Predecisional Distortion of Evidence as a Consequence of Real-Time Audit Review

Posted: 30 Jul 2001

Abstract

With the current shift toward real-time audit review, subordinates become aware of supervisors' views earlier in the audit process. I use an experiment to examine whether earlier knowledge of supervisors' views increases subordinates' tendencies to agree with those views because subordinates predecisionally distort evidence. In a going-concern task, I find that auditors who learn the partner's view before evaluating evidence: (1) evaluate individual evidence items as more consistent with the partner's view, and (2) make going-concern judgments that are more consistent with the partner's view than do auditors who learn the same partner's view after evaluating evidence. In a second experiment, I examine whether auditors anticipate distortion's effect on subordinates' judgments. I find that auditors expect subordinates to make judgments that agree with supervisors' views, but auditors do not expect subordinates to agree even more with those views when subordinates learn those views earlier in the audit process.

Keywords: Predecisional distortion; Accountability; Motivated reasoning; Audit-review process

JEL Classification: D80, M49

Suggested Citation

Wilks, Thomas Jeffrey, Predecisional Distortion of Evidence as a Consequence of Real-Time Audit Review. Accounting Review, Vol. 77, No. 1, January 2002. Available at SSRN: https://ssrn.com/abstract=277029

Thomas Jeffrey Wilks (Contact Author)

Brigham Young University ( email )

School of Accountancy
526 Tanner Building
Provo, UT 84602 84602
United States
801-422-3930 (Phone)
801-422-0621 (Fax)

HOME PAGE: http://marriottschool.byu.edu/directory/details?id=5337

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