An Analysis of Expectation Gaps between Members of the Board of Directors and Auditors Regarding Attributes Influencing Clients’ Auditor Choice Decisions

• In Event: The Influence of Management and Boards on Audit Judgment and Processes

Abstract

This paper reports the results of a survey of board members and audit firm partners and managers on attributes influencing clients’ auditor choice decisions. Based on data from 32 board members and 33 audit firm partners and managers, we find several “expectation gaps” between the importance that board members assign to attributes and the importance that auditors expect board members to assign to the same attributes. The results indicate that board members deem low audit fees, as well as a good relationship with the audit partner to be less important than audit partners and managers expect. We find the opposite for auditor independence and audit quality, which board members assess as more important than audit partners and managers expect. The findings have important implications for auditors, auditees and regulators.

Authors

• Martin Schmidt, ESCP Europe

• Francis Goddard, ESCP Europe