The Effects of a Supervisor's Active Intervention in Subordinates' Judgments, Directional Goals, and Perceived Technical Knowledge Advantage on Audit Team Judgments

Prior research shows that an audit supervisor's active intervention in a subordinate's judgment distorts that judgment. However, subordinates' judgments are only one input into audit team judgments. How do supervisors finalize audit team judgments after actively intervening in their s...

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Published inThe Accounting review Vol. 85; no. 5; pp. 1763 - 1786
Main Authors Peecher, Mark E., Piercey, M. David, Rich, Jay S., Tubbs, Richard M.
Format Journal Article
LanguageEnglish
Published Sarasota American Accounting Association 01.09.2010
Subjects
Accountants
Accounting methods
Accounting standards
Audit departments
Auditing
Auditing standards
Audits
Bias
Cognition
Experiment design
Financial accounting
Financial audits
Financial reporting
Financial services
Focalism
Impact analysis
Judgment
Management audits
Quality control
Questionnaires
Reasoning
Studies
Subordinates
Supervisors
Tax audits
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Summary:Prior research shows that an audit supervisor's active intervention in a subordinate's judgment distorts that judgment. However, subordinates' judgments are only one input into audit team judgments. How do supervisors finalize audit team judgments after actively intervening in their subordinates' judgments? In an experiment using audit teams, supervisors with weaker or stronger goals to reach a client-preferred conclusion either were or were not asked to first actively coach a subordinate's judgment (i.e., active intervention) before reviewing it and finalizing the audit team's judgment. Supervisors' intervention influenced subordinates' inputs, which, in turn, supervisors incorporated into their final judgments. More interestingly, intervention biased supervisors' final judgments, controlling for supervisor directional goal strength and for concurrent effects on subordinates' inputs. However, supervisors distorted their judgments less as they perceived a larger technical knowledge advantage over subordinates. In a second experiment, auditors appear aware of the bias-reducing knowledge advantage effects but unaware of the bias-increasing active intervention effects. We discuss implications for audit team judgments and audit quality control.
Bibliography:ObjectType-Article-2
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ISSN:0001-4826
1558-7967
DOI:10.2308/accr.2010.85.5.1763