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How Internal Auditors Influence Managers

Presentation skills are as important as numbers.

February 7, 2011
from The Practicing CPA

A common assumption is that internal auditors need only to use numbers and relevant accounting information to support their position. However, a new study shows that just as important is how the auditors present themselves and their accounting information.

The study won the “Outstanding Emerging Scholars Award” at the American Accounting Association’s Accounting Behavior & Organizations Research Conference. Kirsten Fanning, professor at the Villanova School of Business with her co-author David Piercey, professor at the University of Massachusetts conducted the study of how internal auditors influence managers’ accounting judgments. Professors Fanning and Piercey recruited 133 managers and other business professionals enrolled in a professional executive training program as participants in the study and had them all read case information as managers of a hypothetical firm.

The experiment divided participants into groups that read different versions of the case. One version portrayed the internal auditor as “likable” (easy to be around, down to earth, nice and understanding). In another, the internal auditor was “dislikable” (hard to be around, arrogant, a jerk and condescending).

Format Variations

Different versions of the case also varied according to whether the available information was more or less supportive of the internal auditor’s preferred position, and whether that information appeared in an “argument format” or a “list format.” The argument format information was arranged into logically organized paragraphs that might help recipients better understand, attend to, and process the implications of that information. The list format placed exactly the same sentences of information into a random bullet point list to remove the argument’s thematic flow.

Professors Fanning and Piercey found that managers were persuaded more by the internal auditor when the auditor used an argument format and good interpersonal skills. However, neither argument format nor good interpersonal skills alone had any effect. Both the format and the skills had to be present together to further persuade managers over and above the implications of the accounting information alone. The joint effect of interpersonal skills and information format persuasion occurred regardless of whether the underlying accounting information was more supportive or less supportive of the internal auditor’s position.

This article has been excerpted from The Practicing CPA. View the full article here (PDF).

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