How the auditor-client relationship affects the extent of value-added service provided to the client

Abstract

This article summarizes our recent study, "Auditor Commitment to Privately Held Clients and its Effect on Value-Added Audit Service" (Herda and Lavelle 2013), which examines how the relationship between individual auditors and their clients affects the extent of value-added services that clients receive. Based on a survey of 204 auditors at two public accounting firms, we find that the auditor-client relationship, measured in terms of the auditor's commitment to the client (i.e., client commitment), develops in response to auditor perceptions of fair treatment and support received from the client. Higher levels of client commitment lead to more value-added services (e.g., management letter comments). The results indicate that auditors' perceptions of client fairness are essential in building strong auditor-client relationships. Stronger relationships yield greater levels of service that go beyond the core audit requirements.