Does Client Acquisition Impair the Objectivity of Engagement Partners and Engagement Quality Review Partners?

Abstract

We conduct two experiments using experienced audit partners as participants to investigate whether engagement partners’ involvement in the client acquisition process as the contact partner can influence their subsequent audit judgments, and whether the engagement quality review partner’s judgments are influenced when he or she is aware that engagement partners play both roles. As predicted, we find that engagement partners who are also the contact partners during client acquisition tend to make judgments that are biased in favor of the client. However, engagement quality review partners are not sensitive to whether the engagement partner was the contact partner or not, but may be motivated to make decisions that favor the engagement partner. Our results provide a deeper understanding of how the client acquisition process influences the judgments of various partners later in the course of audit engagements.