The Effect of the Method of Auditor/Client Interaction on how Supervisors’ Views and Clients’ Views Influence Subordinates’ Judgments

• In Event: External Auditor Judgment and Decision Making

Abstract

Extant literature indicates that less experienced staff auditors’ judgment can be influenced by both their client’s preferences and their supervisor’s preferences. Prior research in this area focused on how these preferences affected auditors’ judgment. However, none of these studies examine how the main method of auditor/client interaction influences these preferences. This is surprising given that research on electronic communication has suggested that it causes people to feel more comfortable expressing their thoughts and opinions (Ho and McLeod 2008) and research in auditing suggests auditors are more likely to request audit evidence when doing so via e-mail (Bennett and Hatfield 2011). This study examines the effect of the method of auditor/client interaction on how supervisors’ preferences and clients’ preferences influence staff auditor judgments. To address our research question, we first interviewed auditors to verify that a proportion of their work with clients is conducted via e-mail or other electronic communication versus face-to-face meetings. We found that it is, and that they believe that this portion will only increase in the future. We then conducted a pilot experiment in which graduate auditing students, as proxy for staff auditors, were asked to make an inventory obsolescence decision. We manipulated how the auditor typically interacts with the client (e-mail versus face-to-face) and whether or not the partner has given his/her preferred conclusion. Although the size of the pilot sample was small, our preliminary results indicate that participants interacting through email with the client made judgments more compatible with the client’s preferred conclusion, compared to participants interacting face-to-face with the client. A full experiment will be conducted to test the hypotheses of our study.

Authors

• Mohamed Gomaa, hofstra university

• Deb Sledgianowski, Hofstra University

• Christine Tan, Fordham University