The Influence of a Client Preference on Auditor Judgment: An Investigation of Temporal Effects and Client Trustworthiness

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Virginia Tech

The purpose of this dissertation is to investigate auditors' judgments and decisions in the presence of an explicitly stated client preference. This investigation considers two factors. First, the temporal placement (i.e., timing) of the client preference is varied to allow for an examination of differential effects associated with the receipt of an early client preference and a late client preference. Second, client trustworthiness is varied so that participants may have a basis upon which to evaluate the client's representations (i.e., preferences). Practicing auditors, who were either managers or senior managers at a national accounting firm, participated in the study by completing two audit tasks in which the two factors were manipulated.

Findings indicate that explicitly stated client preferences resulted in significantly different decision processes, but did not significantly influence auditors' judgment processes. However, further analysis indicated that there was no significant client preference (CP) effect observed for auditors' final decisions. Therefore, it appears that the influence of the client's preference was transitory. Taken together, these findings suggest that the CP did not result in a loss of auditors' objectivity.

Auditors' judgments and decisions were sensitive to the client's relative trustworthiness. This finding suggests that auditors are responsive to a client's credibility when evaluating the client's representations. This result is expected given since generally accepted auditing standards require auditors to consider a source's credibility. However, it is surprising that auditors' evidence evaluation efforts were not differentially sensitive to the client's trustworthiness. Such a finding may indicate that the participating auditors' evidence evaluation efforts are more influenced by firm policy than individual judgment.

Credibility, Temporal Placement, Client Preference, Trustworthiness