Do client's initial estimates and prior concessions influence auditor-client negotiations?

What is it about?

This study reports the result of an experiment examining two aspects of the audit context that auditors likely do not suspect can influence audited account balances: the magnitude of an audit difference and the presence of a prior client concession. Our results show that the magnitude of an audit difference involving an estimate (i.e., difference between client’s account balance and the auditor’s independent estimate) as well as the presence of a prior client concession both cause auditors to propose smaller adjustments.

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Why is it important?

Auditors should be aware of how their estimates of "reasonable" could be compromised by certain client actions (deliberate or unintentional).