What question did this study set out to answer?

The study aims to understand how audit partner compensation schemes and GAAP affect audit judgments, especially under auditor-client conflicts.

June 15, 2026Auditing A Journal of Practice & Theory

The Effect of Partner Compensation Schemes and Generally Accepted Accounting Principles on Audit Partner Judgment.

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The study aims to understand how audit partner compensation schemes and GAAP affect audit judgments, especially under auditor-client conflicts.
Fifty-four audit partners completed hypothetical audit cases with varying accounting alternatives.
Participants were categorized based on how much their firm emphasized local office profitability in partner compensation.
The study analyzed the responses to identify relationships between compensation, GAAP, and audit judgments.
Partners with compensation linked to client retention were less likely to require income adjustments; suggesting compromised objectivity.
More stringent GAAP guidelines increased the likelihood of partners requiring income adjustments, enhancing objectivity.
Internal monitoring mechanisms related to second partner reviews showed variability across firms, influencing auditor responses.

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Implication

Randomized trial reveals how audit partner compensation and GAAP influence auditor-objectivity across firms, indicating critical factors for ethical judgment.

Cite This Study

Greg Trompeter (1994) studied this question.

synapsesocial.com/papers/6a2f98a0a1cfeec490829a5a https://doi.org/10.2308/ajpt-9703143408

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Implication

Randomized trial reveals how audit partner compensation and GAAP influence auditor-objectivity across firms, indicating critical factors for ethical judgment.

The Effect of Partner Compensation Schemes and Generally Accepted Accounting Principles on Audit Partner Judgment.

Key Points

Discussion

Implication

Cite This Study

The Effect of Partner Compensation Schemes and Generally Accepted Accounting Principles on Audit Partner Judgment.

Key Points

Discussion

Implication

Cite This Study

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