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Steven E. Salterio - One of the best experts on this subject based on the ideXlab platform.
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The Effects of Auditor Affinity for Client and Perceived Client Pressure on Auditor Proposed Adjustments
The Accounting Review, 2017Co-Authors: Christopher Koch, Steven E. SalterioAbstract:ABSTRACT: This paper examines how auditors' judgments about accounting policies may differ when experiencing different levels of affinity for Client Management and facing different levels of pressure from Client Management. The theory of motivated reasoning is employed to analyze the effects of these two factors that should lead individual auditors to adopt as a directional goal the acceptance of Client Management's aggressive accounting. Accordingly, we predict and find that auditors experiencing greater Client affinity and facing explicit Client pressure suggest lower adjustments to Clients' aggressive accounting, consistent with motivated reasoning's goal-related predictions. But our study goes further and investigates also how auditors react when motivated reasoning theory's “reasonableness constraint” is potentially violated by auditors who perceive excessive Client pressure. We predict and find, consistent with the individual auditor's “reasonable constraint” being triggered in at least some auditor...
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Effects of Client Pressure and Audit Firm Management Control Systems on Auditor Judgments
SSRN Electronic Journal, 2015Co-Authors: Christopher Koch, Steven E. SalterioAbstract:We examine the effects of pressures from Client Management and the audit firm’s own Management control systems (MCS) on auditors’ willingness to accept an aggressive accounting that is preferred by Client Management. We find that auditors perceiving more pressure from Client Management to accept the Client’s aggressive accounting react by increasing the size of the proposed adjustment needed to bring the Client’s accounting into conformity with GAAP. However, we find that when Client Management promotes the jointness of interests they share with the auditor or the audit firm’s MCS focuses the auditor more on Client service quality the auditor experiences increased affinity for the Client and proposes lower adjustments in response to the same accounting facts. Furthermore, we find that the auditor’s proposed adjustment to Client accounting leads to intended use of negotiation tactics that are consistent with the relative size of the proposed adjustment: larger proposed adjustments result in relatively greater auditor intentions to use contending tactics whereas smaller adjustments lead to increased intentions to use compromising tactics. Two implications emerge from our research. First, that Client Management, if subtle with its use of pressure, can nudge auditors towards accepting the aggressive accounting Management wants. Second, the audit firm’s own MCS can facilitate auditor identification with Client needs leading to a lesser willingness by auditors to challenge aggressive Client Management accounting.
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Fifteen Years in the Trenches: Auditor-Client Negotiations Exposed and Explored
SSRN Electronic Journal, 2011Co-Authors: Steven E. SalterioAbstract:The study of auditor Client Management negotiations dates back twenty years with the publication of the first analytical model of negotiations in 1991. However, that article made next to no impact until Gibbins, Salterio and their later collaborators began a research program on auditor-Client Management negotiations in 1996. The purpose of this paper is to review the fifteen years of research on auditor Client Management negotiation including publishing, for the first time, the theoretical model that underlay their research program. I then review the sequence of published papers focusing on Gibbins, Salterio and their co-authors that led to the acceptance of the premise that the auditor co-created the financial statements and related disclosures with Client Management. I call this “exposing the phenomena” part of the paper. I then examine the experimental research carried out over the last decade and relate it to both the underlying theoretical model and the descriptive model of auditor Client Management negotiating, identifying where research has been carried out and where important matters, both descriptively and theoretically, have received less research interest than their importance may warrant. Finally, I provide some thoughts as to how archival researchers may join into this research stream by suggesting the repurposing audit report delay construct as a measure of probability that auditor-Client Management negotiations took place during the year-end audit. Furthermore, I suggest how this delay measure might be improved by using the newly popular text analysis comparison software that has recently come back in vogue in capital markets research. I call these sections “exploring the phenomena.” I conclude with a brief reminder about the practical significance of auditor-Client Management negotiations and I urge continued research on this important area; one that may threaten the future existence of audit firms more than any other.
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Do Managers Intend to Use the Same Negotiation Strategies as Partners
Behavioral Research in Accounting, 2011Co-Authors: Susan Mccracken, Steven E. Salterio, Regan N. SchmidtAbstract:ABSTRACT: Most auditor Client Management (ACM) negotiations occur between partners and Client Management; however, managers also attempt to resolve issues with Client Management. Given that ACM negotiation impacts the financial statements, an understanding of whether the intended negotiation strategies of partners and managers differ is important. A key feature of the ACM setting is that partners have more power/status and experience than managers. Prior research provides conflicting predictions about the use of integrative strategies based on experience or power/status. Our results, consistent with the power/status hypothesis, demonstrate managers are more likely than partners to intend to use integrative strategies. Conversely, research on distributive strategies provides similar predictions for partner/manager strategy usage for experience and power/status. We find partners are more likely to intend to use the contending strategy and managers are more likely to intend to use the compromising and conces...
