments upon

completion of workpapers (i.e., a workpaper review), they receive feedback upon completion of an

audit (i.e., an engagement review), and as part of their annual assessment and goal setting

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procedures (i.e., an annual review). Psychology and management research suggests these variations

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in feedback source and feedback message are likely to affect individual behavior, however prior

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auditing research has not examined the possible effects.

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Third, public accounting firms are contending with a number of issues related to

performance feedback. One, the PCAOB has expressed concern regarding the sufficiency and

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effectiveness of review of audit field work and supervision (PCAOB, 2010a, 2010b). Two,

Westermann et al. (2014) report that some partners express concern that today’s managers and
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seniors are struggling to provide negative or critical evaluations to their staff, perhaps fearing that

this will lead to employee dissatisfaction and turnover. Three, audit staff comment that formal
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feedback mechanisms do not represent the work actually done and often reflect more general
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assessments (Anderson-Gough, Grey, & Robson, 1998). They also note significant delays in

receiving feedback (Lambert & Agoglia, 2011). These issues suggest further understanding of the
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current feedback processes and the factors affecting the effectiveness of these processes could
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provide guidance to professional practice to improve feedback processes and auditors response to

performance feedback.
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The remainder of this paper is organized into four sections. Section 2 briefly discusses

performance feedback in the audit environment. Section 3 describes the framework used for

reviewing and synthesizing the literature. Section 4 reviews and synthesizes the literature on

performance feedback within and outside of auditing, providing relevant research questions in the

audit setting. Finally, I present overall conclusions in Section 5.

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 2. Performance Feedback in the Auditing Environment
In public accounting firms, multiple opportunities exist for employees to seek and receive

performance feedback. Formal feedback is provided through workpaper reviews, engagement

reviews, and annual reviews. In addition, informal feedback can be sought or provided on an ad-hoc

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basis by peers, supervisors, or coaches/mentors during the course of an audit engagement. This

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variety of feedback mechanisms and the number of possible opportunities to seek and receive

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feedback suggests audit firms see the critical importance that feedback plays in the organization for

both quality control and employee development. However, despite the wide use of feedback

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processes in audit firms, research is limited on the effects these feedback mechanisms have on

auditor’s behavior.1

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Workpaper reviews are conducted by senior associates, managers, and partners, who

provide feedback on specific auditing tasks. To maintain audit quality control standards require
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workpaper reviews to ensure auditors complete their work adequately and that the documentation

supports the audit opinion (PCAOB, 2010c; AICPA, 2006). However, audit firms also rely on the
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workpaper review process as a key coaching tool for inexperienced auditors. This supervisory
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review is empirically linked to important factors for career development, overall job satisfaction,
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and turnover intentions (Vera Munoz, Ho, & Chow, 2006). Most prior research related to workpaper
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reviews focuses primarily on aspects of the review process as a quality control mechanism,

considering such topics as reviewer differences (Ramsay, 1994; Tan & Jamal, 2001), reviewers’
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performance and judgment quality (Agoglia, Hatfield, & Brazel, 2009; Asare, Haynes, & Jenkins,

2007; Tan & Trotman, 2003), and the overall review process (Gibbins & Trotman, 2002; Rich et al.,

1997). There is little focus on the motivational and performance effects of the review on the staff

auditor.

1Luckett and Eggleton’s (1991) management accounting review of feedback similarly suggests that the
behavioral effects of feedback on employees is limited and requires further academic research.

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 Performance feedback is also provided through engagement reviews, which are conducted

when an employee finishes an audit, and annual reviews, which are conducted at the end of the

performance year. Audit staff generally receive anywhere from three to eight engagement reviews

during a year, and are usually reviewed by multiple different supervisors. Annual reviews are

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conducted once per year to assess and evaluate all of the firm’s employees to determine

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compensation and promotion rewards, assess development and help employees set goals for the

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following year. While the overall goals of the engagement and annual reviews are similar (i.e., to

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provide developmental feedback to the auditor and to use the reviews as a method to rate the

auditor against his peers) the underlying factors that affect feedback use can vary considerably

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between these types of reviews (e.g., who the feedback comes from, engagement reviews are

usually completed by an audit staff’s direct supervisor and annual reviews are usually conducted by
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a performance manager or coach). Engagement and annual reviews are directly linked to an

auditor’s year-end compensation decisions and therefore are likely to have significant effects on an
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auditor’s behavior, motivation and overall job satisfaction. Most studies on engagement and annual
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reviews focus on the performance raters (Hirst & Luckett, 1992; Kaplan & Reckers, 1985; Kennedy

& Peecher, 1997) and the scales used to assess performance (Harrell & Wright, 1990). Very few
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investigate the response of audit staff to the reviews, that is, the behavioral component of the
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review (see Hunt 1995 for a comprehensive review of the performance appraisal literature in

auditing).
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In the next section, a framework is presented that will assist in reviewing and synthesizing

the performance feedback literature.

3. The Performance Feedback Framework

Before presenting the framework to be used for reviewing and synthesizing the literature

on performance feedback, it should be noted that performance feedback is an iterative process

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imbedded in an organizational setting (Figure 1). Prior to receiving feedback an individual has a

certain level of performance, knowledge and motivation/effort. Then feedback is created through

one of two ways, either an individual can create feedback or the organization can create feedback.

As an individual resource, feedback is generated through direct inquiry or monitoring by an

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individual to determine whether the individual’s behavior and performance is in line with the

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supervisor’s or firm’s expectations and one’s own goals. As an organizational resource, feedback is

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created though formal or informal means to motivate, direct, and instruct the performance of

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individuals. In the audit environment, this can be done formally through workpaper reviews,

engagement reviews, and annual reviews or informally through coaching and mentoring. The

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decision to actively seek feedback and then to use (or not use) feedback that is given is dependent

on both individual and contextual factors (Anseel, Beatty, Shen, Lievens, & Sackett, 2013; Ilgen et al.,
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1979). This use, or lack of use, of feedback results in a change (or no change) in an individual’s level

of performance, knowledge, and motivation/effort. This cycle continues each time feedback is
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sought or received.
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[INSERT FIGURE 1 ABOUT HERE]

An individual’s decision to seek and use feedback is a function of the attributes of the
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feedback seeker/recipient, the feedback environment, the feedback source/target, and the feedback
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message (Figure 2). These factors are shown in the psychology and management literatures to not

only impact the decision to seek and use feedback, but to also affect the desired outcomes of giving
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performance feedback (e.g., performance improvement, increased motivation and effort). The

variety of dimensions identified in this figure highlight the complexity of examining the effects of

performance feedback on an individual.

[INSERT FIGURE 2 ABOUT HERE]

In the following section, each of the dimensions identified in the figure are discussed in

detail, highlighting key research from both psychology and management literatures, as well as the

Page 8 of 69
research performed in the audit setting. This is not a comprehensive review; rather it is an attempt

to focus on variables that are likely to have implications in the auditing environment that appear to

necessitate continued research.

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4. Factors Affecting Feedback Seeking and Use

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4.1 Individual Factors

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An important consideration in the feedback process is the individual who is seeking or

receiving the feedback. Ashford and Cummings’ (2003) seminal work proposes that feedback

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recipients play an active role in the feedback process. Recipients are able to shape their feedback

environment by seeking feedback, generating their own feedback, combining feedback from

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multiple sources and deciding which feedback to respond to and use. The psychology and

management literatures recognize the moderating influence that individual differences have on the
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outcomes of the feedback process, highlighted by the abundance of research in this area (see Ilgen
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et al. 1979, Kluger and DeNisi 1996, Anseel et al. 2013 for comprehensive reviews of individual
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differences). In the next couple of sections, individual factors and associated findings from the

psychology and management literatures are discussed.

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4.1.1 Personal Characteristics

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A number of personal characteristics are shown to affect feedback seeking and use,
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including a person’s self-esteem, locus of control, and goal orientation, as well as demographic

items like age and job experience. Prior research indicates that tenure, age and experience are

negatively related to both feedback seeking and use (Anseel et al., 2013; London & Smither, 2002).

The research argues that employees that are young and new to a job see feedback as more valuable,

as it helps them reduce uncertainty and adapt quicker to their new role and environment.

Alternatively, older, more seasoned employees have less role uncertainty, which reduces the

Page 9 of 69
perceived value of feedback, and increases concerns about managing others’ impressions of their

expertise.

In addition, there is some research (P. C. Earley, Gibson, & Chen, 1999; Morrison, Chen, &

Salgado, 2004) that suggests cultural differences, may play a role in feedback seeking and use.

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Specifically, cultures with low power distance and high individualism have a higher likelihood of

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seeking feedback and high individualist cultures rely more heavily on individual performance

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feedback over group performance feedback (Morrison et al., 2004). In addition, research finds

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Asians have stronger emotional reactions to negative feedback, but are more responsive to it than

Americans are (Brockner & Chen, 1996).

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Beyond demographics, there is an ever expanding list of personal characteristics that have

the potential to impact feedback behaviors. Self-esteem, a person’s overall evaluation or appraisal of
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his worth, and self-efficacy, a context-specific assessment of a person’s competence to complete a

task or range of tasks, are the most widely researched characteristics, but the findings for these
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characteristics along with a number of others (e.g., locus of control, tolerance for ambiguity) are
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inconsistent (Anseel et al., 2013; Ilgen et al., 1979). Overall, the literature on personal

characteristics as they relate to feedback behaviors is criticized for lack of strong theory and a focus
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on a limited number of broad variables that have conflicting findings (Herold & Fedor, 1998).
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However, more recent literature has used stronger theoretical underpinnings with personality

characteristics that are more directly linked to feedback behaviors, two such characteristics are
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goal orientation and emotional intelligence.

Goal orientation influences how people experience, manage and react to achievement-

related situations. Two distinct dimensions are identified in extant literature: 1) learning goal

orientation, where individuals want to improve competence, master new situations and acquire

new skills and 2) performance goal orientation, where individuals want to demonstrate and

validate their competence and avoid negative judgments of their ability (Dweck, 1986; Dweck &

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Leggett, 1988). The research suggests that learning goal orientation positively impacts feedback

behaviors, including feedback seeking and feedback reactions, whereas performance goal

orientation has the opposite effect (VandeWalle, 2003; VandeWalle & Cummings, 1997). However,

similar to other personal characteristics, Anseel et al.’s (2013) meta-analysis suggests there are

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situations where goal orientation may have contradictory effects. In addition, most of the prior

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research examining goal orientation has examined the propensity to seek feedback, without

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considering the effects on a person’s response to feedback received.2

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Current research also indicates emotional intelligence may be a key factor driving feedback

seeking and use (Ashford et al., 2003). The construct definition of emotional intelligence is still

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heavily debated (e.g., Landy 2005), however most researchers highlight a few common abilities of

individuals with high emotional intelligence. These include an awareness of their own emotions, an
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ability to appraise and understand others’ emotions, a capability to regulate their own emotions,

and an ability to use emotions to enable performance. While it seems clear that emotions are likely
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to play an important role in feedback behaviors, only one study (Dahling, Chau, & O'Malley, 2012)
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to date examines the relationship between emotional intelligence and feedback behaviors. This

study finds that emotional intelligence is positively associated with a person’s receptivity to
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feedback (i.e., feedback orientation).

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4.1.2 Feedback Attitudes

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Initial research on individuals’ attitudes toward feedback focused on an individual’s

external feedback propensity, that is, an employee’s desire to obtain feedback from an external

2 Research on coaching and training indicates that goal orientation also has a state component, suggesting a
person’s orientation can be manipulated through framing of feedback and tasks or through training (Gregory,
Beck, & Carr, 2011; Kozlowski et al., 2001). For example, Cianci et al. (2010) find that individuals who are
given learning goals perform better following negative feedback, but worse after positive feedback, whereas
individuals who are given performance goals perform better following positive feedback and worse following
negative feedback. This research suggests that the manner in which tasks or evaluations are framed can
influence how an individual is likely to behave in subsequent tasks.

