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Management control in professional service firms - A control package in audit companies

Kästle, Alexander LU and Huber, Henrik LU (2012) BUSN68 20121
Department of Business Administration
Abstract
Management control in professional service organizations is fundamentally different from the control in classical industrial and producing corporations. This is mainly due to the special context a professional service firm has to face, as the value creation is knowledge intensive, demands a high level of education, and the professional employees have different expectations concerning their work. Hence, customized control tools have to be applied in professional service firms. Malmi and Brown (2008) provide a general management control package, which shall be applied to the context of professional service firms and auditing in particular.
The aim of this master thesis is a detailed analysis of the management control package in audit... (More)
Management control in professional service organizations is fundamentally different from the control in classical industrial and producing corporations. This is mainly due to the special context a professional service firm has to face, as the value creation is knowledge intensive, demands a high level of education, and the professional employees have different expectations concerning their work. Hence, customized control tools have to be applied in professional service firms. Malmi and Brown (2008) provide a general management control package, which shall be applied to the context of professional service firms and auditing in particular.
The aim of this master thesis is a detailed analysis of the management control package in audit firms. The data collection was done via a two-step approach, which comprised a questionnaire as one part, while interviews were also accomplished. The final sample consists of five office managers or senior auditors within large audit firms in the region of Skåne in Southern Sweden. Additionally, a former CEO of a big4 company is contacted in order to gain detailed information about auditing from a top-management point of view.
Concerning the findings, it can be stated that the most important tools within the control package in audit firms are ‘organizational structure and procedures’, ‘budgeting’, ‘performance evaluation’, and ‘cultural control’. In contrast to previous literature which argued for an increasing use of ‘cultural control’, this study reports the maintained importance of ‘cybernetic controls’. This includes budgeting as a main tool for the management control package in audit firms, while ‘cultural tools’ are important but still of a supportive function. (Less)
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author
Kästle, Alexander LU and Huber, Henrik LU
supervisor
organization
course
BUSN68 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
audit firm, management control package, professional service firm, cultural control, cybernetic control
language
English
id
2544469
date added to LUP
2012-06-21 09:14:00
date last changed
2012-06-21 09:14:00
@misc{2544469,
  abstract     = {Management control in professional service organizations is fundamentally different from the control in classical industrial and producing corporations. This is mainly due to the special context a professional service firm has to face, as the value creation is knowledge intensive, demands a high level of education, and the professional employees have different expectations concerning their work. Hence, customized control tools have to be applied in professional service firms. Malmi and Brown (2008) provide a general management control package, which shall be applied to the context of professional service firms and auditing in particular. 
The aim of this master thesis is a detailed analysis of the management control package in audit firms. The data collection was done via a two-step approach, which comprised a questionnaire as one part, while interviews were also accomplished. The final sample consists of five office managers or senior auditors within large audit firms in the region of Skåne in Southern Sweden. Additionally, a former CEO of a big4 company is contacted in order to gain detailed information about auditing from a top-management point of view. 
Concerning the findings, it can be stated that the most important tools within the control package in audit firms are ‘organizational structure and procedures’, ‘budgeting’, ‘performance evaluation’, and ‘cultural control’. In contrast to previous literature which argued for an increasing use of ‘cultural control’, this study reports the maintained importance of ‘cybernetic controls’. This includes budgeting as a main tool for the management control package in audit firms, while ‘cultural tools’ are important but still of a supportive function.},
  author       = {Kästle, Alexander and Huber, Henrik},
  keyword      = {audit firm,management control package,professional service firm,cultural control,cybernetic control},
  language     = {eng},
  note         = {Student Paper},
  title        = {Management control in professional service firms - A control package in audit companies},
  year         = {2012},
}