Auditors, Specialists, and Professional Jurisdiction in Audits of Fair Values

70 Pages Posted: 2 Jul 2014 Last revised: 24 Jan 2017

Date Written: March 1, 2015


Auditors frequently use valuation specialists to help them improve the quality of audits of fair values, but problems related to specialists’ involvement suggest specialists do not always improve audit quality. I interviewed 28 audit partners and managers with extensive experience using valuation specialists to investigate how auditors use valuation specialists in audits of fair values and how specialists’ involvement affects audit quality. I find that while valuation specialists perform many of the most difficult and important elements of auditing fair values, auditors retain responsibility for making overall conclusions about fair values. Collectively, the interviews reveal a tendency among auditors to make specialists’ work conform to the prevailing audit team view. This puts audit quality at risk. I apply Giddens’ (1990, 1991) theory of trust in expert systems to identify a root cause underlying this problematic tendency. The necessity of trusting in an expert system of valuation specialists causes tension for auditors who ultimately bear responsibility for judgments about fair values, yet who must rely on the expertise of specialists to make these judgments. Auditors’ tendency to make specialists’ work conform arises from this tension as a way to preserve their expert role. By identifying auditors’ tendency to make specialists’ work conform to their prevailing view and theorizing a root cause of this tendency, this study informs researchers, practitioners, and standard setters interested in improving audit quality in the fair value setting.

Keywords: Accounting estimates, Audit quality, Fair value, Specialist

JEL Classification: M40, M41, M42

Suggested Citation

Griffith, Emily Elaine, Auditors, Specialists, and Professional Jurisdiction in Audits of Fair Values (March 1, 2015). Available at SSRN: or

Emily Elaine Griffith (Contact Author)

University of Wisconsin - Madison ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

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