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source (Herold, Parsons, & Rensvold, 1996). However in response to limitations of this construct, as

well as to the general limitations of the prior research on personal characteristics, a more

comprehensive construct, termed feedback orientation, has developed to connect individual

characteristics with feedback seeking and use. Feedback orientation (FO) is universally defined by

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London and Smither (2002) as a person’s overall receptivity to feedback. They indicate that FO

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influences an individual’s propensity to seek and process feedback mindfully, to believe in the value

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of feedback, to be accountable in the use of feedback, and to act on the feedback to drive behavior

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change and performance improvement.

This construct is believed to have both a trait and a dispositional component. That is, it is

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influenced by both individual characteristics, such as goal orientation and self-efficacy, and

organizational characteristics, such as the organizations’ influence on the quality, importance and
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support of feedback (Dahling et al., 2012; London & Smither, 2002). Research suggests that

employees with high FOs should be better able to regulate and overcome their emotional reactions
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to feedback (feedback receipt); process feedback more meaningfully and surmount attribution
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errors (feedback processing); and use feedback effectively in establishing goals and improving

performance (feedback use) (Braddy, Sturm, Atwater, Smither, & Fleenor, 2013; London & Smither,
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2002).
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Linderbaum and Levy (2010) build on London and Smither’s (2002) seminal work by

developing the Feedback Orientation Scale (FOS) to measure an individual’s receptivity to

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feedback.3 Linderbaum and Levy (2010) find that FO has a positive relationship with individual

differences like learning goal orientation, work ethic, self-efficacy and positive affect. Moreover,

their model is predictive of work-related outcomes, including role clarity, feedback environment

3 The FOS is made up of four dimensions, including utility (believing in the usefulness of feedback in achieving

goals), accountability (feeling obligated to react to and use feedback), social awareness (using feedback to be
aware of others’ views of oneself), and feedback self-efficacy (believing in one’s competence to interpret and
respond to feedback).

Page 12 of 69
perceptions, performance appraisal session satisfaction and self-reported job involvement. Braddy

et al. (2013) further validate the FOS in a leadership development context and find FO is positively

related to implicit person theory (i.e., the belief that an individual’s attributes are malleable) and

achievement motivation.

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Researchers have identified a number of propositions related to FO (Linderbaum & Levy,

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2010; London & Smither, 2002); however, with the exception of a few studies the majority of these

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propositions remain untested. These exceptions (Braddy et al., 2013; Dahling et al., 2012; Gregory

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& Levy, 2012) find that FO has a significant and direct effect on feedback seeking, reactions to 360-

degree feedback, and the quality of coaching relationships and an indirect effect on employee

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performance and the supervisor’s coaching behaviors (i.e., guidance, facilitation, inspiration).

Taken together, the research on FO suggests this individual characteristic has the potential
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to help explain when individuals will seek feedback and whether feedback will be used effectively.

While many individual characteristics have been empirically tested with feedback-specific
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variables, future research needs to expand on the determinants of FO and how FO impacts desired
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outcomes of the feedback process, including learning, performance improvement, and motivation.

In addition, the literature on FO suggests it is an important control variable for studies that are
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examining other determinants of feedback seeking and use.

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4.1.3 Conclusions regarding Individual Factors

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Based on the research performed to date, individual factors play an important role in a

person’s decision to seek and to use feedback. The more recent psychology and management

literature on these factors is more theoretically based and the constructs appear to link better and

measure more closely personal attributes that are likely to play a role in the feedback process.

However, the research to date on many of these factors (e.g., feedback orientation and emotional

intelligence) is limited and most of these studies are not performed in a professional context where

this research is likely to have the most relevance and impact. Future research needs to examine

Page 13 of 69
how these individual factors are affected by contextual factors in the professional environment and

whether characteristics like feedback orientation and goal orientation can be shifted over time

through training and the work environment.

4.1.4 Individual Factors and Auditing Research

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Prior literature in the auditing context on the impact of the individual on feedback seeking

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and use is limited (see Table 1 for a summary of the audit research on feedback). Audit research

shows that a number of personal characteristics, including locus of control, cognitive style, gender,

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and cultural background, affect judgment and decision making (Bonner, 2008). However, only one

study (Bryant, Murthy, & Wheeler, 2009) has directly tested the relationship between an individual

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factor and performance feedback, and in turn resulting task performance.

Bryant et al. (2009) examine the effects of cognitive style and feedback type on
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performance. The study examines sensors (more detail-oriented) versus intuitives (more pattern-

oriented) and whether providing the subject information as to their cognitive style improves their
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ability to identify with-in cycle and out-of-cycle internal control cues. Cognitive style is shown to
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have no direct effect on task performance. However, participants who receive outcome feedback in
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conjunction with cognitive style feedback did perform better at detecting out-of-cycle internal
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control information than no feedback or cognitive style feedback. Also, the researchers find an

interesting interaction between cognitive style and feedback. Outcome feedback in combination
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with cognitive style feedback has a negative impact on the performance of intuitives, while this

same combination of feedback types has the opposite impact on the performance of sensors. This

indicates that this combination of types of feedback strengthen the detail-orientation of sensors,

while alternatively causing intuitives to overlook details even more than they are already inclined

to do.

Often auditing studies use demographics or expertise as control variables. A couple of

studies provide evidence that demographic factors are important when considering the impact of

Page 14 of 69
feedback on auditors. Miller et al. (2006) examine the effects of auditor experience on both the

auditor’s motivation to improve performance and the supervising auditor’s perception of whether

performance improvement actually occurs after discussion of performance during the workpaper

review process. The findings indicate experience moderates the effect of performance discussions

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on performance improvement as perceived by the reviewer. Generally, discussion improves less

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experienced auditors’ performance, but appears to diminish performance improvement for more

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experienced auditors. In addition, while Lambert and Agoglia (2011) were not directly examining

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personal factors in their study, they find gender to be a significant covariate related to over-

documenting (e.g., including a tickmark indicating testing was completed when in fact it was not).

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In this study the researchers examined how the timeliness of feedback and the framing of the

comments affect the effort and performance of participants in clearing the comments provided by
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the reviewer. The study finds that significantly more participants’ over-documented in the delayed

condition than the timely condition, with this finding more prevalent in male participants (41%)
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than female participants (20%).

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These studies further extend what is clearly suggested by the psychology and management

literature. That is, individual factors play a role in an individual’s response to feedback which
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results in varying behavioral effects. In order to understand when and from whom auditors will
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seek feedback and how they will react to feedback they receive it is critical to understand how

individual factors moderate and mediate the relationship between the feedback process and work-
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related outcomes. As the auditing environment is quite unique in both the feedback mechanisms

available to an auditor and the operational environment auditors work in day-to-day it is critical to

understand how these factors interact with characteristics unique to the audit environment.

[INSERT TABLE 1 ABOUT HERE]

4.1.5 Future Directions of Auditing Research on Individual Factors

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 From the preceding discussion it is apparent that responses of individuals to feedback are

complicated by individual factors, such as feedback orientation and cognitive style, yet there is a

clear lack of audit research in this area. Based on the research cited in this section, in conjunction

with the framework and review of research outside the audit context, the following questions merit

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further research:

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RQ1: How do personal factors, like feedback orientation and goal orientation, affect an

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auditor’s likelihood of seeking feedback from supervisors, peers, specialists, etc.? How do
personal factors affect an auditor’s reaction to formal and informal feedback? How does this
reaction to feedback affect the auditor’s learning, motivation and future work performance?

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What personal factors may mitigate the adverse effects of contextual factors? What
contextual factors may mitigate adverse effects of certain personal factors?

RQ2: How do demographics, like age, job tenure, and culture, affect an auditor’s likelihood

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of seeking feedback from supervisors, peers, specialists, etc.? How do auditor demographics
affect an auditor’s reaction to formal and informal feedback? How does this reaction to
feedback affect an auditor’s learning, motivation and future work performance? What
demographic factors may mitigate the adverse effects of contextual factors? What
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contextual factors may mitigate adverse effects of certain demographic factors?

RQ3: Do personal factors of auditor’s shift overtime? If so, what contextual factors (e.g.,
feedback environment, supervisor support) play a role in how these personal factors shift?
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What effect do these shifts have on an auditor’s seeking and receptivity to feedback? How
does recognition as an “expert” affect one’s likelihood of seeking and using feedback?
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4.2 Contextual Factors

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Beyond the personal factors of the individual, there are also a number of contextual factors
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associated with feedback that can lead to varying effects on an individual’s motivation, learning and

performance (Kluger & DeNisi, 1996). These contextual factors, as depicted in Figure 2, include who
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the feedback is coming from (i.e., feedback source), characteristics of the feedback message (e.g.,

sign of feedback, timing, frequency) and the organizational environment in which feedback is given

(i.e., feedback environment). The next few sections highlight key contextual factors and associated

findings from the psychology and management literatures.

4.2.1 Feedback Source

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 Feedback source is one of the more highly researched elements related to feedback seeking

and use. Specific source factors include source identity (e.g., supervisor, peer, task, self) and source

attributes (e.g., credibility, power, leadership style). Research (Anseel et al., 2013; Ilgen et al., 1979)

suggests that an individual’s perception, seeking, accepting, and using of feedback is influenced by

t
who the feedback comes from. Therefore, much of the research to date focuses on understanding

ip
how the recipients of feedback regard various sources and the influence these sources have on

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them.

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In a professional setting, the feedback source can be an individual, including most typically

a supervisor, coworker, or subordinate; the organization; the task environment (i.e., through

an
technology or subsequent events); or one’s self. Greller and Herold (1975) investigate five potential

sources including the organization, supervisors, coworkers, the task, and self. Respondents indicate
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that intrinsic sources, like self and task, provide more information than extrinsic sources that

include a supervisor, coworker, or the organization. Herold et al. (1987) expand on this previous
d

study by examining whether individuals differentiate between feedback sources on the basis of the
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perceived usefulness and reliability of the information they provide. The results show that the

consistency and usefulness of the information provided through feedback are important aspects of
p

the feedback source. In an extension of this study, Andrews and Kacmar (2001) investigate
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feedback sources in service based organizations and how these sources relate to certain job

attitudes within the firm environment. Task feedback and supervisor feedback are both significant
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predictors of job satisfaction and role ambiguity. The organization as a source of feedback is a

significant predictor of all five outcome variables examined including job satisfaction, role

ambiguity, role conflict, job involvement, and stress. This finding is unexpected given the

organization provides the least amount of feedback compared to the other sources, but may

indicate the importance of setting and communicating standards from the top-down.

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 Overall, the findings from the psychology and management literatures on source identity

suggest the most valuable feedback comes from the self, the task or the organization. However, in

settings where job responsibilities and tasks are more complex and involve significant judgment,

like the audit setting, one would expect that supervisors and peers may be a better source of

t
feedback. In the below auditing review section, findings appear consistent with this expectation.

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Beyond source identity, prior research also focuses heavily on source attributes to

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investigate choices of whom to seek feedback from and which feedback is ultimately used. Both

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credibility and power of the source arguably affect these choices. Giffin (1967) defines credibility as

the recipient’s belief in the sources’ expertise and their trustworthiness.4 A multitude of studies find

an
that expertise and the quality of knowledge received from the feedback source are key factors in

choosing who to seek feedback from and which feedback to use (Steelman & Rutkowski, 2004;
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Vancouver & Morrison, 1995). Halperin et al. (1976) provide subjects with personality feedback

from one of three sources who vary in expertise and find that especially under the condition of
d

providing a negative personality interpretation, participants are more likely to accept the
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information from the expert than from the other sources. Similarly, Steelman and Rutkowski

(2004) find supervisor credibility significantly moderates the relationship between negative
p

feedback and the motivation to use feedback. These findings suggest individuals are more accepting
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and motivated to use negative feedback when it comes from a highly credible source than when it

comes from a less credible source.

