The Effects of a Supervisor’s Active Intervention in Subordinates’ Judgments, Directional Goals, and Perceived Technical Knowledge Advantage on Audit Team Judgments
Mark E. Peecher
University of Illinois College of Law; University of Illinois at Urbana-Champaign
M. David Piercey
University of Massachusetts at Amherst
Illinois State University - College of Business
Richard M. Tubbs
University of Iowa - Department of Accounting
April 29, 2010
Accounting Review, Volume 85, No. 5, pp. 1763-1787, September 2010
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.
Keywords: Audit team judgments, client pressure, directional goals, active intervention, technical knowledge
JEL Classification: C9, C92, M4, M41, M42, M48, M49Accepted Paper Series
Date posted: May 4, 2010 ; Last revised: January 27, 2011
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