Are There Interactive Effects of Subordinate and Client Competence on Audit Reviewers’ Judgments?
Advances in Accounting Behavioral Research
ISBN: 978-1-78441-636-2, eISBN: 978-1-78441-635-5
Publication date: 1 October 2015
Abstract
Prior research suggests that perceived levels of a subordinate auditor’s competence affects audit reviewers’ judgments. We extend this line of research by investigating the effects of perceived client competence (hereafter, ClientComp) and its interaction with subordinate auditor’s competence (hereafter, AuditorComp) on audit reviewers’ judgments. Using data from highly experienced CPA audit managers, senior managers, and partners, we find a significant main effect for AuditorComp, but not for ClientComp. We also find that when AuditorComp is high, levels of ClientComp do not affect audit reviewers’ judgments. However, we cannot support the hypothesis that when AuditorComp is low ClientComp will significantly affect audit reviewers’ judgments. These mixed results suggest that in the post-SOX (2002) era regulatory environment, audit reviewers may be exercising heightened professional skepticism about ClientComp whenever they consider clients’ assertions.
Keywords
Acknowledgements
Acknowledgments
We thank Abraham Akresh, Barbara Apostolou, Daniel Banks, Jean Bedard, Neal Berg, Philip Beaulieu, Dave Duprey, John Fleming, Steve Glover, Gerald Hepp, Mikhail Pevzner, Jim Rebele, Dave Sinason, Cindy Sobieski, Stefanie Tate, Greg Trompeter, and Leah Woodall for their helpful comments on prior versions of this study, as well as workshop participants at Brigham Young University and Bentley University, and a number of presentations at AAA meetings. We gratefully acknowledge the busy professionals who participated in this study for their time and insights. Nathan Cannon developed a proposal for this research in a judgment and decision-making PhD seminar that one of the authors taught. He also helped significantly with the development of the study. We gratefully acknowledge his contributions. Chris Almeida, Cherry Xin, and Lan Lian provided able research assistance at Bentley University.
Citation
Abdolmohammadi, M. and Reinstein, A. (2015), "Are There Interactive Effects of Subordinate and Client Competence on Audit Reviewers’ Judgments?", Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 18), Emerald Group Publishing Limited, Leeds, pp. 69-97. https://doi.org/10.1108/S1475-148820150000018016
Publisher
:Emerald Group Publishing Limited
Copyright © 2015 Emerald Group Publishing Limited