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In sum, the more credible the feedback source, the higher the perceived value of the

feedback for improving performance, and thus the more likely individuals are to seek and use

feedback from this source. This finding is important to consider in a professional setting. If the

4Giffin (1967) describes expertise as both the belief that the source has the experience in the task to provide
quality feedback, and the belief that the source has enough information/observations to judge the recipient
accurately. Trustworthiness represents whether or not the recipient believes the feedback source is
providing accurate performance information.

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supervisor is not directly observing the employee, or is not believed to have the expertise to

provide knowledge and evaluate them, the feedback that is provided may not be seen as credible.

Therefore, the employee is less likely to ask for feedback or to use the feedback from this source.

While credibility plays an important part in seeking and using feedback, power is also an

t
important factor in the recipient’s decision to use feedback. The expectation is that the higher the

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power of the source, the more likely the recipient will attempt to use the feedback.5 Ilgen et al.

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(1979) predict that the more the source is seen as able to control valued outcomes, the more likely

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the recipient is to respond to feedback from that source. Stated succinctly, increased power will

result in increased compliance even in situations where feedback is not accepted. Power in the

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feedback context is an understudied variable, as is the potential conflict between power and

credibility of the source. Given the potential affect both credibility and power have in a professional
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setting, this review suggests future research related to these aspects is warranted.

One other more recent areas of study is the effect of leadership style on feedback seeking
d

and use. Levy et al. (2002) find that subordinates who view their supervisors as transformational
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leaders (as opposed to transactional leaders) have greater intentions of seeking feedback from their

supervisor. Transformational leadership is described as direction through idealized influence,

p

individualized consideration, intellectual stimulation and inspirational motivation (Bass, 1997).

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While no studies appear to directly assess leadership style and feedback use, prior studies do find

transformational leadership to have positive effects on leadership trust (Podsakoff, MacKenzie, &
Ac

Bommer, 1996), perceptions of relationship quality (Gregory & Levy, 2011), job satisfaction and

work absenteeism (George & Jones, 1997; Staw, Sutton, & Pelled, 1994) and performance (Howell &

Avolio, 1993). A number of these effects are known to be positively associated with feedback use,

5Power refers specifically to the recipient’s belief that the source has the ability to influence outcomes valued
by the recipient (i.e., better tasks, more responsibility, salary and promotions).

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suggesting that transformational leadership is likely to have a direct effect on feedback use as well.

Future research has the potential to address this prediction.

Overall, it is evident from the vast number of studies on feedback source that both source

identity and specific attributes of the source have the potential to influence feedback seeking and

t
use. However, researchers continue to examine how feedback source interacts with other key

ip
feedback factors as well as the role feedback source can play in mediating individuals’ reactions to

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feedback. Further studies that assess the source in professional settings are likely to play a valuable

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role in improving our understanding of the effect of feedback source on an individual’s behavior.

4.2.2 Feedback Message

an
The feedback message can vary along a number of dimensions. The most highly researched

aspects are sign and type. However, this review also briefly discusses other factors that may apply
M
to future audit research. In the sections below, the dimensions are summarized and key research

findings are highlighted.

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4.2.2.1 Sign
Messages conveyed during the feedback process can indicate a range of performance, from
p

good to bad. In most academic literature, feedback sign, is identified as either positive (i.e., the
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individual is performing well) or negative (i.e., the individual is performing poorly). Positive

feedback is generally expected to reinforce good behaviors whereas negative feedback is usually
Ac

presumed to discourage bad behaviors. Research in this area examines both the reaction of

recipients to the feedback and the behaviors of those providing the feedback.

Based on a wide array of research, the effects of feedback sign appear quite complex.

Negative feedback can result in “giving up” or “trying harder” and positive feedback may lead to

“sitting on one’s laurels” or “doubling one’s efforts”(Cianci et al., 2010; Van-Dijk & Kluger, 2004). A

number of studies focus on a control theory perspective and find that failure motivates more than

success (Carver & Scheier, 1981; Podsakoff & Farh, 1989). However, another set of studies focuses

Page 20 of 69
on individual factors (e.g., aspirations and self-efficacy) and find that positive feedback motivates

people to try harder and to raise their goals (Bandura, 1986), whereas negative feedback can be

detrimental (Ilgen & Davis, 2000), resulting in defensiveness, dissatisfaction and denial by feedback

recipients (London, 2003; Podsakoff & Farh, 1989).

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To reduce the impact of negative feedback the most common reaction by the recipient is to

ip
reject it (Fedor, Eder, & Buckley, 1989; Ilgen et al., 1979). Fedor et al. (1989) find that negative

cr
feedback is less accepted and perceived as less accurate than positive feedback. However, before

us
the feedback even reaches the intended recipient the uncertainty of reactions to negative feedback

lead managers to avoid, delay and distort their feedback to subordinates (Benedict & Levine, 1988;

an
Fisher, 1979). For example, Larson finds (1986) that supervisors are significantly less likely to

provide performance feedback when their subordinates fail to successfully meet their performance
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goals than when subordinates meet their goals. This study also reports that some supervisors give

positive feedback even when their subordinate performs poorly. Fisher (1979) also demonstrates
d

that supervisors have the tendency to inflate feedback given to poor performers. This distortion
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may be even stronger in field settings, where there are longer and closer relationships between the

supervisor and the subordinate.

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Due to the complexity of reactions to feedback sign, studies to date primarily focus on
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understanding variables that moderate and mediate these reactions. A few studies propose that the

impact of feedback sign on perception and acceptance may be influenced by feedback consistency,
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feedback source, and feedback quality. Stone and Stone (1985) find that when inconsistencies exist

between feedback sources, individuals tend to discount the less favorable information, perceiving it

as less accurate.6 Halperin et al. (1976) find that when feedback is positive, the source makes little

difference to the acceptance of feedback, but when it is negative, the less power the source has, the

less feedback acceptance occurs. Additionally, Podsakoff and Farh (1989) find that subjects who

6 In this study, the feedback sources were of equal status.

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receive more credible negative feedback set higher goals and perform at higher levels than subjects

who receive less credible negative feedback. However, subjects who receive positive feedback have

similar goal attainment and performance regardless of the credibility of the source.

Steelman and Rutkowski (2004) examine moderators of employees’ reactions to receiving

t
negative feedback. The results indicate that favorable contextual characteristics can mitigate the

ip
negative consequences of unfavorable feedback. In fact, credibility, quality, and delivery of feedback

cr
have a larger impact on satisfaction with feedback and motivation to improve than did unfavorable

us
feedback. The findings imply that employees are most motivated to modify their job performance

when unfavorable feedback is from a credible source, is of high quality, and/or is delivered in a

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considerate and constructive manner. Therefore, supervisors that pay attention to contextual

factors when providing negative feedback may help ensure the feedback recipient will respond
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more positively and be more inclined to alter behaviors based on that feedback.

Nadler (1979) investigates feedback in groups and finds that feedback sign at the group
d

level affects behavior differently. In groups, individuals take personal responsibility for positive
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feedback, but attribute negative feedback to other group members. As a result, individuals shift

attributions of failure from themselves to the group. This may be a particularly useful finding to
p

expand upon in professional settings where employees are often working in teams. This finding
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suggests it is important to provide feedback specific to the tasks the individual actually did, rather

than more generalized feedback about an overall project or assignment.

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A few recent studies examine situational factors that may help to explain why different

individuals respond to the same feedback in divergent ways. Van-Dijk and Kluger (2004) examine

how varying levels of motivation are induced by success or failure. The study finds that when

people are in a promotion focus, positive feedback increases their motivation more than negative

feedback. Alternatively, when people are in a prevention focus, negative feedback increases their

motivation more than positive feedback. The researchers suggest that a feedback system should fit

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the employee’s occupation, values, and motives for work, resulting in a need for both reward-

oriented and punishment oriented feedback systems. Cianci et al. (2010) find individuals assigned

learning goals improve more than individuals assigned performance goals after receiving negative

feedback, whereas individuals assigned performance goals appear to perform better following

t
positive feedback. In addition, they find a person’s disposition towards the belief that people can

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change or improve mitigates the effect of goal type on performance. That is, an individual with a

cr
performance goal is discouraged to a lesser extent by negative feedback when they believe

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performance improvement is possible. These studies taken together suggest simple framing of an

individual’s focus or goals can change the manner in which they respond to feedback sign.

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Despite a significant amount of research related to feedback sign, researchers have only just

begun to examine factors that mitigate and accentuate recipients’ reactions to positive and negative
M
feedback. Providing accurate feedback regardless of sign is critical to performance improvement

and therefore warrants continued research. The persistent reluctance of managers to provide
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negative feedback indicates that research on methods and practices to successfully incorporate this
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type of feedback is essential. Professional work environments provide an ideal context to analyze

potential implications and solutions.

p
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4.2.2.2 Type
The research on feedback type primarily focuses on multiple cue probabilistic learning

(MCPL) techniques. MCPL researchers investigate the ability of different types of feedback to
Ac

improve individuals’ task performance, primarily by assisting in the development of appropriate

judgment strategies. Three types of feedback are identified in the MCPL literature, including

outcome feedback, which is defined as providing the correct answer or information about the

outcome; task-properties feedback, which is information explaining why the outcome occurred or

how to determine the outcome; and cognitive feedback, or information about the judgment strategy

being used by the subject in relation to the task properties feedback. Research on feedback type

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focuses primarily on outcome feedback and task-properties feedback. The literature indicates only

certain types of feedback produce high-quality learning. In addition, educational research related to

feedback also identifies similar findings (see Hattie and Timperly 2007 for a comprehensive

review).

t
Studies find outcome feedback does not generally promote learning because subjects tend

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to change their procedures haphazardly based on inferences from the outcomes, or they do not use

cr
the feedback correctly or in its entirety (see Balzer et al. 1989 for a review). However, Kluger and

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DeNisi (1996) suggest that task attributes (e.g., task complexity and predictability) may moderate

the effect of outcome feedback. Alternatively, task properties feedback usually reduces the amount

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of ambiguity and has therefore been shown to improve judgment in a wide variety of tasks.

Additionally, task feedback combined with outcome feedback stimulates learning better than
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outcome feedback alone (Balzer, Doherty, & O'Connor, 1989).

Finally, cognitive feedback aims to provide individuals with insight into their judgment
d

policies. However, the tasks in the psychology literature are relatively simple, and as such, do not
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demonstrate that cognitive feedback improves performance. Balzer et al. (1989) suggest that in

more complex tasks, wherein individuals are not aware of which cues are important to their
p

judgments, cognitive feedback may be more effective. Psychology research also examines the
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combination of task and cognitive feedback, but no findings indicate that the combination is

particularly advantageous in improving performance (Balzer, Sulsky, Hammer, & Sumner, 1992).
Ac

Generally speaking, MCPL techniques are particularly useful in research on task-specific

learning where answers and task information are readily available. As tasks become more complex,

or feedback is not specific, the usefulness of this type of feedback diminishes. In the auditing section

below, multiple studies are noted that expand on the research identified in this section, and help to

answer some of the questions regarding task predictability and complexity identified above.

