Fifteen Years in the Trenches: Auditor-Client Negotiations Exposed and Explored
79 Pages Posted: 3 Dec 2011
Date Written: November 15, 2011
Abstract
The study of auditor client management negotiations dates back twenty years with the publication of the first analytical model of negotiations in 1991. However, that article made next to no impact until Gibbins, Salterio and their later collaborators began a research program on auditor-client management negotiations in 1996. The purpose of this paper is to review the fifteen years of research on auditor client management negotiation including publishing, for the first time, the theoretical model that underlay their research program. I then review the sequence of published papers focusing on Gibbins, Salterio and their co-authors that led to the acceptance of the premise that the auditor co-created the financial statements and related disclosures with client management. I call this “exposing the phenomena” part of the paper. I then examine the experimental research carried out over the last decade and relate it to both the underlying theoretical model and the descriptive model of auditor client management negotiating, identifying where research has been carried out and where important matters, both descriptively and theoretically, have received less research interest than their importance may warrant. Finally, I provide some thoughts as to how archival researchers may join into this research stream by suggesting the repurposing audit report delay construct as a measure of probability that auditor-client management negotiations took place during the year-end audit. Furthermore, I suggest how this delay measure might be improved by using the newly popular text analysis comparison software that has recently come back in vogue in capital markets research. I call these sections “exploring the phenomena.” I conclude with a brief reminder about the practical significance of auditor-client management negotiations and I urge continued research on this important area; one that may threaten the future existence of audit firms more than any other.
Keywords: auditor, client, negotiation, model, audit delay, experimental, archival, theory
JEL Classification: M40, M41, G30, D83, C78
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Evidence About Auditor-Client Management Negotiation Concerning Client's Financial Reporting
By Michael Gibbins, Alan Webb, ...
-
Auditor Negotiations: An Examination of the Efficacy of Intervention Methods
By Ken Trotman, Arnold Wright, ...
-
A Review and Integration of Empirical Research on Materiality: Two Decades Later
-
The Effect of Auditors' Use of a Reciprocity-Based Strategy on Auditor-Client Negotiations
By Maria H. Sanchez, Christopher P. Agoglia, ...
-
Recent Trends in Audit Report and Earnings Announcement Lags
By Jayanthi Krishnan and Joon S. Yang
-
Audit Committee Member Investigation of Significant Accounting Decisions
-
Examining the Potential Benefits of Internal Control Monitoring Technology
By Adi Masli, Gary F. Peters, ...