Attributes Influencing Clients’ Auditor Choices: The Expectation Gaps between Auditors and Board Members

Current Issues in Auditing (forthcoming)

Posted: 10 Nov 2018 Last revised: 21 Aug 2020

See all articles by Francis Goddard

Francis Goddard

ESCP Europe, Berlin

Martin Schmidt

ESCP Business School, Department of Financial Reporting & Audit

Date Written: March 12, 2020

Abstract

This paper reports the results of a survey of board members who participate in auditor appointments and audit firm partners and (senior) managers on attributes influencing clients’ auditor choice decisions. We identify several “expectation gaps” between the importance that board members assign to attributes and the importance that auditors expect board members to assign to the same attributes. The results indicate that board members deem low audit fees, as well as a good relationship with the audit partner to be less important than audit partners and managers expect. We find the opposite for attributes related to audit quality, such as technical competence and industry expertise, as well as professional skepticism and independence of mind, and business know-how of the audit firm, which board members assess as more important than audit partners and managers expect. The findings have important implications for auditors in audit tenders.

Keywords: audit fees, auditor-client relationships, clients’ auditor choices, expectation gap

JEL Classification: M30, M41, M42

Suggested Citation

Goddard, Francis and Schmidt, Martin, Attributes Influencing Clients’ Auditor Choices: The Expectation Gaps between Auditors and Board Members (March 12, 2020). Current Issues in Auditing (forthcoming), Available at SSRN: https://ssrn.com/abstract=3255574 or http://dx.doi.org/10.2139/ssrn.3255574

Francis Goddard (Contact Author)

ESCP Europe, Berlin ( email )

Heubnerweg 8-10
Berlin, 14059
Germany

Martin Schmidt

ESCP Business School, Department of Financial Reporting & Audit ( email )

Heubnerweg 8-10
Berlin, 14059
Germany

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