4.2.2.3 Quality

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 Feedback quality is made up of a number of variables. High-quality feedback is defined as

consistent across time, specific and provides information useful to performance outcomes (London,

2003; Steelman, Levy, & Snell, 2004). Feedback high in quality impacts subsequent performance in

a positive, consistent manner (Kluger & DeNisi, 1996). Feedback quality has emerged as a key

t
construct in determining feedback seeking and feedback use (Steelman & Rutkowski, 2004;

ip
Whitaker & Levy, 2012).

cr
Consistency of feedback over time and across sources is noted as important primarily

us
because inconsistent feedback is likely to increase the probability that the feedback recipient will

attribute only feedback they feel is accurate and disregard all other feedback (D. L. Stone & Stone,

an
1985; E. F. Stone & Stone, 1984). A variety of research investigates the role of consistency of

feedback. Haas and Maehr (1965) show that the greater the number of agents who provide
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consistent feedback to a person, the greater the change in the person’s self-perceptions and the

more enduring the changes are. Additionally Stone and Stone (1984) find that consistent feedback
d

from two feedback agents has a greater impact on self-perceived task competence than repeated
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feedback by one agent. Extending this study, Stone and Stone (1985) find that unless the person

receives consistent feedback from feedback agents, the perceived accuracy of the feedback is
p

adversely affected. These studies suggest it is important for organizations to consider how best to
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ensure feedback remains consistent when feedback may be coming from a variety of sources.

Research explicit to specificity and usefulness is limited. It is generally believed that

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feedback that is specific allows for the recipient to better understand what they have done and

what they should be doing. It also allows for the recipient to set goals that are specific. Specific goals

are consistently found superior to general goals (Steers & Porter, 1974). In addition, the usefulness

of feedback, evaluated from the recipient’s point of view, is identified as a key factor in whether the

recipient accepts and is willing to seek and respond to feedback (Ilgen et al., 1979; Whitaker &

Levy, 2012).

Page 25 of 69
 Steelman and Rutkowski (2004) find that feedback quality significantly moderates the

relationship between unfavorable feedback and motivation to use feedback. Therefore, employees

are motivated to use unfavorable feedback that is perceived to be of high quality to improve their

performance compared to unfavorable feedback that is of low quality. In addition Whitaker and

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Levy (2012) find that feedback quality is a factor in an individual’s perception of feedback utility

ip
which in turn affects the likelihood that the individual will seek feedback. These findings indicate it

cr
is important to train managers in how to provide quality feedback. It also suggests organizations

us
need to be more aware as to whether the feedback mechanisms they have in place are designed to

provide high quality feedback, and whether the organization is properly encouraging supervisors to

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take appropriate time to provide quality feedback.

Feedback quality has a number of characteristics, even beyond those identified above.
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While it may seem obvious that feedback needs to be of high quality to be of value, the question

remains as to what defines quality to an individual. Research that focuses on understanding the
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aspects of feedback quality that best motivates individuals to use the feedback should be a
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continued focus of academics.

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4.2.2.4 Frequency
The literature generally assumes more frequent feedback enhances individual learning and
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task performance (Salmoni, Schmidt, & Walter, 1984). The rationale for this assumption is that

greater frequency translates into greater accuracy in perceptions, enhances satisfaction and
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interest in tasks, and provides feelings of competence which increase intrinsic motivation (Chhokar

& Wallin, 1984; Cook, 1967). However, in some settings greater frequency is found to have no

beneficial effect on performance (Chhokar & Wallin, 1984), and a recent study suggests feedback

frequency exhibits an inverted-U relationship with task performance (Lam, DeRue, Karam, &

Hollenback, 2011).

Page 26 of 69
 Bilodeau (1966) and Cook (1967, 1968) find that more feedback on simulated tasks results

in better attitudes, improved performance over time and higher levels of aspiration. Chhokar and

Wallin (1984) compare feedback frequency of one week to two weeks for plant workers and find

that performance was about the same in both time periods. However, they did note that when

t
feedback is removed altogether that performance declines, but when added back, performance

ip
again improves. This highlights the importance of feedback overall despite the apparent lack of

cr
significance in frequency of feedback.

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More recently, Lam et al. (2011) examine the association of feedback frequency with task

performance. The theoretical development uses source allocation theory, which suggests that

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feedback frequency has a positive effect up to a certain point. However, once feedback frequency

reaches higher levels, the cognitive demand on individuals to respond and process the information
M
becomes overwhelming. The results indicate that feedback frequency exhibits an inverted-U

relationship with task performance, and this relationship is mediated by task effort.
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In addition to the potential cognitive demand, other researchers suggest increased feedback
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frequency may have opposing effects on an individual’s feelings of competence and personal

control. Feelings of competence are expected to increase as individuals gain knowledge through the
p

feedback process (Ilgen et al., 1979), whereas feelings of personal control are expected to decrease
ce

as individuals see feedback as a means of controlling their behavior (Chhokar & Wallin, 1984).

Competence and personal control are both linked to intrinsic motivation, and both must be high in
Ac

order to have intrinsic motivation on the job. This implies that it is important to find an optimal

balance of feedback frequency in order for individuals to feel competent and yet not feel that they

are being externally controlled.

Overall, the research on feedback frequency is sparse, especially research that looks at

frequency in a professional setting. The studies noted above are difficult to relate to an actual

professional environment where formal feedback is received much more infrequently and with

Page 27 of 69
multiple feedback variables simultaneously involved. Future research that considers this variable in

a professional context is necessary, especially when interactions of other feedback variables can be

examined at the same time. In addition, there does not appear to be literature that examines how

the frequency of seeking feedback affects an individual’s motivation, learning, and performance.

t
ip
4.2.2.5 Timing
Timing specifically refers to the interval between the individual’s behavior or completion of

cr
a task and the receipt of feedback about the behavior or task. Ammons' (1956) review concludes

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that the longer the delay in the receipt of feedback the less effective feedback is on performance.

Bilodeau (1966) later indicates that timing is made up of two time intervals, the feedback delay,

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which is the time between the behavior and the feedback, and the post-feedback interval, or the

time between the feedback and the next opportunity to use the feedback. Using this idea, Bourne
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and Bunderson (1963) conclude in their study that only post-feedback interval affects concept

learning. Additionally, if the time period between the behavior and the feedback is not filled with
d

interfering activities, then learning is not affected by time delay. However, this finding is unlikely to
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generalize to professional practice where delays can be extensive and interfering activities are

likely to occur.
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More recently, research also reveals that time delays may elicit frustration, which in turn
ce

can cause suboptimal cognitive processing and substandard performance (Fox & Spector, 1999).

Also, Sheldon et al. (2006) find that time delays may cause individuals to view information provided
Ac

by the person responsible for the delay as less important. However, they note that the status of the

person (i.e., source credibility) moderates the negative effects of time delays.

Similar to findings in the feedback sign section previously detailed, it appears that the

feedback source can have a significant moderating effect on timing, which by itself can cause

negative reactions to feedback. Based on these varied findings of the impact of feedback timing,

continued research of this factor seems necessary. Of particular importance is a need for more

Page 28 of 69
research that examines interactions and the moderating effects of other feedback factors with

feedback timing, as well as research that examines how delayed feedback affects subsequent

feedback seeking by an individual.

4.2.3 Feedback Environment

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ip
Early literature presents feedback as a process that occurs between a feedback sender and a

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feedback recipient (Ilgen et al., 1979; Morrison & Bies, 1991), whereas more recent literature

highlights the influence of the organizational context on feedback seeking and use (Levy, Albright,

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Cawley, & Williams, 1995; London & Smither, 2002). This organizational context, referred to as the

feedback environment, is thought to play an influential role in determining how a person will seek,

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process, and use feedback messages (Anseel & Lievens, 2007; London & Smither, 2002). It helps to

shape an individual’s attitude towards feedback and the extent to which the individual relies on
M
feedback to improve performance (Farr & Levy, 2007; Gregory & Levy, 2011).

Researchers (Levy & Williams, 2004; London & Smither, 2002) emphasize the importance
d

of understanding the role that the feedback environment plays in feedback interactions and
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processes. Herold and Parsons (1985) identify the feedback environment as an employee’s
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perception of the type of job performance information they have available to them and develop an
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initial scale to assess the availability of different types of feedback information in an organization,

but this scale is not validated and is not actively used in research or practice (Ashford, 1993;
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Steelman et al., 2004). More recent research conceptualizes the feedback environment as an

organizational environment that is supportive of feedback interactions and processes (London &

Smither, 2002; Steelman et al., 2004).

A strong feedback environment is identified as one in which policies and programs for

performance management are in place, continuous learning is encouraged and career development

is important. Steelman et al. (2004) develop and validate the feedback environment scale (FES) to

measure an employee’s perception of the overall supportiveness for feedback in the workplace.

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This instrument measures a more comprehensive view of the feedback environment than prior

instruments by taking into account both supervisor and coworker feedback (Steelman et al., 2004;

Whitaker, Dahling, & Levy, 2007).7 In addition to validating the FES, Steelman et al. (2004) find that

employees in a positive feedback environment are more motivated to use feedback, are more

t
satisfied with the feedback, and seek feedback more frequently. In a follow-up study, Steelman and

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Rutkowsi (2004) find some of the dimensions of the feedback environment, including source

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credibility, feedback quality and feedback delivery, mitigate the unwanted effects of negative

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feedback.

A few recent studies examine the effects of the feedback environment on work-related

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outcomes. Specifically, the feedback environment is positively related to organizational citizenship

behavior of employees, but this relationship is mediated by their affective commitment (Norris-
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Watts & Levy, 2004). Also, employees who perceive a supportive feedback environment increase

feedback seeking, have higher role clarity and higher performance ratings (Whitaker et al., 2007).
d

In addition, a couple of studies (Anseel & Lievens, 2007; Gregory & Levy, 2011) examine
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associations between the feedback environment and the relationship between a supervisor and a

subordinate, finding subordinates perceptions of the relationship quality fully mediate the
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relationship between the feedback environment and an employee’s job satisfaction and the
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feedback environment accounts for significant variance in employees’ evaluations of their

relationships with supervisors.

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Overall, findings from psychology and management indicate that the feedback environment

is positively associated with several work-related outcomes. As such, researchers need to continue

to gain a better understanding of the mechanisms that support feedback in an organization, and

7 The FES measures an employee’s perception of supervisor and coworker feedback environments in terms of

seven dimensions. These include source credibility, feedback quality, frequency of positive feedback,
frequency of negative feedback, feedback delivery, source availability, and the extent to which feedback-
seeking behavior is encouraged (Steelman et al., 2004).

Page 30 of 69
target areas where further development may be necessary. In addition, researchers should examine

interventions and trainings at both the supervisor and subordinate level that may help to improve

the feedback environment within the organization. Finally, research suggests that there are both

mediating and moderating factors that can play a role on the relationship between the feedback

t
environment and desired work outcomes, as such research needs to continue to examine other

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factors that may affect this relationship.

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4.2.4 Overall Conclusions regarding Contextual Factors

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Based on the research performed to date, contextual factors play an important role in a

person’s decision to seek and to use feedback. The more recent psychology and management

an
literature on these factors has become more theoretically based and focuses more on the social

context in which feedback is given (i.e., the feedback environment). However, similar to the
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research on individual factors, the studies examining these factors in a professional context, where

they have the most relevance, are limited. Future research needs to examine how these contextual
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factors are affected by the professional environment.

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4.2.5 Contextual Factors and Auditing Research

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Auditing research on the contextual factors of feedback focus primarily on feedback source
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and feedback type (see Table 1 for a summary of the audit research on feedback). However, there

are two additional contextual factors identified in this review that are not explicitly addressed in
Ac

prior psychology and management literatures, but are important in the audit setting. These are

feedback method (e.g., electronic, face-to-face) and feedback emphasis (i.e., the performance

dimensions emphasized in the feedback).

