A Comparison of Organizational Structure, Job Stress, and Satisfaction in Audit and Management Advisory Services (MAS) in CPA Firms

Article excerpt

Since the late 1970s the Management Advisory Services (MAS) has expanded, establishing itself as an important and separate function within many CPA firms. MAS usually performs diversified, management consulting services such as information systems, employee compensation, control systems, and computer applications. Audit and MAS, as two separate units within one accounting firm, are perceived as having both a competitive and cooperative relationship. They are fundamentally different in employees' task orientation, services provided and professional background. Consequently, the structural orientations and operating mechanisms in these two functional departments are expected to be different. This creates a serious adaptation problem for predominantly Audit-oriented organzations in terms of power distribution, differentiation, and motivational approaches.

This study focuses on the influence of stress and task characteristics on an organizationally desirable outcome such as job satisfaction in audit and MAS functions in large accounting firms. Most of the literature on the subject has been limited to examining these phenomena separately (Zeist, 1983; Kerr et al., 1974; Zanzi, 1987; Bedeian and Armenakis, 1981; House and Rizzo, 1972) with little or no attention to the aggregate impact of structure on stress and job satisfaction.

Tasks performed in Audit and MAS are very different. In Audit, the auditing process is subjected to public accountability and stringent external controls through FASB, SEC, and other regulating agencies. In contrast, MAS tasks are controlled through private contracts and self-regulation. Rule orientation and associated task predictability in Audit dictate a different "structural fit" than in MAS.

Differences in structural orientations in various functional areas within a business unit were studied by scholars in the past. Burns and Stalker (1961), Lawrence and Lorsch (1967) and Pugh et al. (1963, 1969) observed that production, marketing, and research functions within the same manufacturing organization have different structural orientations. It was observed that production was relatively more mechanistic while research was more organic. Public accounting, however, differs from manufacturing. In manufacturing, the functional units are interrelated and are dependent on each other. In public accounting, both Audit and MAS are independent revenue generators and, in most cases, are functionally independent. This suggests that structural orientations in these two functional units have a varying degree of tolerance for ambiguity as stress generators. Ultimately, the impact of structural orientation on job satisfaction can be expected to differ due to the varying degrees of stress associated with MAS and Audit.


The literature in strategy and structure suggests that Audit and MAS are likely to differ in their organizational structures since they are exposed to different product and market strategies. MAS needs continual product and market development, and it encourages managers to become aware of potential market opportunities. In Audit, product development is limited and market expansion does not hinge on product innovation. In general, we can postulate that MAS assumes a "prospector" type strategic orientation whereas Audit traditionally acts as a "defender" type (Miles and Snow, 1978).(1) This difference in strategic posture between Audit and MAS should produce different organizational structures within them. It may be noted that the relation between structure and strategy is well established in the literature (Galbraith and Nathanson, 1979; Rumelt, 1974; Chandler, 1962). Zanzi (1987), in a study of CPA firms, confirmed the organic orientation of MAS compared to a more mechanistic tendency in Audit.

Studies in organizational behavior support the position that organizational structure affects performance, employee satisfaction, and job related stress. …


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