While crises in the financial sphere are commonly understood as failures of auditors and signs of the collapse of the neoliberal system, recent accounting studies have shown how these crises paradoxically strengthen neoliberalism and the position of auditors in society. This paper focuses on this paradox, which in previous studies has been explained with the mythical self-reinforcement of neoliberalism through the scapegoating of auditors (and sometimes other governing actors) in moments of crisis to re-establish order and make the audit profession ‘sacred’. Mobilising the Girardian mythography of the gospels, the present paper provides an alternative account to the scapegoating explanation. The analysis of a spectacular financial debacle (HQ Bank in Sweden) reveals how support from powerful allies as well as the referral to the financial market, as a supra being that transcends (i.e. acts upon) all social actors, saved the accused auditors from being scapegoated and gave auditing the position of an indispensable mediator between the capital market and social actors. Through their mediation, auditors push social actors to act in bad faith (i.e. to lie to themselves about the futility of their agency against a capital market that ultimately decides) to allow the calculative activities to continue to make sense. Based on this study, (i) the ability of auditing to represent is viewed as being conditioned by the creation of imaginary spaces for representation, and (ii) the resilience of neoliberalism can be explained by its ability to incite individuals to act in a kind of bad faith, which paradoxically strengthens their faith in its promises about a better future. 

This study follows a lawsuit against the managers, some board members and the auditor of a collapsed Swedish bank. While the managers and board members were prosecuted because they did not comply with accounting rules (IAS/ IFRS) and misrepresented the bank’s accounting numbers, the auditor was accused of not honouring his audit promise to provide assurances about the accuracy of accounting numbers. The analysis of the defence of the bank’s auditing against this prosecution draws upon Dupuy’s (2014) theory that explains the role of time in self-reproduction and shows how auditors respond to a claimed audit failure and rehabilitate their role by exploiting a certain dissonance in terms of time; that is, the time that ensued between [the regulatory spaces of] accounting and auditing after the adoption of the principle of fair value. The present study provides two main contributions to the audit literature: 1) it highlights the opportunity this ‘time gap’ offers to auditors to defend themselves in a self-reproductive fashion when auditing is deprived of [some of] its essentials (i.e. the expectation gap and the ‘obscure’ audit process), 2) it proposes a theorisation that makes possible reconciliation of the verifiability and auditability theses by representing auditing as an enactable potentiality conditioned by the faith of the other (i.e. the auditee) in the judgement of the auditors.

Based on in-depth interviews with auditors, this paper contributes to the studies on the social constitution of auditing and the production of comfort by focusing on how auditors craft knowledge in an audit engagement. By viewing the auditor as an author, actor and audience of and in the audit engagement, we show how knowledge of an auditee’s accounting is produced through a process that involves the creation of an imaginary space for the representation of the auditee’s accounting in the audit plan; the performance of real actions that determine the existence of the audit object, its occurrence and its conformity with standards; as well as an inference into an audit opinion that is enabled by the unity of the audit’s logical sequence of actions and the emergence thereby of a clear and essential representation of the auditee’s accounting. Following Aristotle’s Poetics, we characterise this process as one of artistic imitation and the creative discovery of knowledge. Taking this view, we also revisit the audit comfort theory and propose a third way between the realist and constructivist perspectives on auditing.