4.2.5.1 Feedback Source

As highlighted in the psychology and management literature, both who the source is and the

characteristics of the source matter in determining who an individual will seek feedback from and

Page 31 of 69
how they will react and use the feedback they receive. In the audit environment, there are a number

of potential sources of feedback (e.g., a coworker/peer, an audit senior/manager/partner, an

assigned coach or mentor, a performance manager) who can have varying personal attributes (e.g.,

credibility, power, leadership style).

t
Belkaoui and Picur (1987) provide one of the few audit studies examining how source

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identity affects the auditor’s perception of the reliability of information received. The study finds

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that information on job tasks and requirements and appraisal information originate from different

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sources, which differ in terms of how informative they are. The supervisor is consistently identified

as the most reliable source for both relevant information and appraisal information by study

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participants. This finding is notably different from psychology studies where self and task are

considered particularly important (Greller & Herold, 1975). This finding suggests that due to the
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complexities of audit tasks, auditors cannot rely on the task and self to learn and improve, rather

they require feedback from supervisors to gauge their performance and to develop technical
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knowledge and skills.

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Feedback source attributes are commonly examined in the psychology and management

literature, but do not appear to be a focus in the auditing literature despite the clear implications of
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the effects of source attributes on feedback seeking and use (Anseel et al., 2013; Ilgen et al., 1979).
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While expertise is a widely discussed construct in the audit literature, few prior studies have

examined the effect of source expertise on an auditor’s likelihood of seeking feedback or using
Ac

feedback to improve knowledge and performance.

One exception is Schaefer (2013); the study finds that auditors’ concerns about their ego

and image affect who they will seek advice from, but concerns of a potential internal quality review

(IQR) make auditors more likely to seek advice from a knowledgeable source (i.e., the engagement

Page 32 of 69
manager rather than a peer).8 The relationship between feedback seeking and ego and image

concerns is well documented in the psychology literature (Anseel, Lievens, & Levy, 2007; Ashford et

al., 2003; Morrison & Bies, 1991). Schaefer (2013) highlights how a specific auditing contextual

factor (i.e. IQR) mitigates auditors’ impression management attempts. Kadous et al. (2013) also

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examine sources of advice, finding advice from a stronger social bond advisor is weighted more

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heavily regardless of how well justified the advice is. They indicate that non-specialist auditors’

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feelings of trust in the advisor may overshadow their ability to objectively assess the quality of the

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advice. These studies, taken together, suggest that auditors may not always seek feedback from the

most knowledgeable source and may not be able to properly assess the quality of feedback when

an
strong relationships are formed with the source. Audit researchers should continue to investigate

circumstances that both encourage and discourage appropriate seeking and accepting of feedback
M
as this is an important piece of the coaching and quality control process in audit firms.

In a professional context source power is often associated with an individual’s job title, but
d

often it is the individual’s underlying characteristics that give them power (e.g., expertise, status
te

within the firm). Fedor and Ramsay (2007) examine the effects of workpaper preparers’

perceptions of reviewers’ power on their responses to a workpaper review. The study finds that, in
p

general, preparers attempt to improve performance and seek feedback in response to a workpaper
ce

review, and if the review is particularly negative, they also try to manage the reviewer’s

impressions of them. However, preparers’ perceptions of the reviewer’s power differentially affect
Ac

a preparer’s response. Reviewers perceived as having referent power, the ability to make a

subordinate feel valued, has positive effects on preparers’ efforts to improve and to seek feedback

and they are less likely to attempt to manage the reviewer’s impressions of them. A reviewer with

expertise (expert power) positively affects feedback seeking, whereas perceived ability to punish

8This study specifically examines advice seeking, rather than feedback seeking, however the advice source
construct is similar to that of feedback source and is therefore worthwhile to include in this review.

Page 33 of 69
(coercive power) has negative effects on performance improvement efforts and feedback seeking.

In addition, the researchers find that power perceptions of reviewers by preparers in an auditing

context are different than those in other contexts as studied by Fedor et al. (2001).

Another source attribute studied in the auditing context is leadership style. As mentioned

t
above, recent management literature has focused on the transformational leadership construct to

ip
assess leadership style, but prior literature identifies two underlying characteristics of leadership

cr
style, structure and consideration (Fleishman & Peters, 1962) which are the measurements

us
primarily used in the audit literature (Otley & Pierce, 1995; Pierce & Sweeney, 2004; Pratt &

Jiambalvo, 1982). While audit literature has examined leadership style in relation to audit team

an
performance and dysfunctional behaviors (Pierce & Sweeney, 2004; Pratt & Jiambalvo, 1982) it

does not appear that prior audit literature examines the effects of leadership style on feedback
M
seeking and use.

A few auditing studies that do not directly measure leadership style, find certain leader
d

behaviors impact staff auditors’ behaviors. Kida (1984) finds supportive behavior by an audit
te

manager during review meetings relate to seniors’ satisfaction with the meetings and their

manager, but not to performance improvement. Also, Stefaniak and Robertson (2010) find prior
p

supervisors reactions to errors made by an auditor, influence the likelihood the auditor will admit
ce

mistakes in the future. These studies suggest that leader behaviors and their style of management

likely influence whether a staff auditor will seek feedback and be receptive to feedback based on
Ac

the leadership style of their supervisor.

Unlike the psychology and management literature, the studies in the audit literature do not

find a consistent positive relationship with leadership style and staff auditor behavior. This may be

due to specific audit environment factors (e.g., the greater number of “leaders” auditors work with

during the year or auditor time/budget pressures playing a more important role) or engagement or

task specific factors (e.g., client-specific circumstances or complexity of the task being performed).

Page 34 of 69
Due to these inconsistencies, it is warranted for auditing researchers to examine how leadership

style of the source and contextual factors of the audit environment may interact to impact feedback

seeking and use.

The auditing literature has examined a number of factors related to feedback source, but the

t
breadth and depth is fairly limited overall. Of particular importance is to examine how

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characteristics of the feedback source interact with specific auditing contextual factors, including

cr
complexity of the task, time/budget pressures, client characteristics, etc. The auditing context

us
allows for an extension of research on feedback source due to the uniqueness of contextual factors

in the environment.

an
4.2.5.2 Feedback Message
As noted in the review of literature in psychology and management, feedback message
M
encompasses a number of contextual factors related to how and what is conveyed through

performance feedback. The review in this section covers the factors most heavily studied by audit
d

researchers and those that appear to have the most future relevance to auditing studies.
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4.2.5.2.1 Feedback Type

One area that audit researchers have examined in some depth relates to the effects of
p

different feedback types on task learning. Similar to studies in psychology, audit researchers focus
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heavily on the varying effects of outcome feedback, process feedback, cognitive feedback, and

various combinations of these feedback options (Ashton, 1990; C. E. Earley, 2003; Hirst, Luckett, &
Ac

Trotman, 1999; Leung & Trotman, 2008).

Unlike the research in psychology, audit research has shown that under certain conditions,

outcome feedback can have an effect on task learning and performance (Ashton, 1990; Bonner &

Walker, 1994; Hirst et al., 1999). Ashton (1990) examines outcome feedback in combination with a

decision aid and finds that when outcome feedback is present with no decision aid, the accuracy of

subjects is greater than those with neither feedback nor a decision aid. However, when a decision

Page 35 of 69
aid is present, outcome feedback has no effect on accuracy. The task used allows for an actual

immediate right or wrong answer, but this is often not possible in auditing practice.9 Therefore, a

number of researchers have since expanded on this study by varying the type of feedback,

combining multiple types of feedback, and examining other task characteristics that may interact

t
with feedback to affect task learning and performance.

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Bonner and Walker (1994) find that outcome feedback assists with knowledge acquisition

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only when significant instruction precedes the task, while explanatory feedback with any pretask

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instruction produces knowledge gains. This study suggests that when prior knowledge is provided,

auditors are able to learn from outcome feedback. Earley (2001) expands on this study by

an
investigating explanatory feedback and self-explanation (subjects generate explanations that clarify

the actual outcomes). Both treatments result in higher accuracy than providing no feedback, and
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the combination results in higher accuracy than either treatment by itself. Together, these findings

suggest prior instruction by a supervisor or requirements to generate explanations allow successful

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use of outcome feedback.

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A few studies examine factors that may interact with feedback type in the audit

environment. Hirst et al. (1999) varies the level of task predictability and shows that outcome
p

feedback, by itself and in combination with task properties feedback, promotes judgment accuracy
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for both high and medium levels of task predictability. As tasks in auditing can vary in complexity,

Leung and Trotman (2005, 2008) extend this prior research by examining the interaction of
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feedback type and task complexity. The combination of task-properties and cognitive feedback is

shown to be particularly effective in transferring knowledge across tasks. Additionally, outcome

feedback is more effective in the less complex task, while cognitive feedback is more effective for

the more complex task. Overall, the results suggest the nature of the task moderates the effects of

different types of feedback and feedback that includes only information as to what judgment should

9 Participants were asked to predict bond ratings.

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have been made (i.e., outcome feedback) is not enough when auditors are completing complex

tasks. Finally, Bryant et al. (2009) examine the interaction of feedback type and an auditor’s

cognitive style. They find outcome feedback and cognitive style feedback together have a negative

effect on pattern-oriented individuals (i.e., intuitives) performance, but a positive effect on detailed-

t
oriented individuals (i.e., sensors) performance.

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Together these studies indicate feedback type has an effect on an auditor’s learning,

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performance, and judgment. Studies that only vary feedback type and those that examine it in

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combination with other factors provide evidence that auditors are affected by the feedback they

receive and this is heavily dependent on the type of task the auditor is performing. As outcome

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feedback is often not available on a timely basis, research that examines how other types of

feedback may assist in learning and performance are worth continued study. As most of this
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research focuses heavily on specific auditor tasks it may be beneficial to expand research into other

forms of feedback (i.e., workpaper reviews and engagement reviews) available to auditors.
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4.2.5.2.2 Feedback Method

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A feedback message variable that is fairly unique to the audit environment is feedback

method (e.g., electronic and face-to-face). This research not only has informed audit practice, but it
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has expanded the list of feedback factors previously identified and studied in the psychology and
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management literatures. The research in this area capitalized on a significant change in the audit

environment from hard copy paper audit files to electronic audit files. With the switch in file types,
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also came the ability to choose to review audit workpapers electronically or to meet with the

workpaper preparer face-to-face to discuss workpaper comments.

A number of studies examine the effects of review method on the workpaper preparers

feelings of accountability, level of effort and effectiveness, and the resulting workpaper quality

(Agoglia et al., 2009; Bamber, Payne, & Ramsay, 2011; Brazel, Agoglia, & Hatfield, 2004; Payne,

Ramsay, & Bamber, 2010). Brazel et al. (2004) find that the method of review affects the preparer’s

Page 37 of 69
effectiveness and efficiency. Specifically, the anticipation of a face-to-face review increases auditors’

effectiveness, decreases their efficiency and makes them feel more accountable than either an

electronic or no-review condition. In an extension of this study, Agoglia et al. (2009) find that

preparers that are reviewed electronically provide their reviewers with lower-quality workpaper

t
documentation than preparers that are reviewed face-to-face. Both studies highlight that the level

ip
of accountability appears to vary depending on the feedback method and this perception of

cr
accountability affects the quality of the workpaper.

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Another study that specifically examines accountability pressure but uses review and

feedback as manipulations of this pressure is DeZoort et al. (2006). They find auditors under high

an
accountability pressure (i.e., response requires justification and formal feedback will be provided)

provide more conservative judgments and have less judgment variability than auditors with lower
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levels of pressure (i.e., partner review will be conducted and anonymity). While this study’s

variable manipulations are different, it supports the previous contention that varying the manner in
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which feedback is expected to be given to audit staff affects their behavior and subsequent
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judgment.

Bamber et al. (2011) perform a similar study with a different task, examining the effects of
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review method on auditor performance and accountability. The results show that electronic,
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discussion, and interview methods all stimulate a high level of accountability, but an electronic

review elicits significantly greater accountability than the interview method. The findings also show
Ac

that auditors anticipating an interview detect more conceptual errors than auditors anticipating

either an electronic or discussion review. This study’s findings vary from that of Brazel et al. (2004)

and Agoglia et al. (2009) in that electronic review appears to elicit significant accountability

compared to discussion or interview. This suggests task differences may play a role in the response

to various review methods. In addition, it appears that feedback method may actually influence

whether the auditor focuses on more mechanical or conceptual errors.

