Perspective: Under Pressure


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Most young auditors recognize when clients try to influence their work, but when those clients are important to the firm’s bottom line, getting auditors to act on that knowledge can be a challenge.

By Kris Hoang, Assistant Professor of Accounting

While many accounting students are attracted to the discipline by the desire to help people make impactful, informed decisions, they also learn from job recruiters that accounting is a customer service career. Interviewers and career centers emphasize interpersonal skills, such as communication and cultural fit with the accounting firm’s customers (i.e., the client companies that hire the firm to perform audits). When they join an accounting firm, young professionals discover that the organization has a sophisticated customer relationship management system in place, and they likely feel pressure to demonstrate commitment to client personnel. This pressure does not necessarily preclude the performance of careful audit work, but it may influence auditors’ attitudes and approaches to their work.

Client satisfaction pressure is pervasive and also directs the behavior of senior professionals at accounting firms. In an article published in Contemporary Accounting Research, co-authors Krista Fiolleau, Karim Jamal, Shyam Sunder and I conducted interviews and obtained proprietary data at a company that put its audit out to tender. We find that even though the company’s audit committee was responsible for appointing the auditor, the company’s management dominated the decision-making process. We also find that the company’s management placed great value on being treated as a priority client and heavily weighed relationship qualities, such as auditor responsiveness and cultural fit, in the auditor hiring decision.

Kris Hoang, assistant professor of accounting

Kris Hoang, assistant professor of accounting

On the accounting firm side, partners tailored their bids and went to great lengths to demonstrate their customer service to win the audit. While our article focuses on the initiation of the auditor-client relationship, we believe that auditors’ emphasis on commercial priorities may influence not only their approach to winning audits, but also their attitude towards retaining the business and, in turn, the work they perform when providing assurance over financial statements.

To investigate whether pressure to satisfy clients makes auditors more susceptible to client persuasion, co-author Sanaz Aghazadeh and I asked auditors with approximately three years of professional experience to make judgments about client persuasion and decide how much to probe the client on a revenue recognition issue. We found that when auditors knew the client would be completing a satisfaction survey at the end of the audit, they had greater awareness of client persuasion but were reluctant to probe the client for additional, higher-quality audit evidence. These findings indicate that auditors are aware of client persuasion and the resulting need to obtain more objective audit evidence, but also that they do not act upon this knowledge when they are under strong client satisfaction pressure, making them appear susceptible to persuasion.

A sense of skepticism and inquisitiveness propels many accountants along their academic and professional paths. Cultivating interpersonal relationship skills will help them contribute to the success of their firms, but it’s also important for these young professionals to be aware of psychological biases they may encounter under commercial and client pressures. Only by recognizing these preconceptions will accountants be able to uphold their role in ensuring that financial disclosures are reliable and useful.

Kris Hoang’s article “How Do Regulatory Reforms to Enhance Auditor Independence Work in Practice?”, co-authored with Krista Fiolleau, Karim Jamal and Shyam Sunder, was published in Contemporary Accounting Research in fall 2013. Her paper “Does Audit Firm-Imposed Pressure to Satisfy Clients Influence How Auditors Perceive and Respond to Client Persuasion?”, co-authored with Sanaz Aghazadeh, was presented at the American Accounting Association (AAA) 2014 Accounting, Behavior and Organizations Conference and the AAA 2015 Auditing Section Midyear Meeting.

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