Trust and the Auditor-Client Relationship: An Exploratory Study*

Abstract

This research examines financial statement auditors' trust of their clients in the context of a disagreement with an audit client. While auditor-client trust is essential to the efficient, effective conduct of an audit, the auditor must also act with professional scepticism and independence. In this study we explore factors that can affect auditor trust of the client. In particular we look at attributes of the client that may attract trust, attributes of the auditor-client relationship and the auditor's own general propensity to trust. We find that trust-attracting behaviours on the part of client representatives during a disagreement do appear to influence the level of trust that an auditor has for a client. Moreover, we find that these behaviours influence the impact that a disagreement has on the auditor's trust for the client. We also find a positive association between length of association between the auditor and client and the level of trust of the client and a negative association between frequency of prior disagreements and trust of the client. The auditor's predisposition to trust is found to have a negative association with the auditor's trust of the client in this context. * The authors gratefully acknowledge the financial support of the Canadian Institute of Chartered Accountants/Canadian Academic Accounting Association Research Grant Program.