Behind the Audit Report: A Descriptive Study of Discussions and Negotiations Between Auditors and Directors

Beattie, V., Fearnley, S. and Brandt, R. (2000) Behind the Audit Report: A Descriptive Study of Discussions and Negotiations Between Auditors and Directors. International Journal of Auditing, 4(2), pp. 177-202. (doi:10.1111/1099-1123.00312)



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This paper presents direct evidence concerning the extent, nature, and outcome of interactions between the two primary parties in the auditor-client relationship - finance directors (FDs) and audit engagement partners (AEPs). A questionnaire instrument is used to elicit the frequency with which, over a three year period, an extensive set of 46 audit and audit-related issues is discussed, is negotiated, and results in a change to either the accounting numbers or disclosures. Three hundred FDs and 307 AEPs of listed UK companies are surveyed, with response rates of 51% and 80%, respectively. Principal findings are that: (i) compliance issues dominate discussions, while accounting and fee issues dominate negotiations; (ii) audit committees generally reduce the level of negotiation and increase the level of discussion, suggesting that the overall degree of confrontation declines; and (iii) in the majority of cases (57%), negotiation results in a change to the financial statements, providing evidence of the auditor's influence on the financial statements.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Beattie, Prof Vivien
Authors: Beattie, V., Fearnley, S., and Brandt, R.
Subjects:H Social Sciences > HF Commerce > HF5601 Accounting
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:International Journal of Auditing
Publisher:Blackwell Publishing
Copyright Holders:© Blackwell Publishing
First Published:First published in International Journal of Auditing 4(2)177-202
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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