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    Auditor Commitment to Privately Held Clients and its Effect...
    research summary posted May 25, 2014 by Jennifer M Mueller-Phillips, tagged 10.0 Engagement Management, 10.04 Interactions with Client Management 
    Auditor Commitment to Privately Held Clients and its Effect on Value-Added Audit Service
    Practical Implications:

    The results of this study highlight the important role that perceptions of client fairness play in endangering social exchange relationships between individual auditors and clients. Client commitment, endangered by perceived client fairness and support, can result in higher levels of value-added audit service. This study also has practical implications for accounting firms. Firms can encourage clients to treat their auditors fairly by including language in the engagement letter describing the importance of the timely provision of audit request, adequate working conditions, and other efforts to ensure a smooth audit process. Future research could also examine the costs and benefits associated with value-added audit service from the client’s perspective.  


    Herda, D. N., and J. J. Lavelle. 2013. Auditor Commitment to Privately Held Clients and its Effect on Value-Added Audit Service. Auditing 32 (1).

    management letter; organizational commitment; social exchange theory; value-added audit service
    Purpose of the Study:

    Value-added audit service, defined as client-service activities resulting from an audit that are not directly related to verifying the financial statements, provide important benefits for both clients and audit firms. Examples of these activities include auditor advice and feedback on accounting, internal controls, and general business issues. The purpose of this study is to examine how social exchange relationships between individual auditors and their clients affect the extent to which auditors provide clients with value-added audit service. The authors focus on auditor commitment to clients as an attitudinal indicator of a high-quality social exchange relationship between auditors and clients as a predicator of value-added audit service. 

    Design/Method/ Approach:

    The authors use a research model that is based on social exchange theory. Email surveys were sent out to auditors by the firms at the request of the authors. Responses were collected in the spring of 2011, after the traditional audit busy season. The final sample used consists of 204 auditor responses at two public accounting firms that principally serve privately held clients.

    • Perceived fair treatment from clients endangers a social exchange relationship between auditors and their clients, leading to an increased level of client service.
    • Perceived fairness on the part of the audit client leads to perceived support from the client, perceived client support leads to client commitment, and client commitment results in increased value-added service.  
    • Client commitment is positively associated with the extent of value-added audit service provided to the client
    Engagement Management
    Interactions with Client Management

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