The Chief Financial Officer's Perspective on Auditor-Client Negotiations

ABSTRACT IN ENGLISH: Auditor-client negotiation about difficult client accounting issues involves both the auditor and the client. On the client side, the chief financial officer (CFO) plays a central role in the financial reporting process, yet is rarely the focus of academic study. This paper reports how a sample of Canadian CFOs viewed the negotiation process and context, using an experiential questionnaire to build on the negotiation model developed and demonstrated for the auditor side of the negotiation by Gibbins, Salterio, and Webb 2001, and corroborated by a comparison of common questionnaire items across auditor and CFO samples by Gibbins, McCracken, and Salterio 2005. The CFOs saw negotiation with the auditors as a consequence of change in accounting and disclosure standards or personnel influential to their financial reporting or business changes, such as new business deals or acquisitions. Negotiation was thrust upon the CFO, who then had to manage it. The CFOs informed other management (such as the chief executive officer) and was aware of their interests, but did not generally seek his or her help. Informing the board or the audit committee of the issue was much less frequent. The issue being negotiated was seen as complex, requiring research and analysis, and dependent on knowledge and expertise, with the result more likely reflecting form over substance (a result some CFOs suggested was more agreeable to the auditor than to the CFO). // ABSTRACT IN FRENCH: Les négociations entre vérificateur et client au sujet de questions comptables épineuses qui se posent à l'entreprise cliente exigent l'intervention des deux parties en cause. Du côté du client, le directeur financier joue un rôle central dans le processus d'information financière, bien que ce rôle fasse rarement l'objet de recherches. Les auteurs exposent ici les résultats d'une étude réalisée au moyen d'un questionnaire expérientiel auprès d'un échantillon de directeurs financiers canadiens quant à la façon dont ils envisagent le processus et le contexte de négociation. L'étude a pour but d'enrichir le modèle de négociation du vérificateur, élaboré et éprouvé par Gibbins, Salterio et Webb (2001) et corroboré grâce à la comparaison d'éléments communs des questionnaires soumis à des échantillons de vérificateurs et de directeurs financiers par Gibbins, McCracken et Salterio (2005). L'étude révèle que les directeurs financiers envisagent la négociation avec les vérificateurs comme une con