Improving Specialists’ Contributions to Audits

46 Pages Posted: 20 Jun 2016 Last revised: 13 Sep 2023

See all articles by Tim Bauer

Tim Bauer

University of Waterloo - School of Accounting and Finance

Cassandra Estep

Emory University

Emily E. Griffith

University of Wisconsin - Madison

Date Written: September 12, 2023

Abstract

Auditors rely on specialists to audit highly specialized areas of financial statements. Yet, auditors and specialists do not always work together effectively, which can inhibit specialists’ contributions to audits. Informed by researchers’ and practitioners’ identification of “ownership” as potentially central to this problem, we conduct a survey and experiment with practicing valuation specialists to investigate it. In the survey, we seek insight into specialists’ psychological ownership – the feeling that something is your own – of their audit work. We find that specialists’ ownership and its contributing factors vary across specialists and engagements. In the experiment, we vary specialists’ psychological ownership of their audit work and whether auditor behavior infringes upon specialists’ audit work. We predict and find that specialists with higher psychological ownership engage in deeper processing of evidence in the absence of auditor infringement. Deeper processing leads specialists to make more evidence-informed judgments and to communicate their judgments more effectively to the audit team, in a setting where the pattern of evidence suggests potential client misstatement. Our study emphasizes that while psychological ownership is a potential mechanism for interventions aimed at improving specialists’ contributions to audits through specialists’ behavior, the effectiveness of such interventions will depend on auditors’ behavior as well.

Keywords: Accounting estimates, audit team interactions, infringement, psychological ownership, specialists

Suggested Citation

Bauer, Tim and Estep, Cassandra and Griffith, Emily Elaine, Improving Specialists’ Contributions to Audits (September 12, 2023). Available at SSRN: https://ssrn.com/abstract=2798346 or http://dx.doi.org/10.2139/ssrn.2798346

Tim Bauer

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada

Cassandra Estep

Emory University ( email )

1300 Clifton Road
Atlanta, GA 30322
United States

Emily Elaine Griffith (Contact Author)

University of Wisconsin - Madison ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
394
Abstract Views
1,250
Rank
137,476
PlumX Metrics