Audited financial statements can be viewed as the product of negotiations between a company's management and its auditor. Relative power of these two parties is a major factor that determines the outcome of the negotiation. This study examines the impact of auditor tenure, importance of a client to an audit partner, nonaudit purchases, and prior audit firm experience of client personnel on client perceptions about their ability to persuade the auditor in the context of an accounting disagreement. We obtained responses to a survey from 124 CPAs in industry who are employed as CEOs, CFOs, controllers, or treasurers. Our results indicate that respondents from companies with short auditor tenures were somewhat more likely to indicate that they could persuade the auditor to accept their (client's) position in case of a disagreement. This finding is consistent with the argument that auditors are susceptible to influence in the early years as they are still in the process of recouping start‐up costs, but is not consistent with concerns expressed by legislators and others that long auditor tenures will adversely affect audit quality. Respondents who believed their business was more important for the audit partner were also more likely to believe that they could persuade the auditor. However, the purchase of nonaudit services and prior audit experience were not related to client's perceptions about their ability to persuade the auditor.
Skip Nav Destination
Article navigation
1 February 2004
Research Article|
January 01 2004
Clients' Expectations on Audit Judgments: A Note
Venkataraman M. Iyer;
Venkataraman M. Iyer
University of North Carolina at Greensboro.
Search for other works by this author on:
Dasaratha V. Rama
Dasaratha V. Rama
Florida International University.
Search for other works by this author on:
Online ISSN: 1558-8009
Print ISSN: 1050-4753
American Accounting Association
2004
Behavioral Research in Accounting (2004) 16 (1): 63–74.
Citation
Venkataraman M. Iyer, Dasaratha V. Rama; Clients' Expectations on Audit Judgments: A Note. Behavioral Research in Accounting 1 February 2004; 16 (1): 63–74. https://doi.org/10.2308/bria.2004.16.1.63
Download citation file:
Pay-Per-View Access
$25.00