This paper examines the use of an apology for conducting a deficient audit that indirectly leads to an audit failure. Audit failures can be costly to accounting firms in terms of litigation costs and reputational harm. These costs are potentially much higher when the audit failure stems from a deficient audit. Using an experiment, I test whether the use of an apology containing various components (expression of sympathy, acceptance of responsibility, and/or promise to refrain) is beneficial or harmful to an accounting firm. The results of the experiment reveal that only one component, the expression of sympathy, has a significant effect on participant assessments of punishment. On the other hand, combining all three apology components leads to a significantly higher perception of the accounting firm's reputation.

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