Auditors, Specialists, and Professional Jurisdiction in Audits of Fair Values
70 Pages Posted: 13 Jul 2016
There are 2 versions of this paper
Auditors, Specialists, and Professional Jurisdiction in Audits of Fair Values
Auditors, Specialists, and Professional Jurisdiction in Audits of Fair Values
Date Written: July 09, 2016
Abstract
Auditors frequently use valuation specialists to help them evaluate fair values, but problems related to specialists’ involvement suggest the potential benefits of specialists’ involvement are under-realized. I interviewed 28 auditors and 14 valuation specialists to investigate how auditors use valuation specialists in audits of fair values. I analyze the interviews using theories of trust in expert systems (Giddens 1990, 1991) and systems of professions (Abbott 1988). This analysis reveals that auditors’ reliance on specialists for valuation knowledge threatens auditors’ perceived jurisdictional claim to the audit. This triggers defensive behaviors by auditors that collectively form a tendency to make specialists’ work conform to the audit team’s perspective. By identifying auditors’ tendency to make specialists’ work conform to their perspective and theorizing jurisdictional defense as a root cause of this tendency, this study informs researchers, practitioners, and standard setters interested in understanding and addressing problems in the fair value setting.
Keywords: Accounting Estimates, Auditing, Fair value, Professions, Specialist
JEL Classification: M40, M41, M42
Suggested Citation: Suggested Citation