How Does an Audit Committee That Encourages Perspective Taking Impact Auditor and Client Judgments During Accounting Disagreements?

SUMMARY We summarize the published study “The Influence of Perspective Taking Encouraged by the Audit Committee on Auditor and Client Judgments during Accounting Disputes” (Bhattacharjee, Moreno, and Pyzoha 2020), which examines the impact of an audit committee (AC) that assists in a disagreement by encouraging the auditor and client to consider their counterpart’s perspective throughout a multiple-stage resolution process. The authors find that an AC that encourages perspective taking compared with an AC that does not leads to a higher likelihood of agreement between the auditor and the client. The AC’s approach continues to impact the parties’ behavior after the AC provides a resolution recommendation. The findings have important implications for practitioners, policymakers, and regulators regarding the critical role of the AC in disagreement resolution.