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 Not only does the feedback method affect the efficiency, quality and level of accountability

of the preparer, but it is shown to impact an auditor’s motivation to improve performance (Miller et

al., 2006), as well as an auditor’s attention to procedures, which in turn appears to help in the

identification of trends indicative of fraud (Payne et al., 2010). Miller et al. (2006) find

t
incorporating discussion of performance with written review notes enhances preparers’ motivation

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to improve performance. Payne et al. (2010) find auditors, who anticipate an interactive review,

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focus more on conclusion-oriented audit procedures, which leads to better performance in

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identifying a trend that may be indicative of fraud.

These studies taken together suggest researchers should continue to examine feedback

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method, taking into account contextual factors that may potentially exacerbate or improve an

auditor’s response to feedback method and the level of accountability they feel. If feelings of
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accountability are impacted by the feedback method, it appears worthwhile to examine other

feedback factors that have been shown to mitigate negative effects, like feedback source or
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feedback quality. It may also be worthwhile to investigate whether these findings which focus
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primarily on task and workpaper reviews generalize to other feedback mechanisms in the audit

environment (e.g., engagement reviews, informal feedback).

p

4.2.5.2.3 Sign
ce

Feedback sign appears to be a particularly important variable to examine in the auditing

context. While prior psychology research suggests both positive and negative feedback are
Ac

necessary for performance improvement, a recent qualitative study (Westermann et al., 2014) in

auditing notes that audit managers are reluctant to provide negative feedback due to concerns that

staff auditors will leave the firm or retaliate by providing poor upward feedback. However, recent

interactions with practitioners also indicate inspection and litigation concerns have made feedback

more compliance based and critical in general. These somewhat contradicting ideas suggest it is

Page 39 of 69
important to examine feedback sign in the auditing context, and yet only a few studies have

examined this variable to date (Cianci & Bierstaker, 2009; Fedor & Ramsay, 2007; Kida, 1984).

In examining criticism, Kida (1984) reveals that seniors view managerial criticism as

positively affecting their job performance as long as the criticism is directed at specific job aspects

t
and not the senior personally. Fedor and Ramsay (2007) examine the effect of source power on

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audit staff response to review using the sign of feedback as a control variable. This study finds

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auditors who reported higher levels of impression management were significantly more likely to

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have reported the review as negative feedback. Finally, Cianci and Bierstaker (2009) examine

whether prior poor or exceptional performance, as noted in an annual review, impacts auditors’

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subsequent ethical decision making. They find auditors who receive positive feedback make more

ethical judgments on both self-focused and public focused ethical tasks compared to those auditors
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who receive negative feedback. They also find auditors who receive positive feedback when

auditing less important clients make the most ethical judgments on both self-focused and public-
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focused tasks. These findings suggest auditors are susceptible to pressure from negative feedback
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and client importance, even when the judgment has public consequences.

Similar to early studies in psychology and management, it is difficult to draw overall

p

conclusions from these studies due to the inconsistencies in the findings. Two of these studies
ce

(Cianci & Bierstaker, 2009; Fedor & Ramsay, 2007) suggest negative feedback may result in

undesirable behaviors, whereas one (Kida, 1984) suggests that when negative feedback is given in
Ac

the appropriate manner it can positively affect auditor behavior. Given that more recent research in

psychology and management suggests certain contextual factors can improve individual’s response

to negative feedback it seems important to further this line of research in the audit setting. While

the above findings are inconsistent they suggest that feedback sign has the potential to impact

overall audit quality.

4.2.5.2.4 Emphasis

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 Research in psychology and management has not explicitly identified feedback emphasis as

a factor affecting individual response to feedback. However, research on both performance

appraisal and coaching appear to suggest that dimensions emphasized during performance review

and the approach taken by a coach in providing feedback affect individual’s subsequent behaviors

t
(Gregory, Levy, & Jeffers, 2008; Hunt, 1995). Audit researchers find that a number of dimensions

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may be highlighted by a supervising auditor during performance feedback and the weighting of

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these dimensions can vary significantly depending on preferences of the supervisor (Kida, 1984;

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Wright, 1980, 1982)

This emphasis on specific dimensions is shown to impact a variety of auditor behaviors. One

an
study finds the emphasis of audit supervisors on specific job dimensions affects the amount of

effort auditors direct towards various aspects of their job (Jiambalvo, 1979). Shankar and Ng
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(2008) examine two-specific dimensions of performance evaluation, either demonstrating

expertise or building client relationships, and find auditors are less (more) likely to accept the
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client’s method of accounting when the performance evaluation focus is on demonstrating

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expertise and they receive technical advice to not support (support) the client’s method.

A couple of studies (Pierce & Sweeney, 2004; Sweeney & Pierce, 2004) examine whether the
p

style of evaluation (e.g., target-constrained style-emphasis on deadlines and budgets, profit-

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conscious style-emphasis on long-term performance, non-accounting style-emphasis on effort,

technical ability) affect dysfunctional auditor behaviors. These studies find both target-constrained
Ac

and non-accounting styles result in dysfunctional auditor behavior, but the behavior varies

depending on the emphasis.10

Finally, Lambert and Agoglia (2011) examine emphasis during the workpaper review

process, where the reviewer stresses either conclusion or documentation during the review. This

study finds emphasis on conclusion-framed review notes leads to higher effort levels than

10 For instance, higher under-reporting of time is significantly associated with a target-constrained style.

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documentation-framed review notes. While the emphasis in this case is not directly linked to

performance evaluation, similar to prior research, one would expect that the reviewee believes

focusing on the aspects highlighted in the workpaper review will lead to positive results when the

individual is evaluated during the engagement review process.

t
Overall, audit research finds that the dimensions emphasized by a supervisor during

ip
performance feedback affect audit staff’s subsequent behaviors. While a number of factors related

cr
to feedback emphasis have been examined, research on feedback and coaching suggest other

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factors may be worth examining. For instance, goal emphasis in combination with feedback is

shown to play an important role in feedback acceptance and response (Ilgen & Davis, 2000). In

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addition, the audit environment has changed quite substantially over the last ten years, suggesting

the dimensions emphasized during performance feedback may have changed in response to new
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pressures and regulatory requirements.

4.2.5.2.4 Timing and Frequency

d

Similar to studies in psychology and management, both the timing of feedback and the
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frequency of feedback appear to affect auditor behavior. Both anecdotal evidence and qualitative

research suggest that significant time delays may exist in the performance feedback process
p

(Anderson-Gough et al., 1998; Lambert & Agoglia, 2011). However, only a few studies to date
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specifically examine timing delays in the audit setting. Lambert and Agoglia (2011) find that a

timely review can enhance reviewee effort and the combination of a timely review and conclusion-
Ac

framed review notes leads to better performance. In addition, they find delayed reviews are

associated with increased dysfunctional audit behavior (i.e., ghost-ticking). Earley (2003) also

examines timing delay, but this study focuses on the lack of timely outcome feedback, an imbedded

issue in the audit setting where actual answers are not necessarily known until months or years

after an audit report is issued. The study finds that auditors who receive outcome feedback before

generating explanations exhibit a higher level of reasoning and performance than those who do not

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receive the feedback prior to generating explanations. Together these studies suggest that, when

available, timely feedback induces greater effort and better performance of staff auditors.

Audit research also suggests there is great diversity in the frequency in which performance

feedback is given (Wright, 1980). However, only one study (Pierce & Sweeney, 2004) to date has

t
examined the effect of feedback frequency on auditor behavior. Pierce and Sweeney (2004) find

ip
that respondents whose performance is evaluated after each assignment report significantly lower

cr
dysfunctional behaviors than respondents who are evaluated less frequently. These findings

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support the related research in management and psychology and suggest the critical importance of

providing feedback frequently.

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Overall, audit research findings are consistent with prior research in psychology and

management, however a number of characteristics in the audit environment may exacerbate or

M
mitigate the effects of feedback timing and frequency. For instance, as noted above, some research

suggests the source of feedback may reduce the negative effects of delayed feedback. However, it is
d

not clear whether this finding would carry over to the audit setting. In addition, more recent
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psychology research suggests feedback frequency may exhibit an inverted-U relationship. In

auditing, it is an empirical question whether the multitude of feedback opportunities available (e.g.,
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workpaper reviews, engagement reviews, annual reviews, informal feedback) may induce a similar
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effect.
Ac

4.2.5.3 Feedback Environment

The feedback environment is a relatively new area of research in psychology and

management literatures, but a couple of studies within the auditing context suggest this may be an

important factor to consider. Anderson-Gough (1998) examine overall socialization of new auditors

highlighting a number of feedback related issues, including performance feedback being too general

and not representing the work actually performed. Also, auditor trainees mention that the

dimensions identified in performance reviews are not integrated well with the values and norms of

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the auditors. This evidence suggests issues with the feedback environment in audit firms which

have the potential to impact auditor behavior. In following up on this potential concern, Dalton and

Viator (2013) investigate unfavorable supervisory feedback environments in public accounting

firms and whether they are associated with negative job outcomes. In addition, this study examines

t
whether mentoring relationships help to mitigate the adverse effects of these environments. They

ip
find unfavorable supervisory feedback environments are associated with lower levels of

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organizational commitment, role clarity, and job satisfaction, but they do find that strong mentoring

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relationships help to mitigate the effects of these environments.

The limited studies in auditing suggest further examination of the feedback environment is

an
warranted. Future research needs to examine both the effects of supportive feedback

environments, as well as to further examine other factors that may mitigate the adverse effects of
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unfavorable feedback environments, as it certainly appears these exist in public accounting firms.

4.2.6 Future Directions of Auditing Research on Contextual Factors

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From the preceding discussion it is apparent that responses of individuals to feedback are
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complicated by contextual factors, yet there is a clear lack of audit research in this area. Based on
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the research cited in this section, in conjunction with the framework and review of research outside
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the audit context, the following questions merit further research:

RQ4: How do the attributes of the feedback source (e.g. power, credibility) affect how
auditors seek and respond to performance feedback? How does varying the source of
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performance feedback affect auditor behaviors? Is feedback inconsistent across types of

performance feedback (e.g., same supervisor but different feedback in workpaper reviews
compared to engagement reviews) or inconsistent across supervisors? How does
inconsistent feedback affect auditor’s response to feedback?

RQ5: What type of feedback is most successful when there is uncertainty (i.e., when
decisions involve judgment)? Can outcome feedback in the form of alternative or preferred
judgments in review comments improve future judgments of the preparer? What effect does
outcome feedback have in more complex auditor situations?

RQ6: Are certain review methods (electronic, face-to-face, interactive, etc.) or types
(outcome, task-properties, cognitive, etc.) better suited to certain individuals? What role

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 does feedback orientation play in auditor response to the feedback method? Does the effect
of review method vary by the type of review (i.e., workpaper review, engagement review)?

RQ7: What individual factors (e.g., feedback orientation, experience) make auditors more
resistant or accepting of negative or critical feedback? What contextual factors (e.g.
feedback environment, feedback emphasis) make auditors more resistant or accepting of
negative or critical feedback?

t
ip
RQ8: Which dimensions do audit staff perceive as the most important dimensions assessed
during performance review? Do these vary by the type of review (e.g., workpaper,
engagement, annual)? Which dimensions do managers and partners believe are the most

cr
important dimensions? Does the firm culture and “tone-at-the-top” reflect the same or
different dimensions? How do the dimensions emphasized during performance review
affect auditor behavior?

