Auditor–Client Negotiations Over Disputed Accounting Issues: Evidence from One of the Norwegian Big 4 Firms

14 Pages Posted: 23 Oct 2018

See all articles by Ellen Kulset

Ellen Kulset

affiliation not provided to SSRN

Iris Stuart

California State University, Fullerton; Norwegian School of Economics and Business Administration

Date Written: November 2018

Abstract

In this study we investigate data collected in an experiential survey from partners at one of the Norwegian Big 4 audit firms concerning 79 disputed accounting issues resolved by auditor–client negotiations. The study is designed to complement prior experimental findings on the auditors' use of negotiation strategies using a different research method (survey‐based retrospective recall). We first investigate which negotiation strategies and tactics audit partners use. We then test three hypotheses (one new and two others that extend prior findings) and find (i) the more precise the relevant accounting standard, (ii) the more general audit experience or task‐specific negotiation experience the auditor has, and (iii) the less positive the auditor–client relationship is that the more auditors agree that contending tactics were used in their own negotiation strategies. Finally, we test the relative importance of different context variables to the auditor's use of the contending strategy and the negotiated accounting outcome.

Keywords: Audit negotiation, external audit, negotiation

Suggested Citation

Kulset, Ellen and Stuart, Iris, Auditor–Client Negotiations Over Disputed Accounting Issues: Evidence from One of the Norwegian Big 4 Firms (November 2018). International Journal of Auditing, Vol. 22, Issue 3, pp. 435-448, 2018, Available at SSRN: https://ssrn.com/abstract=3271229 or http://dx.doi.org/10.1111/ijau.12129

Ellen Kulset (Contact Author)

affiliation not provided to SSRN

No Address Available

Iris Stuart

California State University, Fullerton ( email )

800 N State College St
Fullerton, CA 92834-9480
United States

Norwegian School of Economics and Business Administration ( email )

Helleveien 30
Bergen, 5045
Norway

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