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  • The Auditing Section
    The Effects of Ingratiation and Client Incentive on Auditor...
    research summary posted May 7, 2012 by The Auditing Section, tagged 09.0 Auditor Judgment, 09.10 Prior Dispositions/Biases/Auditor state of mind, 11.0 Audit Quality and Quality Control, 11.03 Management/Staff Interaction 
    Title:
    The Effects of Ingratiation and Client Incentive on Auditor Judgment
    Practical Implications:

    The results of this study are especially important for auditors, suggesting that clients’ incentives and ingratiation of the auditor can influence audit decisions.  Client incentives influence auditor judgment by affecting client credibility. Client ingratiation towards the auditor can influence auditor judgment by inducing positive affect toward the client, which can increase the likelihood auditors will comply with client requests (thus affecting audit quality). Finally, the results show that student participants were less trusting of the client than audit professional participants. This finding is consistent with prior accounting research that shows that as auditors gain more experience, they are less skeptical.

    Citation:

    Robertson, J.C. 2010 The effects of ingratiation and client incentive on auditor judgment. Behavioral Research in Accounting 22 (2): 69-86.

    Keywords:
    Auditor judgments; client incentive; ingratiation
    Purpose of the Study:

    Ingratiation is a strategic influence tactic through which the ingratiator attempts to induce positive affect, which in turn influences judgments such that the target is more likely to comply with the ingratiator’s request. (“Affect” is a broad term encompassing positive and negative valuations and moods.) This study examines how ingratiation affects auditor judgment. In addition, this study examines whether the aforementioned relationship is sensitive to differences in the client’s incentive to influence the auditor. Specifically, this paper examines the following: 

    • Integration. Psychology research shows that ingratiation is applicable to many settings in the corporate environment and is generally a successful influence tactic when seeking compliance with both implicit and explicit requests.
    • Client Incentive and Credibility. Clients’ incentives can have a negative impact on the success of using ingratiation on others, by leading the target(s) to question the credibility of the ingratiator. Source credibility theory indicates sources perceived to be of high credibility are more persuasive than those perceived to be of low credibility. Therefore, the credibility of the ingratiator contributes to the success of ingratiation as an influence tactic.
    Design/Method/ Approach:

    Participants included both audit practitioners and graduate accounting majors and data was collected in the early 2000s. Participants were provided background information about a hypothetical audit client and a description of the assigned client incentive level (either low or high, based on the absence or presence of financial incentives to meet EPS targets to earn bonuses). Next, participants
    performed an audit task that required them to determine the likelihood that they would recommend an adjusting journal entry to write down the inventory. In this stage, the CFO either ingratiated or did not ingratiate the auditor. The final stages of the experiment included participants’ assessment of their affect toward the CFO and a measure of the participants’ level of professional skepticism.

    Findings:
    • Auditors felt stronger positive affect toward the ingratiating client than the non-ingratiating client; however, ingratiation did not affect auditor judgments.
    • Auditors are more likely to propose adjustments when the client has high incentive to influence the auditor than when the client has low incentive.
    • When the client ingratiates the auditor, the auditor will be less likely to propose an audit adjustment when the client has low incentives, compared to when the client has high incentives.
    • Auditors experience stronger positive affect toward clients with low incentive than clients with high incentive.
    • Results indicate that graduate students were less likely to comply with client requests than professionals at least in part because of higher professional skepticism than professionals.
    Category:
    Auditor Judgment, Audit Quality & Quality Control
    Sub-category:
    Prior Dispositions/Biases/Auditor state of mind, Management/Staff Interaction
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  • Jennifer M Mueller-Phillips
    The Influence of Mood on Subordinates’ Ability to Resist C...
    research summary posted August 30, 2016 by Jennifer M Mueller-Phillips, tagged 04.0 Independence and Ethics, 04.04 Moral Development and Individual Ethics Decisions, 05.0 Audit Team Composition, 05.04 Staff Hiring, Turnover and Morale, 11.0 Audit Quality and Quality Control, 11.03 Management/Staff Interaction 
    Title:
    The Influence of Mood on Subordinates’ Ability to Resist Coercive Pressure in Public Accounting
    Practical Implications:

     This study should give pause to investors, auditors and regulators about the potential willingness of subordinate auditors to acquiesce to a superior’s unethical request. As such, the accounting profession should make sure to have a better understanding of the nature of and solutions to the problem such as changes in firm/team culture, personnel placement, etc. Additionally, audit firms can better use this information to understand which employees may be most susceptible to such negative influence and preempt such events.

    Citation:

     Johnson, E. N., D. J. Lowe, and P. M. Reckers. 2016. The Influence of Mood on Subordinates’ Ability to Resist Coercive Pressure in Public Accounting. Contemporary Accounting Review 33 (1): 261-287.

    Keywords:
    Affect, Mood States, Unethical Acts, Obedience Pressure, Superior-Subordinate Relationships
    Purpose of the Study:

    This study examines the relationship between subordinate auditors’ various affective states (i.e. mood/emotion) and their effect on auditors’ willingness to comply with a superiors’ unethical directive in six common auditing scenarios.  The authors also employ more real-world event triggers and scenarios compared with previous research.  This study seeks to better refine and test the broad constructs of mood used in previous research.

    Design/Method/ Approach:

    Sample: 118 audit seniors from two large international public accounting firms

    Experiment: Create a broad distribution of arousal, fear and insignificance among participants by manipulating two aspects of the audit client CEO (high/low dominance and high/low prestige) and one aspect of the auditor (above/below average work-life history).

    Analyses: 2x2x2 between subjects ANOVA using median splits on each measured variable: fear, insignificance and arousal

    Findings:

    Regardless of affective state manipulations, the audit seniors express a high level of willingness to comply with a superiors’ unethical direction.  However, this willingness to comply is increased when auditors are made to feel more insignificant (i.e. weak/low power position relative to others) and fearful (i.e. elevated uncertainty and lower perceptions of control regarding future events and circumstances) but decreased when auditors are in an active, positive mood state (i.e. arousal).  Interestingly, these results obtain despite significant doubt by the firms’ senior management who reviewed the task that any of their subordinates would express willingness to engage in such behavior.  As such, auditors may be more willing to engage in or overlook unethical behavior than previously thought.  

    Category:
    Audit Quality & Quality Control, Audit Team Composition, Independence & Ethics
    Sub-category:
    Management/Staff Interaction, Moral Development and Individual Ethics Decisions, Staff Hiring - Turnover & Morale

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