Auditing Standard Setting: A Process Framework

Auditing standards play an important role in shaping audit practices. Drawing on prior academic and practitioner auditing literature and the process-oriented legitimacy typology from financial reporting research, we develop an input-process-output framework of auditing standard setting. We refine this framework using interview data from 28 highly experienced auditing standard setters. Our results shed light on how auditing standard setters’ characteristics and perspectives (inputs), as well as their activities, decisions, challenges, and interactions with key financial reporting stakeholders (processes), influence the development and revision of auditing standards (outputs). We also provide insights into how some inputs and processes are aimed at (1) producing auditing standards with characteristics that standard setters consider important and (2) contributing to the legitimacy of auditing standards and the standard setting boards. JEL Classifications: M42.