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The auditor’s strategy selection for negotiation with Management: Flexibility of initial accounting position and nature of the relationship
Accounting Organizations and Society, 2010Co-Authors: Michael Gibbins, Susan Mccracken, Steven E. SalterioAbstract:Abstract The audit partner is usually the first mover in a negotiation with Client Management and has an intended strategy set going into such a negotiation. Negotiation strategies that make up the set may be integrative (both parties can gain or at least not lose) and distributive (there is a winner and a loser). We focus on five strategies: two integrative (expanding the agenda or problem solving) and three distributive (contending, conceding or compromising) and measure the audit partner’s intent to use these strategies’ associated tactics. We report the results of an audit negotiation experiment in which 140 highly experienced audit partners planned a negotiation in response to a case scenario that incorporated two key theoretical variables: the flexibility of the Client initial accounting position and the nature of the prior relationship between the auditor and Client Management. In addition to intended tactics, we also examine these two variables’ effects on commitment to the goal of reducing net income. Our results indicate that in contrast to findings in the generic negotiation literature that show negotiators have a preference for distributive tactics and have difficulty employing integrative ones, our audit partners generally favored the use of integrative tactics over distributive ones when entering negotiations, irrespective of circumstance. However, the two theorized variables led to particular strategic choices when distributive tactics were intended; for example, when the audit partner perceived he or she was facing a Client Management that was inflexible in its initial accounting position, the partner was more likely to use contending tactics and less likely to use conceding and compromising tactics. Finally, we discuss implications of these results for practice and research.
Richard C. Hatfield - One of the best experts on this subject based on the ideXlab platform.
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The Effect of Deadline Pressure on Pre-Negotiation Positions: A Comparison of Auditors and Client Management†
Contemporary Accounting Research, 2015Co-Authors: G. Bradley Bennett, Richard C. Hatfield, Chad M. StefaniakAbstract:This study compares auditors' and chief financial officers' pre-negotiation judgments and considers the potential differential impact the end of the audit (deadline pressure) has on each party. General negotiation literature suggests that individuals change their behaviors as deadline pressure increases (i.e., when there is less time in which to conduct a negotiation) in order to increase the probability of reaching an agreement. In an audit context, the end-of-engagement deadline is often based on regulatory filing deadlines (e.g., SEC filings for public companies), which are not determined by either negotiating party. The audit context is also unique in that there are asymmetric consequences for each party (the auditor and Client Management) for failing to reach an agreement and different negotiation tactics used by the two parties potentially leading to differing levels of concessions. We predict that auditors, who are in a stronger negotiation position, will generally concede less than Client Management when determining their pre-negotiation position and will tend to use more contentious strategies. However, such contentious strategies require time. Thus, we expect, based on negotiation theory, that as deadline pressure increases, auditors' concessionary behavior will be more affected than that of Client Management. Consistent with expectations, results of our experiment suggest that CFOs concede more than auditors in general; however, auditors are more reactive to deadline pressure and increase concessions when faced with high deadline pressure, while CFOs do not. We also measure planned strategy use and find results to be consistent with theory: when deadline pressure is high, auditors are less likely to use contentious tactics, while CFOs' strategy choices are unaffected by deadline pressure. These results suggest that characteristics of the unique auditor–Client negotiation environment, such as deadline pressures, have potentially differential effects on both parties due to the differing negotiation strategies employed by these parties.
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Negotiations between auditors and their Clients regarding adjustments to the financial statements
Business Horizons, 2015Co-Authors: Richard C. Hatfield, Curtis MullisAbstract:Abstract While financial statements are the responsibility of Management, they are ultimately a product of collaboration between Management and their auditors—likely involving negotiations over proposed audit adjustments. This installment of Accounting Matters discusses the implications of prior research in psychology and social psychology regarding negotiations as applied to the context of auditor-Client Management negotiations. Specifically, we consider recently published research by Hatfield and colleagues regarding how these auditor-Client discussions may be influenced in unexpected ways if not viewed through the lens of negotiation. This research finds that explicit consideration of negotiation characteristics (e.g., whether the unaudited financial statement data is the ‘first offer’ of Client Management, whether negotiations have created reciprocity pressures for the current negotiation) can influence these auditor-Client discussions in predictable ways. Understanding the unconscious biases resulting from these ‘negotiation rules’ is key for auditors to effectively translate audit quality into improved financial statement quality.
