They're a product of collaboration between management and their auditors--likely involving discussions over proposed audit adjustments whereas the company financial reports are responsibility of management. This instalment of Accounting Matters discusses the implications of previous research in psychology and social psychology involving dialogues as applied to the context of auditor-customer direction negotiations.
Particularly, we consider recently published research by colleagues and Hatfield seeing how these auditor-client discussions may be affected in ways that are surprising if not viewed through the lens of negotiation. This research finds that explicit concern of discussion features (e.g., whether the unaudited financial statement data is the 'first offer' of customer direction, whether dialogues have created reciprocity pressures for the present negotiation) can affect these auditor-client discussions in predictable manners. Understanding the unconscious biases resulting from these 'negotiation rules' is essential for auditors to efficiently translate audit quality into improved financial statement quality.
PUBLICATION DATE: March 15, 2015 PRODUCT #: BH662-HCB-ENG
This is just an excerpt. This case is about LEADERSHIP & MANAGING PEOPLE
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