Audit Partner Judgement: The Effects of Concurring Reviews, Compensation Practices, and Accounting Flexibility

Posted: 18 Feb 2002

See all articles by Gary M. Entwistle

Gary M. Entwistle

Department of Accounting; University of Saskatchewan - Edwards School of Business

Daryl Lindsay

University of Saskatchewan - College of Commerce

Date Written: Undated

Abstract

In this paper, responses from fifty-five Canadian audit partners are used to explore the links between concurring (or second partner) reviews, partner compensation practices, and accounting flexibility, and partners' judgments of client's preferred accounting choices. Surprisingly, given existing academic and professional writings, the results fail to support a significant (inverse) association between the effectiveness of concurring reviews and the influence client's preferred accounting treatments have on the partners' judgments. Similarly, the results also fail to support the hypothesis that partner judgments will be less (more) influenced by client preferences where partner compensation reflects a firm wide (versus local office) orientation. In contrast, and consistent with prior research, the results strongly support the hypothesis that audit partner judgments are more influenced by client preferences where greater accounting flexibility exists, and further whether this flexibility is income-affecting or disclosure oriented.

JEL Classification: M49

Suggested Citation

Entwistle, Gary M. and Entwistle, Gary M. and Lindsay, Daryl, Audit Partner Judgement: The Effects of Concurring Reviews, Compensation Practices, and Accounting Flexibility (Undated). Available at SSRN: https://ssrn.com/abstract=298428

Gary M. Entwistle (Contact Author)

Department of Accounting ( email )

Saskatoon, Saskatchewan S7N 5A7
Canada

University of Saskatchewan - Edwards School of Business ( email )

Saskatoon, Saskatchewan S7N 5A7
Canada

Daryl Lindsay

University of Saskatchewan - College of Commerce ( email )

Department of Accounting
Saskatoon S7N 5A7, Saskatchewan
Canada

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