The effects of an auditor's communication mode and professional tone on client responses to audit inquiries

Abstract

In this study, we investigate whether receiving an auditor inquiry via e-mail differentially affects client responses as compared to more traditional modes of inquiry, and whether those responses are affected by the auditor's professional tone. In an experiment, experienced business professionals respond to an auditor's information request regarding a potential accounting adjustment. We varied the communication mode of the request (e-mail, audio, or visual) and the professional tone of the communication (more versus less professional) and then measured the extent to which participants revealed information that either supported or did not support the client's accounting position. We find that if an auditor asks for information via e-mail, client responses are more biased towards information that supports the client's position as compared to audio or visual inquiries. In addition, we find that clients respond in a more biased manner when the inquiry is worded in a less professional tone as compared to a more professional tone. Further underscoring the implications of these findings for audit outcomes, our results suggest that if an auditor's request leads clients to provide a response that is biased towards client-supporting information, clients may be less likely to agree with an auditor's proposed income-decreasing adjustment.

Email versus In-Person Audit Inquiry: Recent Research and Additional Survey Data

“…Interestingly, although audit partners have expressed concerns that email can affect the relationship between the client and auditor, I find no statistical differences between email and in person requests in the degree to which clients liked the auditor, how competent they thought the auditor was, or their willingness to work with the auditor or the audit firm again. However, I note that Saiewitz and Kida (2018) find that clients report feeling more annoyed with the auditor when they receive an email request compared to an in-person request. These negative feelings toward the auditor could build over time and, ultimately, could have long-term effects on auditor-client relationships.…”

“…Participants in the email request condition were significantly more likely to agree that they could carefully craft an argument to support their 7 I did not specify the age or title of the auditor conducting the inquiry, in order to enhance generalizability of the results. In contrast, Saiewitz and Kida (2018) clearly identified the auditor as a young staff auditor. Prior research indicates that staff-level auditors often conduct client inquiries (Trompeter and Wright 2010).…”

“…5 I also report a survey about communication usage and preferences (''Survey 2''). This data was collected as part of the post-experimental questions in the study conducted by Saiewitz and Kida (2018). Participants in this survey were 183 experienced business professionals from the same part-time M.B.A. program.…”

“…2 The finding that clients provide a set of information more biased toward information that supports their accounting position has potentially negative implications for audit quality, as prior research demonstrates that an auditor is more likely to agree with a client's position if the client provides more supporting information (Hoffman and Patton 1997). 3 The second survey was collected from participants in Saiewitz and Kida's (2018) study. Some of the survey results in this paper were also reported in Saiewitz and Kida (2018). via email than in person.…”

“…3 The second survey was collected from participants in Saiewitz and Kida's (2018) study. Some of the survey results in this paper were also reported in Saiewitz and Kida (2018). via email than in person. Although I find that clients think the auditor will question their response at similar rates via email or in person, clients expect to be questioned more quickly in person compared to email if the client is too aggressive in their response to the auditor.…”