Negative Auditor-Client Interactions—An Exploration of Power Dynamics During Audit Evidence Collection Free

Prior research reports that client management frequently exert control over various aspects of the audit, and that auditors strategically deploy tactics to overcome this control and obtain the client’s cooperation (Guénin-Paracini, Malsch, and Tremblay 2015; Trotman, A. Wright, and S. Wright 2005; Saiewitz and Kida 2018). Most vulnerable to these tactics are staff auditors, who collect a significant proportion of audit evidence (Kachelmeier 2018; Daugherty, Dickins, and Fennema 2012). However, little research qualitatively examines interactions between staff auditors and their clients during the evidence collection process. A recent study by Carlisle, Gimbar, and Jenkins (2023) addresses this gap in the literature by interviewing staff auditors and investigating the extent to which they perceive that client personnel exert control over their evidence collection efforts as well as the tactics auditors use to overcome those efforts.

Staff auditors commonly have less business experience and accounting knowledge than client personnel, are asked to perform tasks under time and budget pressures, and are often made aware of their firm’s commercial interests (Bennett and Hatfield 2013; Hermanson, Houston, Stefaniak, and Wilkins 2016; Malsch and Gendron 2013). Consequently, staff auditors may be vulnerable to compromised operational independence, meaning the audit team may “lose its capability to work with diligence and efficacy” in the execution of their audit work (Guénin-Paracini et al. 2015, 221). Compounding this possibility, research finds that staff auditors are generally less likely to push back against management (Griffith, Hammersley, and Kadous 2015) or alert other members of their audit team to potential audit issues (Kadous, Proell, Rich, and Zhou 2019; Gissel and Johnstone 2017). Therefore, understanding how staff auditors respond to client attempts to impair their operational independence, such as those that obfuscate, delay, or otherwise undermine the audit process, is important.

Carlisle et al. (2023) find that, when staff auditors experience difficult client interactions, they encounter a range of client behaviors that have the potential to undermine evidence collection efforts (i.e., negatively impact the auditor’s operational independence) and, as a result, audit quality. Staff auditors report feeling inexperienced and unprepared for their interactions with client personnel. As a result, staff auditors experience a power imbalance in which clients maintain the upper hand by delaying audit evidence, intimidating the less experienced auditor, and leveraging their knowledge and expertise to undermine the auditor’s confidence. Still, staff auditors deploy various techniques to combat the client’s power. In this paper, we highlight several tactics which threaten audit quality, such as auditors ingratiating themselves to the client, avoiding particular client personnel altogether, and ghost ticking (i.e., documenting a procedure that was not actually completed). Overall, results reported in Carlisle et al. (2023) suggest that audit teams should remain vigilant to attempts by client personnel to undermine evidence collection efforts, particularly in light of our findings that staff auditors may breach ethical boundaries in reacting to difficult interactions by misrepresenting their work (e.g., ghost ticking).

Carlisle et al. (2023) study two research questions by interviewing 22 associate and senior auditors.¹ Refer to Table 1 for interviewee demographics. The first question asks what staff auditors perceive to be the causes of difficult client interactions during the evidence collection process. To answer this question, interviewees were asked to recall a client interaction that did not go well such that it was difficult to obtain the necessary audit evidence or that led to feelings of anxiety. The second research question addresses how staff auditors respond to difficult client interactions during the evidence collection process. To answer this question, interviewees were asked about tactics they used to overcome the difficult interaction. Anticipating that some auditors may avoid difficult interactions with clients altogether, interviewees were asked whether they had either witnessed or engaged in ghost ticking (Lambert and Agoglia 2011; Buchanan and Piercey 2021).

All interviewees were able to recall difficult encounters with clients, the most common of which related to evidence gathering through client inquiry. An analysis of responses revealed three primary sources of power that clients hold over auditors during the evidence collection process. Specifically, there is evidence of clients exerting reward, coercive, and expert power over audit staff (French and Raven 1959; Raven 2008). In response, staff auditors use various tactics to counteract the power imbalance, including power-use tactics, which leverage the existing power dynamics to gain cooperation (e.g., ingratiation), and power-change tactics to decrease the power differential between themselves and their clients (Bacharach and Lawler 1980). This section presents a summary of findings with example quotes provided by interviewees, followed by implications for practice.²

Reward power reflects the extent to which the auditor can be rewarded by the client and how much the auditor believes the client controls these rewards (French and Raven 1959; Raven 2008). For example, auditors depend on clients to provide accurate audit evidence in a timely manner. Interviewees consistently expressed that, in order to complete required audit procedures, auditee cooperation was necessary. Interviewees described instances in which clients did not respond to in-person requests, claiming that the audit evidence had already been provided or that the client did not believe it was necessary or material. Interviewees interpreted that clients ignore emails because they get to “decide what they want to respond to” (A2). Many voiced frustrations with auditees who stymied their work by not cooperating. Clients, therefore, appear to use audit evidence as a means by which to exert reward power. Overall, staff auditors believe that clients exercise control over the audit by choosing not to cooperate with audit requests, and may have opinions about what types of documentation the auditors should receive. See Table 2 for interview quotes that illustrate reward power.

