Abstract. A description of factors contributing to good judgment is developed by considering both the process exercising and results having exercised it. Factors are from public accountants' perceptions important components in characterizing professional accounting. Descriptive data about quality presented hypotheses concerning justification tested using responses a process‐oriented questionnaire. The emphasis on natural environment accountant types situations which occur field, with...

The outcome effect occurs where an evaluator, who has knowledge of the a judge's decision, assesses quality judgment that decision maker. If evaluator negative outcome, then negatively influences his or her assessment ex ante judgment. For instance, jurors in lawsuit brought against auditor for alleged negligence are informed undetected fraud, even though unqualified opinion was issued. This paper reports results experiment applied audit setting examined methods mitigating by means...

Public expectations of auditors' objectivity, the on-going debate over independence (SEC 2001), and previous research motivate our study one aspect auditor rotation. Using an experimental case, we examine impact continuity on concurring partner reviews. Continuity specifically refers to a partner's assumed degree prior involvement with client engagement. We explore two levels involvement—a continuing (i.e., involved as in current year's engagement) new engagement only). Based information...

SUMMARY: This study examines the engagement quality review (EQR) process from perspective of partner. A questionnaire was administered to 127 audit partners in public accounting firms, experienced performing EQRs. The covered elements, associations, and contextual features surrounding EQR process. Partners recalled an their choosing where they acted role partner involved direct negotiation or discussions with resolve one more issues. results provide a comprehensive picture typical EQR;...

SYNOPSIS Regulators consider lack of professional skepticism to be a major cause audit deficiencies and are concerned that auditors more willing accommodate less conservative accounting policies in clients employing former partner their firm because diminished skepticism. This study examines the impact alumni serving as senior members client's management on auditors' skeptical judgment. In controlled experiment with three different conditions, managers assessed potential impairment goodwill....

Abstract. This paper reports the results of an experiment examining framing bias and a potential debiasing technique. Practicing auditors formed judgment about hypothetical client's inventory internal control system to determine amount related substantive testing. Auditors from two Big Six firms were randomly assigned one four treatments in fully crossed 2 times between‐subjects design. The initial description was identical for all treatments, as items additional evidence system. either...

Audit partners may be called upon to evaluate, ex post, the work of another auditor. One example such an evaluation is a Peer Review. An experiment was conducted that examined influence outcome knowledge on going concern and peer judgments 122 audit from Canada United States. Outcome information manipulated at three levels—no outcome, negative positive information. The results confirm previous research show are subject Negative influenced (1) partners' assessments likelihood client's...

ABSTRACT This paper examines the relationship between audit seniors discussing their own experiences with committing and correcting errors (modeling fallibility), juniors' thinking about error communication (openly self-discovered errors). The investigates direct senior modeling fallibility responses, whether is mediated through strain error-related self-efficacy. Survey data from 266 juniors two Big 4 Canadian accounting firms showed a positive association errors, communication. positively...

This paper presents the results of a field experiment that tested effects various qualitative risk factors suggested by auditing standards and prior literature on practicing Canadian auditors’ estimates performance materiality, concept introduced Auditing Standard (CAS) 320, in audit specific accounts financial statement audit. Ninety-four auditors responded to four scenarios and, based “good” “bad” versions six factors, revised or not, as they deemed appropriate, initially established...

This study presents an empirical cross-industry descriptive analysis of overall quantitative materiality measures. We examine the behaviour four commonly used measures within and across industries with respect to their size, relative size stability, over ten years. The sample consists large- medium-sized European companies, representing 24 different industry categories for years 1998 through 2007 (a total 36,000 data points). Our results show that these are variable stability time, both a...

This paper used a combined approach informed by the results of research in social psychology and auditing to examine second partner review process role different parties that process. The behavioural negotiation literature was synthesized develop model incorporating features accounting setting review. create questionnaire be given partners public firms, experienced doing such reviews. questionnaire, developed from previous auditing, covered elements, associations contextual surrounding 127...

We introduce and operationalize a new construct: team leader modeling fallibility in this study. hypothesize that influences members' learning from errors through three mediators: psychological safety, error strain, error-related self-efficacy. Using data collected two large Canadian accounting firms, we found the supporting evidence of an overall positive impact on errors. conclude by discussing theoretical practical implications