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RQ9: How timely does performance feedback need to be given in order to reduce the
negative effects on auditor behavior? Are there individual or contextual factors (e.g.,

an
feedback orientation, feedback source) that mitigate the negative effects of delayed
feedback on auditor behavior? How does feedback frequency affect auditor behavior? Is
there too much or too little performance feedback in the audit environment? How does a
supervisors’ feedback quality change as the number of reviews increases?
M
RQ10: What is the feedback environment like in the public accounting firms? How does the
feedback environment affect an auditor’s response to performance feedback? Can
improvements in auditor response to feedback be made through refining the feedback
d

environment of the firm? How does the relationship between the audit supervisor and the
te

audit staff affect seeking of feedback and responding (i.e., effort, performance) to feedback?
Do, and if so, how do audit supervisors adjust performance feedback in response to
individual differences of their subordinates?
p

RQ11: How does the audit environment (i.e., documentation requirements and new
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standards) and technology (i.e., new workpaper and performance appraisal systems) affect
an auditor’s response to performance feedback?
Ac

5. Conclusion
This paper takes the position that while performance feedback is recognized by auditing

firms as an important component to ensuring audit quality and for developing staff auditors,

insufficient recognition is given to understanding how performance feedback changes auditor

behavior and to the behavioral effects of providing feedback. Furthermore, the review of the

psychology and management literatures suggests the effects of feedback on learning, motivation,

and performance can be quite variable depending on features of the feedback recipient, the

Page 45 of 69
feedback source and the contextual factors of the feedback message and environment. The

complexities of the construct indicate further research is needed to understand the interplay of

various feedback factors and the social context in which feedback is given.

As noted in this review, a number of auditing studies address the performance feedback

t
process, but the studies are narrowly focused overall and an abundance of research opportunities

ip
still exist. Studies of performance feedback in auditing primarily focus on the knowledge acquisition

cr
effects of feedback rather than the potential performance and motivational effects. The studies that

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investigate the behavioral effects of performance feedback focus heavily on feedback type and

feedback method. While these are certainly key variables to consider, audit researchers need to

an
broaden their scope of factors affecting the learning, performance, and motivation of auditors. In

addition, much of the audit research on performance feedback is quite dated. The audit
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environment, as well as the feedback mechanism and processes, have changed quite substantially in

the last fifteen years (e.g., new technology, new standards, heightened inspection and litigation
d

concerns, new performance appraisal systems), suggesting this may be an area where a renewed
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focus is warranted.

To stimulate additional research in this area, I propose eleven research questions focused
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on gaining an understanding of the current feedback mechanisms in the audit environment and the
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implications of these feedback mechanisms on auditor behavior and development, and overall audit

quality. Research addressing these questions has the potential to not only extend academic
Ac

literature on feedback, but to inform practitioners and standard setters to improve the

effectiveness of feedback in the audit environment. Given the significance of performance feedback

to quality control and staff development and the present gap in this literature such research is

critical.

In conclusion, when undertaking research related to performance feedback in auditing, care

should be taken not to replicate findings reported in the psychology and management literatures.

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Audit researchers have the opportunity to use a professional setting to extend and contribute to the

understanding of feedback’s role in learning, performance improvement and motivation and to

further develop theories to explain the results. Successful research will depend on devising strong

qualitative and experimental studies that will capture the individuals involved and the social

t
context of the feedback process in the audit firm.

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Acknowledgements

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I appreciate the helpful comments of Jean C. Bedard, Jay C. Thibodeau, and accounting research
workshop participants at Bentley University.

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an
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p te
ce
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d
p te
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Figure 1

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Figure 1 – A Dynamic Model of Feedback Behavior

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Start Feedback Feedback Feedback End Feedback

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Trajectory Perspective Behaviors Trajectory

an
Performance Level T1 Individual Resource:
Feedback Seeking
Knowledge T1 Informal
Inquiry
Motivation/Effort T1

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Monitoring
Organizational Resource:
Formal Feedback Giving

ed
Workpaper Review
Engagement Review
Annual Review
pt
Informal
Coaching
Performance Level T2
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Mentoring Feedback Use

Knowledge T2
Motivation/Effort T2
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Individual Factors

Contextual Factors

Now Day Week Month Year

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Figure 2

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Figure 2 – Determinants of Feedback Seeking and Use

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Individual Factors Contextual Factors

us
an
1) Personal 2) Feedback 3) Environment 4) Message 5) Source/Target
Characteristics Attitudes

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ed
Decision Decision
to Seek to Use
pt
1) Personal Characteristics Feedback Feedback 3) Source
a) Demographics (age, job a) Identity (supervisor, peer, task,
ce

experience, etc.) environment, etc.)

b) Self-efficacy & self-esteem b) Attributes (power/status,
c) Goal Orientation credibility, leadership style)
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d) Emotional Intelligence 4) Message

2) Feedback Attitudes a) Sign (positive or negative)
a) Feedback Orientation b) Type (outcome, process,
cognitive)
c) Quality
d) Timing
e) Frequency
5) Environment
a) Firm support
b) Supervisor support (relationship)
Page 56 of 69
Table 1
t
ip
Table 1
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Summary of research on performance feedback in auditing
Citation Aspects of feedback Purpose
us
investigated
Agoglia et al. (2009) Feedback Message - Method Study examines audit workpaper
review formats: face-to-face versus
electronic to assess their effects on
an
audit review team judgments
through a focus on quality issues
within the documentation.
M
Study also examines two mediating
factors: preparer workpaper
documentation quality and the
extent to which reviewers
ed
appropriately evaluate preparer
documentation quality.
Anderson-Gough et al. (1998) Feedback Message - Timing Study examines the socialization of
Feedback Environment trainees working towards
pt
qualifying as chartered accountants
at two 'Big 6' (now 'Big 4) firms in
the United Kingdom.
ce
Study aims to understand the
processes of socialization of a new
auditor to develop a professional
Ac
identity, and to explore the nature
of the professional identity and its
relationship to overall
organizational practices.
Research Key research findings
method
Experiment  Electronic review preparers provide
reviewers with lower-quality
workpaper documentation than face-
to-face preparers.
 Electronic reviewers’ judgments are
affected by their preparer’s less-
informative documentation.
Specifically, reviewers’ judgments are
of lower quality when the workpaper
preparer anticipates an electronic
review as opposed to a face-to-face
review.
Case Study  Provides descriptive information of
the formal appraisal forms and
processes at two audit firms.
 Common criticisms noted with the
formal appraisal forms include: the
forms not being representative of the
work that is actually done, the forms
making the reviewers be overly
critical, and significant delays in
receiving reviews back.
 Formal feedback often reflects more
general and prior judgments of the
audit supervisors, rather than specific
current consideration of each
competency.
 The competencies on the appraisal
forms are generally not integrated
well with the values and norms of the
auditor trainees.
Page 57 of 69

ip
Citation Aspects of feedback Purpose
cr
investigated
Ashton (1990) Feedback Message - Type Study examines the impact of
financial incentives, performance
us
feedback, and the requirement to
justify one's decision to others on
decision making in an auditing
setting.
an
Bamber et al. (2011) Feedback Message - Method Study investigates the effects of
anticipating one of three methods
of review (electronic, interview or
M
discussion) on preparer
accountability and performance.
ed
pt
ce
Belkaoui and Picur (1987) Feedback Source - Identity Study examines the nature of CPA
Feedback Message - Type work information environments
regarding sources, types and
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reliability of information received.
t
Research Key research findings
method
Experiment  When outcome feedback is present
with no decision aid the accuracy of
subjects is greater than those with
neither feedback nor a decision aid.
 When a decision aid is present,
outcome feedback has no effect on
accuracy.
Experiment  Each method elicits high levels of
accountability, but an electronic
review elicits significantly greater
accountability than an interview.
 Accountability has both direct and
indirect effects on performance and
documentation.
 Anticipation of an interview results in
the detection of more conceptual
errors than anticipation of either an
electronic review or discussion.
 Results differ from Brazel et al. (2004),
suggesting the differences in task play
a role on the method of review that
will increase accountability.
Survey  Referent and appraisal information
originate from different sources, which
vary in their degree of
informativeness.
 Different information sources in a CPA
firm are perceived as providing
information with different reliability
levels, with the supervisor being rated
most reliable for both referent and
appraisal information.
Page 58 of 69

Citation
Bonner and Walker (1994) Feedback Message - Type
Brazel et al. (2004) Feedback Message - Method
Bryant et al. (2009) Feedback Message - Type
Personal Characteristics
Ac
ip
Aspects of feedback Purpose
cr
investigated
Study examines the effectiveness of
various combinations of instruction
us
and experience (practice and
feedback) in producing knowledge.
an
M
Study examines the effects on
preparers of using two different
ed
methods of review: face-to-face and
electronic review.
pt
Study investigates the effects of
ce
cognitive style and feedback type
on auditors' ability to identify
internal control cues using internal
control questionnaires.
t
Research Key research findings
method
Experiment  Combinations of instruction and no
experience or of instruction and
practice without feedback do not
produce knowledge.
 Practice with explanatory feedback
and any form of instruction creates
gains in knowledge.
 Practice with outcome feedback does
not assist with knowledge acquisition
unless it is preceded by
"understanding rules", but not with
"how-to rules".
Experiment  The method of review affects preparer
effectiveness and efficiency.
 Anticipation of a face-to-face review
produces higher quality judgments,
less reliance on prior year, and more
accountability, but lower task
efficiency, than anticipation of an
electronic review.
Experiment  Cognitive style has no effect on task
performance; however outcome
feedback in conjunction with cognitive
style feedback results in better
performance at detecting out-of-cycle
internal control information than no
feedback or cognitive style feedback.
 Outcome feedback, and the
combination of it with cognitive style
feedback, has a negative effect on the
performance of intuitives, while these
feedback types have an opposite effect
on the performance of sensors.
Page 59 of 69

Citation
Cianci and Bierstaker (2009)
Dalton and Viator (2014)
Ac
ip
Aspects of feedback Purpose
cr
investigated
Feedback Message - Sign Study investigates the effect of
performance feedback and client
us
importance on auditors' self- and
public-focused ethical judgments.
an
M
ed
Feedback Environment Study investigates whether
unfavorable supervisory feedback
environments are associated with
negative job outcomes in the public
pt
accounting profession and whether
mentoring relationships can
mitigate adverse effects of these
ce
environments.
t
Research Key research findings
method
Experiment  Receiving positive (negative) feedback
results in more (less) ethical
judgments in a self-focused task and in
a public-focused task when auditing a
less (more) important client.
 Receiving positive feedback and
auditing a less important client results
in more ethical judgments in both
tasks.
 Suggests auditors are susceptible to
pressure from negative feedback and
client importance, even when the
judgment could have public
consequences.
Survey  Unfavorable supervisory feedback
environments are associated with
lower levels of job satisfaction,
organizational commitment, and role
clarity.
 Mentoring support mitigates the
negative effects of unfavorable
supervisory feedback environments.
Page 60 of 69

ip
Citation Aspects of feedback Purpose
cr
investigated
DeZoort et al. (2006) Feedback Message - Method Study investigates the effects of
varying accountability pressure on
us
auditors' materiality judgments.
an
M
ed
Earley (2001) Feedback Message - Type Study examines novice auditors'
pt
knowledge acquisition by
examining whether providing
explanatory feedback and/or self-
ce
explanation improves procedural
knowledge acquisition.
Ac
Earley (2003) Feedback Message - Type Study investigates the effect of
providing outcome feedback (i.e.,
the correct answer) prior to or
after self-explaining on the level of
reasoning exhibited in self-
explanations, and then the effect of
level of reasoning on performance.
t
Research Key research findings
method
Experiment  Under high pressure (i.e., justification
and feedback) more conservative
judgments are provided, and less
judgment variability exists than lower
levels of pressure (i.e., review and
anonymity).
 Accountability strength is also related
to the amount of time spent on the
task, explanation length, and
consideration of qualitative
materiality factors.
 Use of a planning materiality decision
aid influenced the accountability
effects of the materiality judgment.
These judgments are more
conservative and less variable when
the decision aid was available.
Experiment  Providing explanatory feedback in
summary form improves performance.
 Self-explanation training improves
performance, but it is dependent on an
auditor's level of reasoning.
 No significant difference is noted
between the two methods or by
combining them.
Experiment  In the absence of outcome feedback,
lower levels of reasoning are exhibited
in self-explanations, which then
adversely affect performance.
 Ability to reason is not due solely to
individual differences.
Page 61 of 69

