Uncooperative clients can undermine audit quality, according to new study

A young auditor stares at clearly inconsistent financial reports while their business client offers vague explanations and deflections. Despite recognizing the red flags in this person’s behavior, the auditor hesitates to press harder, caught between professional instinct and uncertainty about how to navigate the client's resistance.

This scenario highlights why effective business auditing requires not just technical skill but the confidence to act when something feels wrong. According to a new study, though, there’s a troubling inconsistency in how auditors respond to difficult clients during business financial audits, a needed assessment to ensure a company’s financial statements are an accurate representation of their transactions. 

Researchers from the University of Florida Warrington College of Business found that while auditors, especially younger auditors, mentally flag uncooperative clients as higher risk, they surprisingly act with less scrutiny when faced with these challenging interactions.

In four complementary studies, Fisher School of Accounting Assistant Professors Michael Ricci, Ph.D., and Dan Rimkus, Ph.D., examined both auditor behavior and client strategies. Their findings reveal a significant gap between what auditors think and what they actually do when dealing with uncooperative clients, like those who respond slowly to requests, provide disorganized evidence, limit their availability or behave aggressively.

“We seem to be doing a nice job of training young auditors to be perceptive,” Ricci said. “Not only do they pick up on uncooperative behavior, but they sense that it’s a bit suspect. At the same time, our evidence suggests that young auditors are anxious about following up on their instincts.

“So, we could probably do a better job of equipping young auditors with the social skills needed to follow-up on those instincts.”

Perhaps most concerning, the study found that experienced client managers of a business working with audit firms are aware of this tendency among auditors and strategically exploit it. In an experiment, client managers who were deliberately misreporting financial information were more likely to act uncooperatively, correctly anticipating that this behavior would discourage auditor scrutiny despite raising red flags.

“If someone knows that an auditor can be put off by just being a little difficult, they can use that to cover up bad behavior,” Rimkus said. “They don’t worry about that looking suspicious, because they anticipate auditors not wanting to follow their nose on those suspicions.”

The researchers offer a potential solution for audit firms: when auditors were "shielded" from direct interaction with uncooperative clients, it reduced the inconsistency. In these cases, auditors both identified uncooperative clients as higher risk and were not deterred from investigating further.

While additional research is needed, other recommendations include coaching young auditors on difficult client interactions, allowing younger auditors to shadow senior auditors during challenging client meetings and firms providing access to outlet activities that help auditors manage anxiety.