To install StudyMoose App tap and then “Add to Home Screen”
Save to my list
Remove from my list
Recent events in the financial world have led to increasing research on issues relating to accounting negotiations. Auditing standards and economic models generally portray the auditor-client management’s reporting, rather than seek to modify it. However, recent negotiation research is of the view that if there is a difference in opinion between the auditor and client management about the client’s reporting, both parties can resolve the difference.
There may be corporate misbehaviour in financial reporting which has prompted legislators and regulators to question the appropriateness of auditors’ judgments over controversial accounting items that are subject to negotiation.
Research has shown that auditors may be waiving the majority of proposed adjustments to the financial statements. Frequent negotiations between auditors and client management raises the question as to whether both groups’ reports of the process may be divergent. If the recalls are the same, then there would be confidence of a reliable characterization of the process.
Research on the GSW model shows congruent recalls that audit partners and CFOs saw negotiation as a process of persuading the other party to adopt the favoured position, or agreeing on some middle ground, rather than as an opportunity to developing new solutions, to the advantage of both.
Verified writer
Proficient in: Accounting
5 (339)
“ KarrieWrites did such a phenomenal job on this assignment! He completed it prior to its deadline and was thorough and informative. ”
The two groups saw similar central roles for accounting standards and expertise as well as seeing the audit committee as entirely peripheral and were usually not notified of any negotiations. CFOs had more accounting expertise and understood the business better than the partners did.
The two interpreted similar elements and features differently.
While the partners emphasized the importance of prior negotiation to the current one, the CFOs gave their accounting expertise higher ratings. The audit partners were also aware of a list of potential issues to be negotiated, whereas the CFOs perceived the issues to be a one-off. These different perspectives would of course affect the negotiation strategies as well as outcomes. Factors that would influence current negotiations
• Antecedent conditions: These are derived from the client’s history and past negotiations. Although they both agreed that the history of negotiations was moderately important, audit partners viewed these more importantly that the CFOs did. • Accounting issues: These involve the client’s financial statements and may be affected by changes such as financial standards. Here, differences in expertise may cause both parties to view issues in different lights because a majority of each group chose examples where they first identified the issues.
• The negotiation process: This would start with exchanging of information then assessment of the issue, followed by various interactions and finally identification of the general possible outcome. Both sides saw themselves as important to the issue resolution as they reported considerable involvement of their staff, as well as citing the other group’s staff as examples. They both felt that the length of time it took to resolve an issue was considerably long while the auditors felt that it took longer than the CFOs felt.
• Accounting outcome: This is the end of the formal negotiation. Auditors felt they accepted the CFOs position more than the CFOs accepted the auditors positions. • Consequences This is the financial reporting result which involved both groups having a common ground on clean or unqualified audit, with the same auditor being reappointed and pending issues being agreed upon as to be revisited in future audits, possibly leading to future negotiations.
In conclusion we can say that both parties agree on the contextual features that are important in all negotiations even if they differ in the emphasis on how each constructs an analysis and decision frame. REFERENCES Gibbins, Michael. McCracket Susan. A. & Salterio, Steven, E. Negotiations Over Accounting Issues: The Congruency of Audit Partner and Chief Financial Officer Recalls. 2005
Negotiations Over Accounting Issues. (2020, Jun 02). Retrieved from https://studymoose.com/negotiations-over-accounting-issues-new-essay
👋 Hi! I’m your smart assistant Amy!
Don’t know where to start? Type your requirements and I’ll connect you to an academic expert within 3 minutes.
get help with your assignment
