Managing the Auditor-Client Relationship Through Partner Rotations: The Experiences of Audit Firm Partners

The Accounting Review (Forthcoming)

56 Pages Posted: 9 Jun 2017 Last revised: 2 Jun 2019

See all articles by Mary Kate Dodgson

Mary Kate Dodgson

Northeastern University - Accounting Group

Christopher P. Agoglia

University of Massachusetts at Amherst

G. Bradley Bennett

University of Massachusetts Amherst - Isenberg School of Management

Jeffrey R. Cohen

Boston College - Department of Accounting

Date Written: May 2019

Abstract

While current audit standards explicitly state engagement partner tenure requirements, firms have flexibility in managing the rotation process. We conduct semi-structured interviews with 20 U.S. audit firm partners who share their experiences on topics including how they identify appropriate candidate partners and what efforts they undertake to manage relationships with clients post-rotation. We investigate firms’ motivation to manage the auditor-client relationship through the lens of Social Exchange Theory (SET), and we consider how likely outcomes of this rotation process map onto regulators’ intent that a newly rotated partner provides a fresh perspective to the audit. Our study informs regulators and investors about the process by which engagement partners are selected for rotation, documenting that partner assignment is typically not random. Further, our finding that partner rotation is an extended process (rather than a single discrete event) has implications for audit researchers investigating the effects of partner rotation.

Keywords: partner rotation; relationship partners; partner selection; qualitative method; social exchange theory

Suggested Citation

Dodgson, Mary Kate and Agoglia, Christopher P. and Bennett, George Bradley and Cohen, Jeffrey R., Managing the Auditor-Client Relationship Through Partner Rotations: The Experiences of Audit Firm Partners (May 2019). The Accounting Review (Forthcoming). Available at SSRN: https://ssrn.com/abstract=2983255 or http://dx.doi.org/10.2139/ssrn.2983255

Mary Kate Dodgson (Contact Author)

Northeastern University - Accounting Group ( email )

360 Huntington Ave.
Boston, MA 02115
United States

Christopher P. Agoglia

University of Massachusetts at Amherst ( email )

Department of Accounting & Information Systems
121 Presidents Drive
Amherst, MA 01003-4910
United States
413 545-5582 (Phone)
413 545-3858 (Fax)

George Bradley Bennett

University of Massachusetts Amherst - Isenberg School of Management ( email )

Amherst, MA 01003-4910
United States

Jeffrey R. Cohen

Boston College - Department of Accounting ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-3165 (Phone)
617-552-2097 (Fax)

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