Citation Aspects of feedback
investigated
Fedor and Ramsay (2007) Feedback Source - Attributes
Feedback Message - Sign
ed
pt
ce
Hirst et al. (1999). Feedback Message - Type
Ac
ip
Purpose
cr
Study investigates the effect of
workpaper reviewers' power on
us
workpaper preparers' attempt to
improve their performance,
manage the reviewers' impressions
of their work, and seek additional
an
feedback from their reviewers.
M
Study examines the effect of
different types of feedback on task
learning and judgment accuracy
across different levels of task
predictability.
t
Research Key research findings
method
Survey  Audit review results in attempts to
improve performance and seek
feedback.
 When feedback is negative, attempts
to manage the reviewer's impressions
are also noted.
 Perceptions of a reviewer's power
affect the preparer’s response to the
review. Referent power, reviewers
who make a preparer feel valued, has a
positive effect on all three outcomes.
Reviewer expert power positively
affects feedback seeking, whereas
coercive power, the perceived ability
to punish, has negative effects on
feedback seeking and performance
improvement efforts.
 Power perceptions are different for
auditors compared to administrative
workers. Staff auditors perceive audit
supervisors to have more expert
power, similar referent power, and
less coercive power.
Experiment  Outcome feedback improves judgment
accuracy due to improved task
knowledge and it does not cause
deterioration in judgment consistency
where task predictability is lower.
 The way in which feedback promotes
judgment accuracy depends on the
type of feedback.
Page 62 of 69
 t
ip
Citation Aspects of feedback Purpose Research Key research findings

cr
investigated method
Jiambalvo (1979) Feedback Message - Emphasis Study develops and tests a model of Survey  It is possible to predict the amount of
how the performance evaluation time CPAs direct toward various

us
process affects CPAs' motivation to aspects of their jobs and their
engage in certain classes of job performance on job dimensions using
behaviors. perceptions of effort and reward
relationships and the intrinsic value of

an
Kadous et al. (2013) Feedback Source - Identity Study examines how auditors
weight informal advice depending
on the social bond and advice
the activities.
Experiment  When advice comes from a stronger
social bond advisor, the advice it
weighted relatively heavily and no

M
justification. differentiation is made between better
and worse justified advice.
 Non-specialists fail to objectively
assess the quality of advice, and they

ed
optimistically assess specific attributes
of advice coming from stronger social
bond advisors, inaccurately equating
better and worse justified advice.
pt
 Specialists put less weight on better
justified advice despite assessing its
quality to be higher when it comes
ce

from a stronger social bond advisor.

Ac

Page 63 of 69

Citation Aspects of feedback
investigated
Kida (1984) Feedback Source - Attributes
Feedback Message - Emphasis
Feedback Message - Sign
ed
pt
Lambert and Agoglia (2011) Feedback Message - Emphasis
Feedback Message - Timing
Personal Characteristics
ce
Ac
ip
Purpose
cr
The study examines the evaluation
schemes of audit managers and
us
seniors. It also examines the
interpersonal interactions between
managers and seniors during
meetings on job performance.
an
M
Study examines how two
contextual factors, review
timeliness and review note frame,
influence reviewee follow through
during the “closing notes” phase of
the audit process.
t
Research Key research findings
method
Survey  Seniors emphasize similar dimensions
as managers when arriving at overall
evaluations. However, substantial
disagreement exists at the individual
rater level. Suggesting individual
raters are applying different weighting
schemes.
 Supportive behavior, invitation to
participate and participation in goal
setting are related to the seniors'
satisfaction with the meeting and their
managers, but not to performance
improvement.
 Seniors view managerial criticism as
positively affecting their job
performance if the criticism is directed
at specific job aspects and not the
senior personally.
Experiment  Providing a timely review enhances
reviewee effort.
 Conclusion-framed review notes lead
to higher effort levels than
documentation-framed review notes
when the review is timely.
 Review timeliness and review note
frame interact to affect reviewee
effort.
 Combination of both a timely review
and conclusion-framed review notes
leads to enhanced performance
 Review delays are associated with an
increase in dysfunctional behavior
(i.e., ghost-ticking).
Page 64 of 69

Citation
Leung and Trotman (2005) Feedback Message - Type
Leung and Trotman (2008) Feedback Message - Type
Miller et al. (2006) Feedback Message - Method
Personal Characteristics
Ac
ip
Aspects of feedback Purpose
cr
investigated
Study examines the effect of four
types of feedback (outcome, task
us
properties, cognitive, combined
task properties/cognitive) in
combination with the complexity of
the task (configural or non-
an
configural), on the ability of an
individual to transfer learning to
subsequent tasks.
M
Study investigates the impact of
four types of feedback (outcome,
ed
task properties, cognitive and
combined) on increasing the extent
of configural information
processing by auditors.
pt
Study investigates whether the
addition of discussion of
ce
performance and audit findings to
the review feedback process
enhances preparers' subsequent
performance.
t
Research Key research findings
method
Experiment  Task properties feedback and
combined feedback improves
performance on both tasks.
 Outcome feedback is more effective for
the nonconfigural task, while cognitive
feedback is more effective for the
configural task.
 Combined feedback is particularly
effective in transferring knowledge
across tasks.
 The nature of the task moderates the
effects of different types of feedback.
Experiment  Task properties feedback, cognitive
feedback and the combination all show
increases in configural processing
compared to the no feedback group.
 The level of configural processing is
positively associated with
performance.
Survey  Incorporating discussion of
performance with written review
notes enhances preparers' motivation
to improve performance.
 Experience moderates the effect of
discussion on performance
improvement as perceived by the
reviewer. Discussion improves less
experienced auditors’ performance,
but appears to diminish performance
improvement for more experienced
preparers.
Page 65 of 69

ip
Citation Aspects of feedback Purpose
cr
investigated
Payne et al. (2010) Feedback Message - Method Study examines the effects on
preparers of anticipating a real-
us
time interactive review to the
effects of anticipating receipt of
more traditional written review
notes.
an
M
Pierce and Sweeney (2004) Feedback Source - Attributes Study identifies some of the main
Feedback Message - changes that are perceived by
Frequency auditors to have recently occurred
Feedback Message - Emphasis in their operating environments.
ed
Study investigates the relationship
between dysfunctional behaviors
and environmental variables
pt
including time pressure (budgets
and deadlines) and performance
evaluation (style and frequency of
ce
evaluation).
Ac
t
Research Key research findings
method
Experiment  Interactive review leads to a focus on
more cognitively demanding,
conclusion-oriented audit procedures,
which leads to better performance in
identifying a trend that is indicative of
fraud.
 Finds no evidence that dysfunctional
behavior strategies operate under the
less structured interactive review to
compromise audit performance.
Survey  Dysfunctional behaviors are
significantly related to time pressure
and performance evaluation
(specifically style and frequency of
evaluation).
 Perceived tightness of time budgets
and their perceived importance to
performance evaluation have
decreased in recent years.
 "Effort put into the job" and ability to
communicate are reported to be
growing in importance in evaluating
the performance of auditors.
 A non-accounting style of evaluation is
significant in explaining quality-
threatening behavior, whereas a
significantly higher under-reporting of
time is reported by respondents who
reported a budget-oriented style of
evaluation.
 When performance is evaluated after
each assignment significantly lower
dysfunctional behaviors are reported
than when performance is evaluated
less frequently.
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Citation Aspects of feedback Purpose Research Key research findings

cr
investigated method
Schaefer (2013) Feedback Source - Identity Study examines factors that affect Experiment  The social costs of seeking advice
when auditors seek advice, to impact the advice strategies that

us
whom auditors go to for advice, auditors use.
and how they present audit issues  Auditors' concerns to protect and
to the advisor. defend their egos/images can cause
them to avoid pushing issues up to the

an
manager. However, firm's internal
quality review process mitigates these
behaviors.
 Internal quality review mitigates

M
Shankar and Ng (2008) Feedback Message - Emphasis Study examines whether and how
auditors’ use of advice is jointly
social pressures to encourage proper
advice seeking.
Experiment  When the client’s attitude is to use the
most appropriate accounting methods

ed
affected by the performance to enhance financial reporting quality,
evaluation focus of superiors and neither the advice direction nor
preferences of the client. performance evaluation focus
influences auditors’ decisions.
pt
 When the client believes that they
should be able to use any accounting
methods as long as they are acceptable
ce

under generally accepted accounting

principles, auditors’ decisions are
significantly influenced by advice
direction when the performance
Ac

evaluation focus is on demonstrating

technical expertise than on building
client relationships.
 When the advice recommends not
supporting (supporting) the client’s
method, auditors are less (more) likely
to accept the client’s method when the
performance evaluation focus is on
demonstrating technical expertise
than on building client relationships.

Page 67 of 69

ip
Citation Aspects of feedback Purpose
cr
investigated
Stefaniak and Robertson Feedback Source - Attributes Study investigates the effects of
(2010) mistake significance and superiors'
us
historical reactions to mistake
admissions on the likelihood that
staff auditors will admit mistakes.
an
Sweeney and Pierce (2004) Feedback Source - Attributes Study investigates control system
Feedback Message - Emphasis variables (time pressure,
M
participation, and style of
evaluation) shown to be related to
quality threatening behavior in
audit firms.
ed
pt
ce
Ac
t
Research Key research findings
method
Experiment  Auditors are more likely to admit
errors when their superiors have
reacted positively, regardless of error
significance.
 Auditors are less likely to admit
apparently insignificant errors when
their superiors have reacted
negatively to prior mistakes.
Field Study  Style of evaluation moderates the
association between time pressure
and quality threatening behavior.
 High levels of time pressure are more
likely associated with high levels of
deliberate quality threatening
behavior when a target-constrained
style of performance evaluation is
used. Conversely, high levels of time
pressure are more likely to be
associated with low levels of
deliberate quality threatening
behavior when a profit conscious style
of evaluation is used.
Page 68 of 69

ip
Citation Aspects of feedback Purpose
cr
investigated
Wright (1980) Feedback Message - Emphasis Study examines the performance
Feedback Message - evaluation process for staff
us
Frequency auditors.
Specific areas of investigation
include performance criteria,
an
reliance on engagement
evaluations for salary and
promotion decisions, approaches to
dealing with appraisal difficulties
M
and experimentation with
alternative evaluation techniques.
ed
pt
Wright (1982) Feedback Message - Emphasis Study examines the validity of
ce
senior auditors' engagement
evaluations in assessing the
performance of staff auditors, in
terms of (1) the weights attached
Ac
by seniors to various performance
criteria compared to normative
weights, and (2) their consensus
and self-insight.
t
Research Key research findings
method
Field Study  Study identifies descriptions of strong
and weak performers and the
perceived importance of performance
criteria.
 All firms indicate engagement
evaluations are the most important
factor considered to appraise staff
auditor performance.
 There is diversity in how frequently a
staff's overall performance is
discussed.
 Nontraditional forms of feedback are
not used (i.e., upward feedback, self-
reviews, peer reviews).
 Considerable diversity exists in
content of engagement evaluation
forms.
 Widely different philosophies exist on
the role and importance of the
engagement review process.
Experiment  Technical ability is the major cue
relied on for evaluating staff auditor
performance.
 Ability to meet time budgets is not a
significant criterion seniors rely on to
evaluate performance.
Page 69 of 69