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Auditors' identification with their clients: Effects on audit quality

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  • Svanberg, Jan
  • Öhman, Peter

Abstract

Although client familiarity is desirable from the auditor's perspective, identifying with clients threatens auditor objectivity. This study examines the extent to which non-Big 4 auditors identify with clients, the effect of auditor–client identification on auditors' client acquiescence to client-preferred treatment, and, finally, whether the harmful effects of auditor–client identification can be extended to a broader set of reduced audit quality acts. The responses of 141 practicing auditors at non-Big 4 firms in Sweden support our theoretical predictions. We find that auditors tend to identify with their clients, and that an auditor who identifies relatively more with a client is more likely to acquiesce to client-preferred treatment and to commit reduced audit quality acts. While previous research has considered only Big 4 firms, the current findings suggest that the problems with auditor identification with clients also hold for non-Big 4 auditors.

Suggested Citation

  • Svanberg, Jan & Öhman, Peter, 2015. "Auditors' identification with their clients: Effects on audit quality," The British Accounting Review, Elsevier, vol. 47(4), pages 395-408.
    • Handle: RePEc:eee:bracre:v:47:y:2015:i:4:p:395-408
    DOI: 10.1016/j.bar.2014.08.003
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    2. Parker, Lee D. & Schmitz, Jana, 2022. "The Reinvented accounting firm office: Impression management for efficiency, client relations and cost control," Accounting, Organizations and Society, Elsevier, vol. 98(C).
    3. Ahsan, A.F.M. Mainul & Bose, Sudipta & Ali, Muhammad Jahangir, 2024. "Does Islamic religiosity influence professional accountants' judgments? Evidence from global convergence of IFRS," Advances in accounting, Elsevier, vol. 64(C).
    4. Astrid Rudyanto, 2017. "Audit Firm Reputation versus Auditor Capability: Their Effect on Audit Quality in Indonesia," GATR Journals afr147, Global Academy of Training and Research (GATR) Enterprise.
    5. Svanberg, Jan & Öhman, Peter & Neidermeyer, Presha E., 2019. "Auditor objectivity as a function of auditor negotiation self-efficacy beliefs," Advances in accounting, Elsevier, vol. 44(C), pages 121-131.
    6. Jan Svanberg & Peter Öhman, 2016. "Does Ethical Culture in Audit Firms Support Auditor Objectivity?," Accounting in Europe, Taylor & Francis Journals, vol. 13(1), pages 65-79, April.
    7. Luis Porcuna-Enguix & Elisabeth Bustos-Contell & José Serrano-Madrid & Gregorio Labatut-Serer, 2021. "Constructing the Audit Risk Assessment by the Audit Team Leader When Planning: Using Fuzzy Theory," Mathematics, MDPI, vol. 9(23), pages 1-22, November.
    8. Jones, Joanne & MacTavish, Carolyn & Schultz, Wendy, 2019. "The effect of gender and firm identification on auditor pre-negotiation judgments," Advances in accounting, Elsevier, vol. 44(C), pages 49-57.

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