A comparison of auditor and client initial negotiation positions and tactics

This study examines the initial negotiation positions and tactics of auditors and clients facing a revenue recognition conflict. We investigate the degree of flexibility in auditor and client initial negotiation positions, whether auditors and clients accurately perceive the other party's positions, and the types of negotiation tactics that may be used by both parties. The results indicate that auditors and clients approach conflict resolution in very different ways. Clients were more flexible, determined the auditor's goals and limits more accurately, and were more likely to use negotiation tactics such as bid high/concede later and trade-off one reporting issue for another. The implications of these findings and directions for future research are discussed. (C) 2006 Elsevier Ltd. All rights reserved.