AUDITOR-FIRM CONFLICT: THEORETICAL CONCEPTS APPLICATION AND ANALYSIS OF THE POWER DYNAMICS INVOLVED

Authors

  • IDOWU EFERAKEYA, PHD DENNIS OSADEBAY UNIVERSITY, ANWAI-ASABA, ASABA, DELTA STATE, NIGERIA Author

DOI:

https://doi.org/10.70518/ajoa.v13i1.08

Keywords:

Auditor Independence, Conflict of Interest in the Firm, Dependency Theory, Firm, , Goldman and Barlev Model, Interpersonal Exchange Theory, Power Positions

Abstract

This study undertakes a theoretical analysis of the auditor-firm conflict situation. It relied on the review of literature methodology and focused mainly on the auditor's appointment, firm economic pressure, management bargaining power, auditor's fear of losing a firm, firm's management economic power over the auditor, auditor's personal attributes and moral reasoning, auditor's tenure, audit fees, audit market competitiveness, non-audit services, audit firm size, and the firm’s financial condition. The Goldman and Barlev model, exchange, and dependency theories provided the basis to explain the likely power positions in the auditor-firm relationship. Employing the deductive analysis, the study indicated the presence of an asymmetry power structure where the auditor and firm can have low and high-power positions. On this basis, the study proffered resolution measures that include the imposition of reputational and litigation costs; strengthening of audit committees; the need for regulations on the auditor’s appointment and remuneration; impose disciplinary measures on firms and auditors, and ensure strong enforcement of standards. These measures are capable of curtailing the auditor's and firm actions in reducing violation of auditing standards; improve the auditor's independence, reduce the firm's pressure on the auditor, and bring about the balance of power positions. The paper has implications for understanding the auditor-firm conflict situation and provides opportunities for strengthening audit policy and audit standards development.

Author Biography

  • IDOWU EFERAKEYA, PHD , DENNIS OSADEBAY UNIVERSITY, ANWAI-ASABA, ASABA, DELTA STATE, NIGERIA

    DEPARTMENT OF ACCOUNTING, DENNIS OSADEBAY UNIVERSITY, ANWAI-ASABA PMB 95090, ASABA, DELTA STATE, NIGERIA

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Published

2024-06-24

How to Cite

AUDITOR-FIRM CONFLICT: THEORETICAL CONCEPTS APPLICATION AND ANALYSIS OF THE POWER DYNAMICS INVOLVED (I. EFERAKEYA , Trans.). (2024). ANAN Journal of Accounting, 13(1), 145-170. https://doi.org/10.70518/ajoa.v13i1.08

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