Accounting

Rude clients harm audit quality

Published

8 months ago

November 17, 2025

Nasty behavior by individuals at client companies toward auditors is widespread and can negatively affect audit quality and auditor judgment, according to a recent academic study.

The study, which appears in the journal Contemporary Accounting Research, examines the impact of client incivility on auditors’ professional judgment and whether auditors can reduce any adverse effects by using coping strategies. The researchers conducted an experiment on 114 senior auditors, manipulating whether auditors are exposed to client incivility and, if so, whether they’re prompted to cope actively, passively, or not at all. They also surveyed 70 auditors across the U.S. and Canada of all ranks about their experiences. They defined client incivility as negative behavior, such as rudeness, exhibited by clients toward service providers with ambiguous intent to harm.

“We found that auditors don’t experience incivility from time-to-time — they experience it a lot,” wrote one of the researchers, Ala Mokhtar of McMaster University in Ontario, Canada, who co-wrote the study with Tim Bauer of the University of Waterloo and Sean Hillison of Virginia Tech. “Ninety percent of auditors said they had encountered negative client behavior at some point in their careers.”

Over three-fourth (77%) of the auditors surveyed said clients had rudely told them how to do their jobs or questioned their procedures, while more than 60% had their skills or abilities questioned and over 50% had been ignored or faced hostility when approaching a client. One-third of the auditors reported being bullied at some point in their career.

Client rudeness can cause auditors to back off and allow clients to get away with aggressive accounting choices. The experiment involved a client recording a seemingly low inventory write-down amount supported by weak assumptions. The researchers measured the auditors’ willingness to challenge the aggressive reporting by asking what write-down amount they would propose. A higher amount would indicate a greater challenge to aggressive reporting. They found that auditors’ write-down amounts were lower when they experienced client incivility, as opposed to when they didn’t.

They also looked at the coping mechanisms used by auditors who experienced rude behavior from clients and found that active coping mechanisms such as looping in a senior colleague to intervene in the situation helped reduce the auditor’s emotional distress and helped them push back against an aggressive accounting choice by the client.

Accounting Today asked Mokhtar whether there could be the opposite effect from client incivility, with auditors getting tougher on client companies whose employees act rudely toward them.

“The opposite effect you’re referring to is actually part of what motivated our research,” she replied. “We wanted to understand whether auditors become more skeptical when they encounter client incivility or whether incivility undermines their judgment. Our findings suggest that, on average, auditors are less likely to challenge clients’ aggressive accounting when they face incivility, rather than getting tougher on them. That said, the effect may depend on other circumstances. In our generic setting, auditors became less tough, but it’s possible that certain environmental factors could lead to the opposite response. Our survey also showed that auditors sometimes report becoming tougher in those situations. We just haven’t tested those contextual factors yet.”

For audit firms that wish to maintain high audit quality, the researchers suggest it’s critical to assess the risks associated with serving uncivil clients. “Client incivility pervades the audit profession, and there is no reason to believe that it will diminish,” said the study. “Our research suggests firms could encourage auditors to use active coping, as it helps them challenge aggressive reporting.”

Active coping can include talking to the perpetrator or to a superior who can intervene. Training can be helpful in this regard. “Audit firms may want to consider a broader set of remedies, such as training or more open dialogue on client incivility and coping, to ensure auditors are aware of different coping responses, how to engage in them, and which ones could benefit their judgments and mental well-being the most,” said the study.

Accounting

Continuous Auditing Transforms Corporate ERPs

Published

3 days ago

July 21, 2026

Business Finance News

continuous auditing transforms corporate erps

As corporate accounting departments cross the threshold into late July 2026, the adoption of continuous, automated auditing systems has reached a definitive turning point. Driven by advances in artificial intelligence and deep integration with modern Enterprise Resource Planning (ERP) platforms, leading finance organizations are moving away from traditional, periodic post-hoc audits in favor of real-time, 100% transactional verification. This technological transition is redefining internal control environments, reducing compliance costs, and eliminating the structural delays inherent in legacy quarterly closing processes.

Unlike traditional auditing frameworks that rely on statistical sampling—a process that inevitably leaves operational blind spots—continuous auditing software monitors operational data feeds continuously. Every purchase order, electronic invoice, payroll disbursement, and cross-border wire transfer is automatically cross-referenced against established corporate governance parameters, regulatory tax schedules, and anti-fraud algorithms in real time. Anomalies or unauthorized ledger entries are flagged instantly, allowing internal audit teams to investigate and remediate compliance gaps immediately rather than months after the close of a financial period.

The implications for executive financial management are far-reaching. By embedding continuous verification directly into daily transaction workflows, chief financial officers gain uninterrupted visibility into the organization’s true financial standing. Real-time balance sheet auditing eliminates the severe operational bottlenecks associated with month-end and quarter-end financial reconciliations, freeing accounting professionals to focus on strategic financial modeling, tax planning, and capital allocation rather than manual data entry and spreadsheet consolidation.

