Research pick: The sound of finance - "Silence is golden? Disclosure of critical audit matters and auditors’ perception of due professional care"

Research in the International Journal of Accounting, Auditing and Performance Evaluation raises important questions about how auditors communicate complex professional judgements. A team at Shandong University of Finance and Economics in China found that subtle differences in disclosure style can significantly influence perceptions of auditors’ diligence and competence.

This study follows recent reforms in international auditing standards: the mandatory inclusion of Critical Audit Matters (CAMs) in audit reports. CAMs are meant to highlight areas of greatest complexity or judgement during an audit, issues requiring scrutiny or posing reconciliation challenges. However, while auditors must describe these matters, current standards don’t require them to offer a conclusive evaluation or opinion within CAMs. That decision is left to the auditor’s discretion.

Drawing on psychological theory and professional norms, the research explored whether including a conclusive evaluation in CAMs affects how others perceive an auditor’s professional care, a core principle involving diligence, prudence, and competence.

Through a controlled experiment with auditors at different career stages, the researchers observed a consistent pattern: CAMs that avoided definitive conclusions were viewed as demonstrating higher professional care. Conversely, including conclusive evaluations, such as stating a complex valuation was sound, was seen, especially by experienced auditors, as a lapse in cautious professionalism.

The explanation lies in social norms theory, which holds that individuals are judged not just on actions, but on how well those actions align with expectations. In auditing, restraint and prudence are valued over assertiveness, particularly amid ambiguity. This preference for discretion is especially strong in China, where indirect expression is a cultural norm.

Experienced auditors appeared particularly attuned to these norms. Their scepticism toward definitive CAMs suggests that professional maturity brings heightened awareness of how even slight deviations from tradition can affect credibility. Novice auditors, less familiar with these unwritten rules, showed milder reactions.

The findings have global implications. They reveal tension between formal standards and informal expectations. While conclusive CAMs are technically allowed, the profession may view them unfavourably. Regulators may need to clarify when such assertiveness is appropriate or best avoided.

For companies, the study highlights the need for technically skilled auditors who also grasp the communicative nuances of their role. As audit quality faces growing scrutiny, how findings are framed may matter as much as the findings themselves.

Han, D. and Guan, Y. (2025) ‘Silence is golden? Disclosure of critical audit matters and auditors’ perception of due professional care’, Int. J. Accounting, Auditing and Performance Evaluation, Vol. 21, No. 5, pp.1–17.