The results of this study have practical implications relating to auditor defense strategies. Results indicate that when negligence is alleged on high-importance clients, audit firms should be cautious about using remedial tactics to avoid inadvertently increasing juror negligence assessments by calling attention to the firm’s incentives to appease management (e.g., high audit fees). Rather, for high-importance clients, audit firms would likely benefit from procuring external firms or expert witnesses who may be perceived as more credible. Conversely, when negligence is alleged on low-importance clients, audit firms likely can reduce negligence assessments by utilizing various remedial tactics (e.g., preemptively denying prior knowledge of an undetected fraud). Lastly, results indicate that, if possible, audit firms should implement remedial tactics at the national, as opposed to local, office level.

Grenier, J., B. Pomeroy, and A. Reffett. 2012. Speak Up or Shut Up? The Moderating Role of Credibility on Auditor Remedial Defense Tactics. Auditing: A Journal of Practice and Theory 31(4): 65-83.

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