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Auditor-Client Disagreements and Independence: An Exploratory Field Study

Morina D. Rennie

Lori S. Kopp

W. Morley Lemon

Research on Professional Responsibility and Ethics in Accounting

ISBN: 978-1-78441-164-0, eISBN: 978-1-78441-163-3

Publication date: 15 September 2014

Abstract

Independence is the cornerstone of the auditing profession. Even so, it is often assumed that acquiescing to the audit client when a disagreement occurs is more beneficial to the auditor-client relationship than asserting one’s independence (e.g., see Wang & Tuttle, 2009). We look more closely at the issue in the context of auditor-client management disagreements as recalled by experienced auditors.

We find that for most disagreements in which the auditor did not make any concession at all, the auditor-client relationship was either unaffected or strengthened. We find that a client’s use of pressure tactics did not appear to influence whether or not the auditor made a concession, but that a client’s use of pressure tactics, was associated with damage to the auditor-client relationship. The importance of the issue causing a disagreement was positively associated with the likelihood of the auditor staying with his/her initial position.

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Acknowledgements

Acknowledgments

The authors gratefully acknowledge the financial support of the Canadian Institute of Chartered Accountants/Canadian Academic Accounting Association Research Grant Program. Dr. Lemon acknowledges the financial support provided by the PricewaterhouseCoopers Auditing Professorship. Dr. Rennie acknowledges financial support provided by the Institute of Chartered Accountants of Saskatchewan. We thank our anonymous reviewers, as well the participants and our discussant at the 18th Annual Ethics Research Symposium, for helpful feedback that has significantly improved the paper.

Citation

Rennie, M.D., Kopp, L.S. and Lemon, W.M. (2014), "Auditor-Client Disagreements and Independence: An Exploratory Field Study", Research on Professional Responsibility and Ethics in Accounting (Research on Professional Responsibility and Ethics in Accounting, Vol. 18), Emerald Group Publishing Limited, Leeds, pp. 131-166. https://doi.org/10.1108/S1574-076520140000018005

Publisher

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Emerald Group Publishing Limited