Study: Even When Auditors Recognize Clients’ Persuasion Attempts, They May Not Act on It

November 10, 2020

Sanaz Aghazadeh
Sanaz Aghazadeh

BATON ROUGE- All companies strive to get a “good audit.” The choice of an auditor is up to the company (or client), and just as with any service industry, the auditor-client relationship is at the forefront of many business decisions. It is always the job of an auditor to ensure financial records are reliable by collecting evidence, performing tests, and interviewing employees and management. But how does a skeptical auditor use knowledge of the auditor-client relationship when conducting an audit? LSU Department of Accounting Assistant Professor Sanaz Aghazadeh answers this question in her new paper published by Accounting, Organizations, and Society.

Aghazadeh’s paper titled, “How Does Audit Firm Emphasis on Client Relationship Quality Influence Auditors’ Inferences About and Responses to Potential Persuasion in Client Communications?” explains how the audit outcome could be influenced by auditor-client relationship concerns. Auditors want to retain their client’s future business, so developing the auditor-client relationship is beneficial to both parties. Many audit firms use client satisfaction surveys or other tools to gauge this relationship and evaluate individual auditor performance. These surveys may put increased pressure on auditors to please their clients over diligently performing the audit. There’s a saying, “a good auditor is a skeptical auditor,” however, always being skeptical of the client means every piece of information provided by the company needs to be tested and verified before auditors can make conclusions. Building the auditor-client relationship allows auditors to trust the accuracy of some information, as long as they look for red flags and remain skeptical and diligent. 

Using 84 staff auditors, Aghazadeh and Kris Hoang (University of Alabama), set up an example scenario where half of the audit partners stress the importance of a client satisfaction survey to their audit team and the other half do not. Then, they ask the participating auditors to evaluate a certain business transaction that needs further evidence. For half of the participants, the client expresses confidence that everything is in order while no expression is made for the other half. While there is nothing wrong with the client being confident about the transaction, this expression can be interpreted in two different ways: (1) an “innocuous natural tendency to express confidence” or (2) “strategically expressing confidence as a persuasion tactic.” This experiment allows the authors to examine how the presence of the satisfaction survey influences the auditor’s belief that the client is trying to persuade them and whether they need to collect additional evidence.

The results of the experiment show that when relationship quality is stressed (the client satisfaction survey), the auditors were more likely to believe the client was trying to persuade using their confidence. Surprisingly, the auditors do not respond by collecting additional evidence under these conditions.  If the auditors recognized the persuasion, why didn’t they act on it?

The authors note that prior research findings in this area are mixed. On one side, regulators and some academics argue that client satisfaction surveys are “bias [auditor] judgement and impair audit quality.” On the other hand, recent research reported that client satisfaction ratings may heighten auditor’s awareness and focus for audit quality.  The results from Aghazadeh and Hoang’s study contribute to this ongoing debate. Contrary to regulator concerns that auditor pressure from client satisfaction surveys impairs audit quality, when there is an emphasis on the auditor-client relationship, auditor skepticism increases (auditors are aware of the persuasion). However, consistent with regulators’ concerns, the auditors do not appear to act on this skepticism. Overall, the findings support the notion that “the expectation to achieve high client satisfaction appears to discourage auditors from acting skeptically when gathering evidence, which could ultimately harm audit quality.”

Full study is available here:

About the Department of Accounting

The Department of Accounting at LSU’s E. J. Ourso College of Business strives for excellence in teaching, research, and service to the accounting profession. With a mission of producing graduates at all levels who excel in their pursuits, the department offers undergraduate and graduate programs that prepare students for careers in various fields, including industry, auditing, finance, government, and academia. A key element of the department’s success is the outstanding faculty, who publish articles in top academic and professional journals and write textbooks and trade books. Additionally, faculty members are active participants in the accounting profession. For more information, visit, email or call 225-578-6202.



Bridget Conrad
E. J. Ourso College of Business