Auditor-Client Disagreements and Independence: An Exploratory Field Study

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.

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