Coercive power refers to how much a client can punish an auditor, or the extent to which an auditor believes that punishment can be avoided by complying with a client’s wishes (French and Raven 1959). Clients often exert coercive power through intimidating behaviors. The majority of interviewees recalled experiences with unfriendly, or outright hostile, clients. Interviewees described interactions that ranged from mild to more extreme cases in which a client was verbally abusive. Client hostilities can become so extreme that the client effectively forces the auditor to conduct a remote audit either by not providing office space, or frequently moving the audit team around the client’s office. Even in instances where auditors are on-site at the client’s office, some reported that clients do not allow them to freely approach client personnel. One auditor recalled overhearing an individual at a client that consistently moved them around from conference room to conference room express their annoyance with their presence saying, “Who do those auditors think they are just taking our conference rooms? Thinking they can go anywhere” (A7).³

Coercive power also manifests in auditors’ concern for client service, due to the client’s ability to punish the auditors by ending their relationship and severing future revenues. As a result, many interviewees referenced the need to “keep the client happy” and “client service” messaging from either their audit firm training or their lead engagement partner. This focus on client service likely fosters an environment in which client personnel feel justified in attending only to requests they deem necessary and responding to the auditor on their own timeline. Interviewees also reported instances in which clients questioned their intelligence or joked about not wanting to engage with them. Ultimately, interviewees seemed resigned to being unable to secure cooperation from difficult clients without damaging the auditor-client relationship, and having to endure potentially abusive behavior to keep the client happy. That is, interviewees felt as if they had to endure unpleasantries to obtain the evidence they needed. See Table 2 for interviewee quotes that illustrate coercive power.

Finally, expert power occurs when a client holds power over the auditor because the auditor believes the client has more expertise (French and Raven 1959). The existence of expert power was frequently demonstrated in responses from interviewees who noted that the client’s knowledge and experience exceeded their own. Age and experience gaps often make staff auditors feel timid, unsure, nervous or anxious when asking about potential errors. Interviewees described feelings of “being thrown to the wolves” (S3) and being surprised at having routine interactions with high-ranking client personnel. Although all interviewees reported receiving formal client interaction preparation from their firm, many believed the training was insufficient. Interviewees also admitted that they did not always have a strong understanding of what they were requesting, a circumstance that may exacerbate the client’s expert power. Table 3 includes interviewee quotes that demonstrate expert power.

Auditors also reported using power-change tactics (e.g., avoidance) to reduce the client’s control over the audit. Avoidance tactics remove the clients’ ability to exert power, but also potentially threaten audit quality if auditors fail to obtain evidence from appropriate client personnel. Interviewees reported using a variety of avoidance tactics, including delaying certain client interactions, using email to avoid face-to-face interactions, or actively avoiding particular client personnel altogether. Almost half of the interviewees said they had intentionally delayed client interactions because of anxiety, difficult prior interactions or a lack of timely responses from client personnel. Table 4 includes example quotes that demonstrate power-change tactics.

Most interviewees admitted to using email communication to avoid face-to-face interactions with clients. One auditor suggested that email is preferable to talking over the telephone to avoid a potentially tense conversation with the client. However, some noted that using email may delay progress if clients opt out of responding. Further, half of the interviewees reported avoiding a specific, difficult individual by going around them and asking for help from others who were thought to be easier to deal with. By seeking evidence from other client personnel, an auditor decreases their dependence on a more difficult client contact, which can improve efficiency. However, failing to fully understand what they should be requesting, or interacting with less knowledgeable personnel to avoid a more difficult client contact, may lead to quality threatening behaviors, such as accepting insufficient evidence as persuasive or missing pertinent information.

Whenever interviewees mentioned using avoidance tactics, they were asked how they completed their work without interacting with client personnel and whether, instead of obtaining all necessary and appropriate audit evidence, they had documented having finished tasks without having actually performed them (i.e., ghost ticking). Nearly half of the interviewees stated they had engaged in the behavior themselves and one-third reported that they were aware of ghost ticking by others. These results suggest that, by not obtaining the evidence, auditors are able to avoid clients altogether, thus limiting the client’s ability to exert heightened power over the auditor.

Over half of the interviewees who acknowledged ghost ticking said it occurs because they believe it is a waste of time to follow-up on items that are unlikely to result in changes to audit documentation. Instead of approaching the client and being seen as an annoyance, interviewees explained that the benefit of leaving the client alone outweighed risks associated with ghost ticking. Nearly half of the interviewees report that ghost ticking arises from the dread of interacting with client personnel, suggesting that auditors who acknowledge this behavior use it as a power-change tactic to reduce the client’s influence over them.

