Strategies to implement for a healthier firm culture that attracts and retains audit talent.
Culture is the underpinning of an organization, impacting everything from day-to-day operations to customer service to talent retention. Audit firm culture is no exception.
“Like any private business, audit firms aim to make a profit. Audit firm leaders — with the tone they set and the culture they foster — are responsible for ensuring that their professionals maintain independence, integrity, and professional skepticism as they also pursue growth and profitability of their audit firms,” the Public Company Accounting Oversight Board (PCAOB) states in its 2024 Insights on Culture and Audit Quality report.
In fact, the PCAOB identified a clear link between audit firm culture and a firm’s ability to deliver a quality audit, which is likely no surprise, especially when considering broader, global workplace insights.
According to global research by the Society for Human Resource Management (SHRM), 57% of those who rated their organizational culture as poor stated that they were actively or would soon be looking for another job.
Among those employees in unfavorable workplace cultures, the top-cited reasons for leaving, according to SHRM’s The State of Global Workplace Culture in 2024, were:
- Poor management (54%)
- Unfair treatment (54%)
- Inadequate pay (54%)
- Lack of empathetic leadership (47%)
- Insufficient regard for employee well-being (47%)
So, what exactly is culture, and why is it so important? Corporate culture, which naturally develops over time through the traits of leaders and staff, is an organization’s shared practices, ethics, and values. It determines how leaders and staff interact, perform their work, and serve clients. In addition, it impacts everything from day-to-day operations to staff retention, customer service, and reputation. This makes an organization’s culture extremely important.
According to SHRM’s analysis of the global data, five key drivers surfaced as the foundation of positive workplace cultures. These include:
- Honest and unbiased management
- Civil behavior
- Meaningful work and opportunities
- Open communication
- Empathy
As an audit firm manager or leader, you may be wondering what this means for your firm and your firm’s audit quality. What makes a good audit firm culture? To help audit firm managers and leaders successfully cultivate a healthy audit firm culture, we will address these questions and more.
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Impact of audit firm culture on audit quality
What makes a good audit firm culture
Remote and hybrid work policies
A healthy firm makes for healthy client relationships
Impact of audit firm culture on audit quality
Year-over-year increases in audit deficiency rates, which culminated in a Part I.A deficiency rate of 46% during PCAOB’s 2023 inspection cycle, prompted the PCAOB to investigate whether an audit firm’s culture contributed to the firm’s ability to deliver a quality audit.
Part I.A of PCAOB inspection reports identify any deficiencies that indicate the audit firm did not obtain sufficient appropriate audit evidence to support its opinion.
The findings were clear: an audit firm’s ability to deliver a quality audit is influenced by the firm’s culture.
“Culture is crucial at audit firms, since it lays the foundation for the work auditors perform in our capital markets,” said PCAOB Chair Erica Williams, who encouraged firms to “double down on their efforts to create cultures that reward integrity, accountability, and strong performance of audit work.”
Consider the following impacts that audit firm culture can have on the quality of audits:
- Centralization and standardization: When firms establish centralized and standardized processes, this helps ensure consistent application. This results in fewer deviations in auditors’ procedures and fewer deficiencies.
- Accountability: It is important for firms to cultivate a culture of accountability. This means that negative audit events (e.g., restatements, external and internal inspection deficiencies, independence violations) are thoroughly evaluated and properly attributed to the firm’s personnel. Sufficiently addressing errors when they occur helps mitigate audit risk.
- Messaging: Mixed messages from firm leadership can impact audit quality, especially if leadership communicates one thing yet rewards another. Therefore, it is important to ensure that the factors driving adjustments to partner compensation align with behaviors that promote audit quality. Furthermore, this must be clearly communicated to firm personnel.
- Ethical conduct: A strong ethical culture fosters an environment in which auditors are encouraged and guided towards impartial judgment and unwavering integrity. In turn, auditors feel more empowered to exercise professional skepticism and to speak up if they have concerns.
Following the PCAOB’s findings and recommendations, audit deficiencies showed some signs of improvement in 2024. According to a more recent PCAOB report issued in 2025, the aggregate Part I.A deficiency rate decreased to 39% in 2024, down from 46% in 2023.
The PCAOB noted that, based on its more recent inspections and dialogue with firms, several improvements were evident. For example, improvements by larger firms included:
- More in-person work: Firms continued with policies requiring engagement teams to work on-site together for a portion of their work week.
- More focused training: Firms increased the training of less experienced staff.
- More resources: Firms strengthened national office resources dedicated to audit quality.
- Better supervision and review: Firms implemented programs or policies to increase supervision and review.
What makes a good audit firm culture?
As previously mentioned, a good audit firm culture is rooted in strong ethics, integrity, consistency, and a positive and cohesive work environment. It is also imperative that firm leadership sets the tone at the top and leads by example.
Elizabeth Davis, CPA, specialist editor at Thomson Reuters, agreed and said it is also beneficial to have resources and processes in place to help drive talent development. This has a positive impact on staff morale, staff engagement, and improves productivity and retention rates.
