The effect of relationship and reward on reports of wrongdoing

Several auditing experts' propositions about communication's role in detecting fraud were investigated: 1. Communication from client personnel is important in detecting fraud. 2. The likelihood of receiving sensitive communications from client personnel is heavily dependent on the strength of the relationship between the auditor and the person knowledgeable of any wrongdoing. 3. The willingness to communicate is influenced by the knowledgeable person's understanding of who might be benefited by the wrongful act. The experts' suggestions and previous research relating to communication of wrongdoing resulted in the securing of input from 20 highly experienced audit partners. Five partners served as expert consultants prior to the execution of a controlled experiment which used auditing students. The experimental results, which came exclusively from students, indicated that stronger relationships between the observer and the potential report recipient resulted in more reports.