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The Effect of the Social Mismatch between Staff Auditors and Client Management on the Collection of Audit Evidence
The Accounting Review, 2012Co-Authors: G. Bradley Bennett, Richard C. HatfieldAbstract:ABSTRACT: This study provides both survey and experimental evidence to consider how social interactions between staff-level auditors and Client Management may affect staff auditors' perceptions and influence their decisions regarding the collection of audit evidence. During fieldwork, staff-level auditors have extensive interaction with Client Management. Survey evidence suggests that these staff-level auditors are often “mismatched” with Client Management, in terms of their experience, age, and accounting knowledge. Experimental results indicate that staff-level auditors may reduce the extent to which they collect evidence to avoid these interactions. Finally, the use of email communication with Client Management helped to mitigate the reduction in evidence collected caused by avoiding in-person interactions. Interestingly, when not collecting all the evidence, approximately half of the participants documented their findings in a vague or inappropriate manner, which would likely reduce the likelihood tha...
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The Effect of the Social Mismatch between Staff Auditors and Client Management on the Collection of Audit Evidence
2012Co-Authors: G. Bradley Bennett, Richard C. HatfieldAbstract:This study provides both survey and experimental evidence to consider how social interactions between staff-level auditors and Client Management may affect staff auditors’ perceptions and influence their decisions regarding the collection of audit evidence. During fieldwork, staff-level auditors have extensive interaction with Client Management. Survey evidence suggests that these staff-level auditors are often “mismatched” with Client Management, in terms of their experience, age, and accounting knowledge. Experimental results indicate that staff-level auditors may reduce the extent to which they collect evidence to avoid these interactions. Finally, the use of e-mail communication with Client Management helped to mitigate the reduction in evidence collected caused by avoiding in-person interactions. Interestingly, when not collecting all the evidence, approximately half of the participants documented their findings in a vague or inappropriate manner, which would likely reduce the likelihood that reviewing auditors would identify a problem. Given the extent of audit evidence collected by young staff auditors, these findings have direct implications for workpaper and audit quality.
G. Bradley Bennett - One of the best experts on this subject based on the ideXlab platform.
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The Effect of Deadline Pressure on Pre-Negotiation Positions: A Comparison of Auditors and Client Management†
Contemporary Accounting Research, 2015Co-Authors: G. Bradley Bennett, Richard C. Hatfield, Chad M. StefaniakAbstract:This study compares auditors' and chief financial officers' pre-negotiation judgments and considers the potential differential impact the end of the audit (deadline pressure) has on each party. General negotiation literature suggests that individuals change their behaviors as deadline pressure increases (i.e., when there is less time in which to conduct a negotiation) in order to increase the probability of reaching an agreement. In an audit context, the end-of-engagement deadline is often based on regulatory filing deadlines (e.g., SEC filings for public companies), which are not determined by either negotiating party. The audit context is also unique in that there are asymmetric consequences for each party (the auditor and Client Management) for failing to reach an agreement and different negotiation tactics used by the two parties potentially leading to differing levels of concessions. We predict that auditors, who are in a stronger negotiation position, will generally concede less than Client Management when determining their pre-negotiation position and will tend to use more contentious strategies. However, such contentious strategies require time. Thus, we expect, based on negotiation theory, that as deadline pressure increases, auditors' concessionary behavior will be more affected than that of Client Management. Consistent with expectations, results of our experiment suggest that CFOs concede more than auditors in general; however, auditors are more reactive to deadline pressure and increase concessions when faced with high deadline pressure, while CFOs do not. We also measure planned strategy use and find results to be consistent with theory: when deadline pressure is high, auditors are less likely to use contentious tactics, while CFOs' strategy choices are unaffected by deadline pressure. These results suggest that characteristics of the unique auditor–Client negotiation environment, such as deadline pressures, have potentially differential effects on both parties due to the differing negotiation strategies employed by these parties.
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The Effect of the Social Mismatch between Staff Auditors and Client Management on the Collection of Audit Evidence
The Accounting Review, 2012Co-Authors: G. Bradley Bennett, Richard C. HatfieldAbstract:ABSTRACT: This study provides both survey and experimental evidence to consider how social interactions between staff-level auditors and Client Management may affect staff auditors' perceptions and influence their decisions regarding the collection of audit evidence. During fieldwork, staff-level auditors have extensive interaction with Client Management. Survey evidence suggests that these staff-level auditors are often “mismatched” with Client Management, in terms of their experience, age, and accounting knowledge. Experimental results indicate that staff-level auditors may reduce the extent to which they collect evidence to avoid these interactions. Finally, the use of email communication with Client Management helped to mitigate the reduction in evidence collected caused by avoiding in-person interactions. Interestingly, when not collecting all the evidence, approximately half of the participants documented their findings in a vague or inappropriate manner, which would likely reduce the likelihood tha...