Reflecting on her own experience working at an audit firm, Davis said, “My firm was really big on setting up team members to drive your own career. They had some tools in place where you could set your own goals, think about where you wanted to be and when, and let you move at your own pace.”
Added Davis, “There was a really great coaching and mentor process that they had in place that you could use at your discretion.”
Davis outlined several other ways firm leaders and managers can empower staff and create a positive audit firm culture. These include:
- Promoting a healthy work-life balance and ensuring that firm leaders and managers set an example. This could involve having good PTO policies in place, encouraging downtime after stressful deadlines, and creating opportunities for team-building and social interaction to help strengthen relationships among staff.
- Encouraging openness to new ideas, new practices, and feedback from staff at all levels within the firm. Ensuring that associates feel valued, recognized, and heard — even if they have challenging questions for upper management — helps create a positive and trusting work environment.
- Fostering transparency and communicating the reasoning behind any changes made to auditors’ work. When staff members have a clear understanding of the purpose of any changes made to their work, they can avoid those mistakes in the future and ultimately improve outcomes.
Remote and hybrid work policies
Given advancements in technology, such as cloud-based solutions and data-sharing platforms, some auditors can work remotely, at least part of the time. For audit firms that choose to adopt remote and hybrid work environments, it is essential to have a well-defined and intentional remote policy.
What does this mean? This involves developing a clear roadmap of how the audit team will operate and making sure that everyone within the firm understands the expectations. Factors to consider when establishing remote and hybrid work policies include, but are not limited to:
- Which processes, sites, and activities can be audited remotely?
- What is the availability of both staff and clients? And be sure to set those guidelines.
- Which technologies will be used and how will they be used in areas like document reviews, site reconnaissance, and remote interviews?
- What are the security and privacy protocols for any software that may be used?
- What are the best methods for facilitating communication between team members (e.g., email, instant messaging, video calls)?
When managing a remote audit team, it is important to provide managerial support and promote well-being to help maintain a healthy audit firm culture. Again, set the tone at the top and lead by example.
Davis agreed and noted that, if a firm has a mix of remote and on-site staff, it must be intentional in fostering an all-inclusive culture and ensuring that remote staff members feel included. This could involve having everyone on camera during calls, or establishing activities or committees to address and promote inclusion of remote workers.
Competitive benefits
The employee benefits that a firm offers can also impact firm culture. Firms that offer competitive benefits are likely to experience higher employee engagement, morale, productivity, and improved retention rates.
According to the Thomson Reuters Institute 2024 Audit Survey Report, more than half (58%) of audit firms said attracting and hiring skilled professionals was a top challenge. 41% of respondents identified retention of staff as the second-highest challenge.
A 2025 report by the Pennsylvania Institute of Certified Public Accountants (PICPA) emphasized the importance for firms to move beyond traditional compensation models to implement “total rewards strategies” that blend salary, professional development, work-life balance, and benefits.
“Our latest findings make it clear: salary alone isn’t enough to attract and retain top talent in today’s market and firms need to be thinking differently about what matters,” said PICPA Chief Executive Officer Jennifer Cryder in announcing the findings. “Holistic compensation strategies that include competitive benefits, flexible work arrangements, and clear career development pathways are critical in today’s world.”
Among the key findings:
- Firms reported an average salary increase of 8% in June 2024, up from 5% in July 2023.
- In response to an increased desire for a better work-life balance, the majority (80%) of firms surveyed allow flex hours outside of core hours, and 76.9% offer flexible work options year-round.
- Offering comprehensive benefits remains a priority. The majority (88.5%) of firms provide medical insurance, 80.8% offer dental coverage, and 73.1% offer vision insurance.
A healthy firm makes for healthy client relationships
An audit firm’s culture can also impact client relationships. There are several reasons why.
Obviously, a deficient audit can erode client trust and even result in the termination of an engagement. However, even if there are no deficiencies, a negative firm culture can still prove damaging.
As Davis explains, “If you, as a partner or a manager, are unhappy and you are grumpy about everything that you are doing, your clients are going to see that and they are going to feel like they are just another burden on a stack of burdens that you have. I think it is really important to, not just think it, but really enjoy what you are doing and demonstrate that we are providing a service that fulfills a need that clients have, and finding the joy in helping them wade through whatever the problem is.”
“They also see how team members interact with one another. We often had team meetings that included the client, and I think it is really important to have good relationships within the team because the client is going to feel the room,” Davis continued. “They are going to read the room and understand those relationships. If you have a manager who talks very condescendingly to staff, the client is going to see that, and it is probably going to create a little bit of an awkward or hostile environment.”
When clients work with a firm that has a healthy environment that prioritizes ethical conduct and respectful behavior among both its staff and clients, this helps strengthen clients’ trust and satisfaction in the work being performed.
Clearly, a firm’s culture has broad-reaching impacts, and, in today’s environment, modern audit practices require a blend of traditional fieldwork and remote capabilities. This is both more efficient and preferable for your staff. To learn more, check out our whitepaper Audit from anywhere: Hybrid and remote work best practices.
