Auditor Tactics in Negotiations: A Research Note

Abstract

This study provides a broad set of tactics identified and used by mediation experts widely cited in the psychology literature. Seven auditing partners are provided with this broad list of tactics and asked to apply these tactics to two examples of an audit judgment setting. Another group of auditors consisting of 11 partners and 11 managers identify the degree of importance they plan to place on these 38 adapted tactics in the same audit judgment setting. Factor analysis is used to group the tactics into dimensions and it is found that there are four underlying factors. These are contending (forcing/asserting), compromising, problem solving and accommodating. The 22 auditors also manually sort the tactics into groups of homogeneous tactics, and cluster analysis indicates four factors of appealing to authority, forcing/asserting, context setting and facilitating. These groupings from the factor analysis and auditors' sorting are broadly consistent with previous research. Little difference is observed between partners and managers' assessment of the importance of the tactics, while auditors with formal negotiation training place less emphasis on compromising tactics than those without training.

The politics of profit production

“…There is the earnings management (and adjacent) literature (Basu, 1997; Healy and Wahlen, 1999; Kothari, 2001; Watts, 2003a, 2003b; Marquardt and Wiedman, 2004; Dechow et al , 2010), but that can at best speak only indirectly about this process due to limitations in the methods of choice. The best insights we have into the financial reporting process come instead from the auditor–client negotiations literature, which typically uses the survey method (Beattie et al , 2000; Perreault and Kida, 2011; Hollindale et al , 2011), experiments (Gibbins et al , 2010; Fu et al , 2011) and sometimes even interviews (Beattie et al , 2001; McCracken et al , 2008; Hellman, 2006). In this section, the insights from this strand of the accounting literature will be summarized with regard to what previous research argues to be causes of tension and conflict in the financial reporting process.…”

Auditor–client negotiations over disputed accounting issues: Evidence from one of the Norwegian Big 4 firms

“…Prior auditor–client negotiation research has considered auditors' use of different negotiation strategies that are employed when resolving disputed financial reporting issues (e.g., Brown & Wright, ). Some nonexperimental studies exist in this stream of research, including interview or survey‐based studies (e.g., Beattie, Brandt, & Fearnley, ; Beattie, Fearnley, & Brandt, ; Gibbins, McCracken, & Salterio, ; Gibbins, Salterio, & Webb, ; Hollindale, Kent, & McNamara, ), but most auditor–client negotiation studies are conducted using the experimental method.…”

“…Hollindale et al () study auditors' use of planned negotiation tactics in a survey‐based project. They suggest the use of a number of contending tactics that are not included in our project but that may be of interest for future research.…”

العلاقة بین الإستراتیجیات التفاوضیة للمراجعة وممارسات إدارة الأرباح فی الشرکات المقیدة فی البورصة المصریة" دراسة تجریبیة"

“…) (Gibbins et al, 2010,p.581;McCracken et al, 2011,p.131;Schmidt and Cross, 2014, p. 110 (Hollindale, et al,2011;McCracken et al, 2011;Kulset & Stuart, 2018…”