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The Effect of the Social Mismatch between Staff Auditors and Client Management on the Collection of Audit Evidence
2012Co-Authors: G. Bradley Bennett, Richard C. HatfieldAbstract:This study provides both survey and experimental evidence to consider how social interactions between staff-level auditors and Client Management may affect staff auditors’ perceptions and influence their decisions regarding the collection of audit evidence. During fieldwork, staff-level auditors have extensive interaction with Client Management. Survey evidence suggests that these staff-level auditors are often “mismatched” with Client Management, in terms of their experience, age, and accounting knowledge. Experimental results indicate that staff-level auditors may reduce the extent to which they collect evidence to avoid these interactions. Finally, the use of e-mail communication with Client Management helped to mitigate the reduction in evidence collected caused by avoiding in-person interactions. Interestingly, when not collecting all the evidence, approximately half of the participants documented their findings in a vague or inappropriate manner, which would likely reduce the likelihood that reviewing auditors would identify a problem. Given the extent of audit evidence collected by young staff auditors, these findings have direct implications for workpaper and audit quality.
Ana R. Cavalli - One of the best experts on this subject based on the ideXlab platform.
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A reactive wireless mesh network architecture
2008Co-Authors: Bachar Wehbi, Anis Laouiti, Ana R. CavalliAbstract:The future of wireless networks evolves toward more simple ways for users to get connected while on the move. In this perspective, Wireless Mesh Networks constitute one of the key technologies for new generation wireless networks. In this paper we present a reactive solution for routing and Client Management in an infrastructure-based wireless mesh network. The solution is based on DYMO1/AODV adhoc routing protocol; it performs on-demand path setup for Clients and supports their mobility by introducing a light mechanism. Our solution is designed to minimize memory and bandwidth overhead by exchanging only mandatory information for Client Management and route establishment
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MDM - Light Client Management Protocol for Wireless Mesh Networks
7th International Conference on Mobile Data Management (MDM'06), 2006Co-Authors: Bachar Wehbi, Wissam Mallouli, Ana R. CavalliAbstract:The future of wireless networks evolves toward more simple ways for users to get connected while on the move. In this perspective, Wireless Mesh Networks constitutes one of the key technologies for next generation wireless networks. In this paper we present LCMP, a new protocol for Client Management in wireless mesh networks. LCMP performs on-demand path setup for Clients and supports Clients mobility by introducing new light mechanisms that take full advantage of the mesh architecture. The work on LCMP and mesh routing is still in progress at LOMNT laboratory. In this papel; we highlight some ongoing work.
Bachar Wehbi - One of the best experts on this subject based on the ideXlab platform.
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A reactive wireless mesh network architecture
2008Co-Authors: Bachar Wehbi, Anis Laouiti, Ana R. CavalliAbstract:The future of wireless networks evolves toward more simple ways for users to get connected while on the move. In this perspective, Wireless Mesh Networks constitute one of the key technologies for new generation wireless networks. In this paper we present a reactive solution for routing and Client Management in an infrastructure-based wireless mesh network. The solution is based on DYMO1/AODV adhoc routing protocol; it performs on-demand path setup for Clients and supports their mobility by introducing a light mechanism. Our solution is designed to minimize memory and bandwidth overhead by exchanging only mandatory information for Client Management and route establishment
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MDM - Light Client Management Protocol for Wireless Mesh Networks
7th International Conference on Mobile Data Management (MDM'06), 2006Co-Authors: Bachar Wehbi, Wissam Mallouli, Ana R. CavalliAbstract:The future of wireless networks evolves toward more simple ways for users to get connected while on the move. In this perspective, Wireless Mesh Networks constitutes one of the key technologies for next generation wireless networks. In this paper we present LCMP, a new protocol for Client Management in wireless mesh networks. LCMP performs on-demand path setup for Clients and supports Clients mobility by introducing new light mechanisms that take full advantage of the mesh architecture. The work on LCMP and mesh routing is still in progress at LOMNT laboratory. In this papel; we highlight some ongoing work.
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Med-Hoc-Net - A Reactive Wireless Mesh Network Architecture
Advances in Ad Hoc Networking, 1Co-Authors: Bachar Wehbi, Anis Laouiti, Ana CavalliAbstract:The future of wireless networks evolves toward more simple ways for users to get connected while on the move. In this perspective, Wireless Mesh Networks constitute one of the key technologies for new generation wireless networks. In this paper we present a reactive solution for routing and Client Management in an infrastructure-based wireless mesh network. The solution is based on DYMO1/AODV adhoc routing protocol; it performs on-demand path setup for Clients and supports their mobility by introducing a light mechanism. Our solution is designed to minimize memory and bandwidth overhead by exchanging only mandatory information for Client Management and route establishment.