Question

Read the article, “Exploring trust and the auditor-client relationship: Factors influencing the auditor’s trust of a client representative.” Respond to the following:

What is the issue being addressed in this paper?

Why is this paper important to auditors, and what are the implications of this paper for the auditing profession?

Describe the research methodology used as a basis for the conclusions

Answer 1

Issue Addressed in this Paper

This research examines financial statement auditors' trust of members of client management in the context of a disagreement. In this descriptive field study involving 48 partners and 23 managers of Canadian offices of international accounting firms, they explore factors that can influence an auditor's trust of client management. They find that a client representative's openness of communication and demonstration of concern during an auditor-client disagreement are positively associated with the trust that an auditor feels for that individual. They also find that aspects of the auditorclient relationship are associated with auditor trust. Responses to general questions about trust and auditing indicate that our auditors believe it is important to trust their clients and that they attempt to ensure that trust does not impede professional skepticism, primarily through a rigorous audit process and the adoption of an independent attitude.

Importance to Auditors

This Paper is important for the auditors as it is based on auditor-client relationship. We find these findings from the paper that is quiet important from auditor's Prospective.

• A disagreement experience with the client is relevant to the auditor’s trust of that client.
• A client’s openness of communication during the course of a disagreement is positively associated with the auditors’ trust of that client representative.
• A client’s demonstration of concern toward the auditor appears to be trust-relevant.
• The frequency of disagreements with the client is negatively associated with the auditor’s trust of the client.
• The length of the auditor-client relationship is positively associated with the auditor’s trust.
• An auditor’s satisfaction with the outcome of the disagreement is positively associated with the auditor’s trust.
• The auditor’s predisposition to trust is not associated with the auditor’s trust of the client.
• Auditors believe it is important to trust their clients but they also attempt to ensure that trust does not impede professional skepticism.

Implications

The findings provide evidence that auditors do hold a level of trust in client representatives and that the level of trust is associated with commonplace behaviors of client representative that attract trust. The results of this study are important to make auditors and auditing standards setters aware of factors that may lead to greater auditor trust of client management and perhaps consider whether there may be a potential for excessive trust to overwhelm the auditor’s professional skepticism. Note that the study was unable to determine whether the levels of trust that the auditors had for the client were such that auditor judgment would be compromised.

Research Methodology

The authors collected their evidence via a survey questionnaire prior to June 2007. Participants surveyed include 71 experienced auditors (48 partners, 2 principals, 20 senior managers, and 3 managers) from Canadian international accounting firms. Participants were asked to briefly describe a disagreement they had previously had with a client and were asked specific questions about that disagreement.