However, implementing continuous auditing requires accounting leadership to invest heavily in data governance and technical upskilling. Internal audit teams must evolve from manual ledger reviewers into system architects capable of auditing complex algorithms and validating automated data pipelines. Accounting firms and corporate controllers that master continuous auditing will establish a resilient compliance framework capable of meeting stringent international regulatory standards with total transparency.

Accounting

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

Published

4 days ago

July 20, 2026

Business Finance News

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

WASHINGTON — In a major escalation of cross-border trade friction, U.S. President Donald Trump has signed executive orders imposing new 50% tariffs on a wide selection of Canadian exports, citing discriminatory practices by Ottawa targeting American auto, dairy, and beverage industries.

The new duties, announced Monday, will take effect in 30 days. They target a broad spectrum of consumer and industrial goods—ranging from wine, liquor, and milk products to commercial cement, furniture, clothing, and hockey equipment.

Untested Legal Mechanism

To enact the sweeping measures, the administration invoked Section 338 of the Tariff Act of 1930—a rarely used legal provision allowing the executive branch to levy additional tariffs of up to 50% on foreign nations deemed to discriminate against U.S. commerce.

White House officials noted that Section 338 addresses trade discrimination rather than national security or economic emergencies. The move comes months after prior global emergency tariffs faced legal challenges in domestic courts, signaling Washington’s pivot toward alternate statutory authorities to maintain import duties.

Senior administration officials briefed reporters that the measure directly responds to Canadian provincial bans on U.S. alcohol, restrictions on American vehicle exports, and import quota disparities affecting U.S. dairy and cheese producers relative to third-party trading partners.

“While the administration continues to secure reciprocal trade agreements globally, Canada retaliated against efforts to protect domestic industry,” U.S. Trade Representative Jamieson Greer stated.

USMCA Impact and Carve-Outs

Significantly, the newly ordered 50% duties will apply to designated items even if they otherwise comply with the United States-Mexico-Canada Agreement (USMCA).

However, the administration confirmed key targeted exemptions:

Energy products (including oil and natural gas)
Potash and critical minerals
Fish and seafood
Goods already governed by sector-specific duties (such as existing steel and aluminum tariffs)

Administration representatives emphasized that the tariffs do not stem from recent disputes concerning drifting Canadian wildfire smoke, noting that policy options regarding environmental spillover remain under separate review.

Canadian Response and Market Reaction

Following the White House announcement, the Canadian dollar experienced a sharp decline against the U.S. dollar, falling approximately 0.4% during evening trading.

Canadian Prime Minister Mark Carney issued a statement emphasizing that Canada’s earlier counter-duties had merely matched previous U.S. trade actions. “Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens,” Carney stated, pointing to detailed proposals Ottawa submitted to modernize the USMCA framework.

Ontario Premier Doug Ford took a firmer stance, urging a “dollar-for-dollar” reciprocal response if the measures go into effect on August 19.

With a 30-day implementation window before the duties officially lock in, industry associations and trade groups on both sides of the border are calling for urgent bilateral negotiations to avert further supply chain disruption across North America.

Accounting

Automated Continuous Auditing: Transforming Compliance and Real-Time Financial Oversight

Published

4 days ago

July 20, 2026

Business Finance News

Transforming Compliance and Real-Time Financial Oversight

The traditional accounting paradigm—defined by periodic monthly closures and post-hoc annual audits—is rapidly giving way to continuous, automated financial oversight. As of July 2026, forward-thinking accounting practices and multinational corporate finance departments are leveraging continuous auditing systems powered by advanced machine learning models. These systems monitor operational transactions in real time, shifting audit methodologies from sample-based post-analysis to absolute, 100% transaction-level verification.

The operational advantages of continuous auditing are transformative. Standard auditing procedures historically relied on statistical sampling, which, despite rigorous methodology, inherently left gaps where anomalies or fraudulent transactions could go undetected for months. Modern continuous auditing platforms integrate directly with enterprise resource planning (ERP) databases, instantly cross-referencing purchase orders, invoices, bank feeds, and tax records. Any deviation from established control parameters or unusual transaction behavior triggers immediate flags for internal audit teams, dramatically reducing detection lag from quarters to seconds.

Beyond fraud prevention, continuous auditing fundamentally alters internal reporting and decision-making. Executive leadership no longer has to wait weeks after the close of a quarter to evaluate precise financial standing; real-time verified ledger data provides an uninterrupted view of operating margins, tax liabilities, and cash flow dynamics. This real-time visibility enables corporate controllers to adjust capital allocation strategies dynamically, mitigating liquidity constraints and capitalizing on emerging commercial opportunities far more efficiently than competitors bound to legacy reporting cycles.

However, implementing continuous auditing requires accounting professionals to acquire new analytical capabilities. The role of the auditor is evolving from manual data reconciliation toward system validation, algorithmic model governance, and strategic risk interpretation. Accounting firms and corporate finance departments must invest in continuous technical education, ensuring that audit staff possess the data engineering skills necessary to design, maintain, and evaluate complex automated compliance systems.