To counteract the power disparity with their clients, interviewees described power-use tactics they employ. One tactic, ingratiation, may be especially threatening to audit quality. Table 5 includes quotes that illustrate this power-use tactic. Interviewees frequently reported the use of ingratiation, such as being nice to the client, developing relationships, and adhering to client wishes. In honoring the commercial interests of their firms, interviewees frequently commented on the importance of clients “liking them.” None mentioned their obligation to external stakeholders. The majority of interviewees reported that a focus on client service is frequently communicated through firm training and internal messaging, creating a culture in which threats to operational independence may go unaddressed.

Commonly used ingratiation tactics included acquiescing to the client’s communication preferences, engaging in extensive small talk, and doing favors for client personnel, all with the goal of garnering cooperation. Ingratiation can take the form of asking clients about their personal lives, flattery, treating client personnel to meals or doing favors for them, and in some cases leads to feelings of inappropriate closeness with the clients. Some auditors even mentioned how they had a friendship or family-like relationship with their client. Although many of the ingratiation tactics and behaviors that auditors described may simply be viewed as being a nice person, the central question that the AICPA’s Code of Professional Conduct puts forth is whether a reasonable and informed third party would perceive the auditor as independent (AICPA 2024).

Carlisle et al. (2023) conducted interviews to better understand staff auditors’ difficult client interactions. They observed various causes of these difficult interactions, including client personnel exerting control over the audit through unfriendly and hostile behaviors and auditors feeling inexperienced and unprepared for client interactions. They organized and explained their findings through the theoretical lens of power and power tactics (French and Raven 1959; Bacharach and Lawler 1980; Yukl and Tracey 1992; Raven 1993, 2008). Client personnel often hold the upper hand over staff auditors in difficult interactions and maintain dominance by exerting various types of power, including reward (e.g., withholding audit evidence), coercive (e.g., intimidation) and expert (e.g., leveraging greater knowledge and expertise) powers. Their findings also indicate that staff auditors attempt to counter the power disparity through power-use and power-change tactics. Auditors’ reports of the power use tactic of ingratiation suggest that auditors actively cooperate with client requests and are concerned with getting the client to like them in order to gain client cooperation. These ingratiation behaviors can threaten operational independence. One way that auditors changed the power dynamic was by reducing the client’s role in the audit process. Reducing the client’s role through avoidance heightens the risk of audit quality threatening behaviors, including failing to obtain all necessary evidence or ghost ticking. Most interviewees reported that ghost ticking occurs on their engagements, and nearly half reported they themselves had engaged in the practice.

Findings in Carlisle et al. (2023) have implications for audit practice. Although client power and influence have long been documented (e.g., Knapp 1985), understanding staff auditors’ experiences with clients during the evidence collection process and how those experiences influence audit documentation is vital to firms’ efforts to perform high quality audits. Not only does Carlisle et al. (2023) find evidence of ghost ticking, but it also finds evidence of other quality threatening behaviors, such as going around knowledgeable but difficult client personnel, delaying communication, and ingratiation. Carlisle et al. (2023) finds that staff auditors perceive themselves as having less power than clients, and that quality threatening behaviors may emerge as a result.

In response to these findings, firms may consider improving training and making systematic changes to the workpaper review and client continuance processes. Firms can use training to make staff aware of difficult or abusive client behaviors, including encouraging staff to report such behaviors to engagement leadership without fear of recrimination. In addition, by systematically integrating information regarding unnecessarily difficult or abusive clients into the client acceptance and continuance processes, audit firms can send a message that such behavior will not be tolerated. Further, because staff auditors overcome difficult or hostile clients using avoidance and ingratiation tactics that may threaten audit quality, staff training should instruct auditors in the art of professional business interactions that effectively garner client cooperation without reducing independence or skepticism. Training should also include communicating that ghost ticking will not be tolerated under any circumstances, and educating workpaper reviewers on the prevalence of ghost ticking may help prevent and detect the behavior. Finally, expert power is inherent in the audit environment between auditors and client personnel and staff auditors may be particularly susceptible to the negative effects of this power dynamic. Firms can address this concern by emphasizing the importance of proper supervision, review, and on-the-job training of less experienced auditors (see PCAOB 2015). Training experienced professionals on how to effectively supervise and coach staff auditors could address this systemic power imbalance.

The reported study is not without limitations, which offer opportunities for further research into the important area of auditor-client interactions. For example, the study is unable to capture the nature of the underlying auditor-client relationships and how the auditors we interviewed may have influenced the situations that they recounted. Future research could interview client personnel to better understand how auditors’ own behaviors may contribute to difficult interactions with clients. Lastly, auditors were not asked whether they believe that the frequency of negative interactions they have with clients is consistent with the frequency of negative interactions in general (i.e., in their day-to-day lives). Future research could investigate whether the frequency of difficult interactions is higher for staff auditors versus other interactions and whether the frequency of difficult interactions increases or decreases with experience.