The Impact of Pressure from Potential Client Business Opportunities on the Judgments of Auditors Across Professional Rank

Posted: 4 Nov 2002

See all articles by Kimberly Moreno

Kimberly Moreno

Northeastern University - Accounting Group

Sudip Bhattacharjee

Virginia Polytechnic Institute & State University - Department of Accounting and Information Systems

Abstract

This study examines the impact of the pressure to obtain potential client business opportunities on auditor judgments. Thirty-two lower rank auditors (staff and seniors) and 39 higher rank auditors (managers and partners) were either provided or not provided with information on additional client business opportunities when assessing a client's potential inventory obsolescence risk. Lower rank auditors judged the obsolescence risk to be lower when provided with information on additional business opportunities than when such information was not provided. In contrast, there were no differences in the judgments of higher rank auditors when either provided or not provided with such information. These findings suggest that through greater tacit management skills and exposure to other counter pressures such as litigation and risk-management concerns higher rank auditors are better able to manage the competing goals they confront in the audit environment and recognize the importance of freedom from client pressure than lower rank auditors. Implications for training procedures and audit judgment research are discussed.

Keywords: auditor judgment, audit pressure, additional business opportunities

JEL Classification: M49

Suggested Citation

Moreno, Kimberly and Bhattacharjee, Sudip, The Impact of Pressure from Potential Client Business Opportunities on the Judgments of Auditors Across Professional Rank. Auditing: A Journal of Practice and Theory, March 2003, Available at SSRN: https://ssrn.com/abstract=326320

Kimberly Moreno

Northeastern University - Accounting Group ( email )

360 Huntington Ave.
Boston, MA 02115
United States

Sudip Bhattacharjee (Contact Author)

Virginia Polytechnic Institute & State University - Department of Accounting and Information Systems ( email )

Pamplin College of Business
Blacksburg, VA 24061
United States

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