Audit Negotiations: The Effect of Communicating Involvement of the Professional Practice Department and Auditor-Type on Negotiated Outcomes

• In Event: Continental Breakfast and Research & Education Forum
  In Roundtable Session: Table 1: Auditor Negotiation

Abstract

Auditor-Client negotiation about difficult client accounting issues involves the auditor, the client, and various other parties. On the auditor side, the Professional Practice Department (PPD) is reported to play a significant role in the financial reporting process. In this study, I investigate the financial and relationship outcome of communicating the involvement of the PPD in the context of two other variables found to be important within the continuing auditor-client relationship, auditor type and CFO preferred auditor-type. 154 highly experienced CFOs participated in the study and results indicate authoritatively communicating the PPD’s involvement had mixed effects on CFOs willingness to adjust the financial statements, depending on the type of auditor paired with. CFOs reported less satisfaction when authoritative influence tactics were used. Furthermore, CFO’s preference for auditor-type significantly affects both their willingness to adjust the financial statements and their satisfaction with the auditor. Implications of these results are discussed.

Author

• Carolyn MacTavish, Wilfrid Laurier University