An Examination of Trust and Distrust in Auditor-Client Relationships

• In Event: Auditor-Client Relationships & Interactions

Abstract

The auditing literature generally conceptualizes trust and distrust as opposite poles of a unidimensional construct. However, research in management suggests that trust and distrust are related, but functionally distinct. We contend that this two-dimensional approach is appropriate for examining trust and distrust in auditor-client relationships. One factor that may influence auditors’ feelings of trust and distrust toward their clients is the receipt of client-provided evidence that is inconsistent with prior evidence obtained. We conduct an experiment to test whether the timing of inconsistent evidence influences audit effort by affecting the levels of trust and distrust that auditors feel toward client management. Results suggest that auditors who receive an inconsistent representation earlier in a series of client interactions plan significantly less audit effort than do auditors who receive the inconsistent representation later. Results further reveal that feelings of distrust (trust) drive planned audit effort when inconsistent evidence is received earlier (later).

Authors

• Erin Michelle Hawkins, University of South Carolina

• Joel Owens, University of Nebraska-Lincoln