THE EFFECT OF POWER DISTANCE ON CONTROL RISK ASSESSMENT AND AUDIT SAMPLE SIZE: A CROSS-CULTURAL STUDY OF SAUDI AND UK AUDITORS

Abstract

This study examines how power distance, a cultural dimension indicating the acceptability of hierarchical authority, affects auditors' control risk assessments and related audit sample decisions. A scenario-based survey utilizing Hofstede’s framework was administered to 475 professional auditors from Saudi Arabia and the United Kingdom. Participants assessed a standardized audit case, evaluated internal controls, and established a suitable sample size. The findings indicated that Saudi auditors, indicative of a high-power distance culture, assessed lower control risk and opted for smaller sample sizes, implying more confidence in client-supplied controls. Conversely, the assessments of British auditors were more uniform and less swayed by cultural norms. Although Saudi auditors modified their testing in accordance with control risk assessments, this trend was not evident among British auditors as a whole. Among younger UK auditors (aged 25–30), those who perceived weaker controls opted for bigger samples, indicating early-career compliance with standards. Path analysis shown that control risk assessment strongly mediated the relationship between power distance and sample size decisions in the Saudi sample, but not in the UK sample. These findings highlight the indirect influence of cultural hierarchy on audit judgments and advocate for the incorporation of cultural awareness into international audit training and practice.