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The Role of the Regulator in Shaping Audit Firm Culture and Work Quality

The Role of the Regulator in Shaping Audit Firm Culture and Work Quality

by Stephen Scott, Mark Cooke

Dec 01, 2021

Thoughts

Regulators play a unique and critical role in helping to maintain trust in firms, markets, economies and nations. At a time when trust in many of our core institutions is lacking, the role of the regulator becomes all the more essential. And this is particularly so for the overseers of the financial and audit industries. 

With some 80 percent of the market capitalization of the S&P 500 made up of intangible value, trust in a company’s brand is a critical corporate asset. Firm culture is viewed as an essential contributor to the value of that asset (Elsten and Hill, 2017). Poor culture — and the poor conduct that invariably results — is now seen to represent an ‘intangible risk’ to a firm, with very tangible negative effects on firm valuation.

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