Specialists’ Evidence Evaluation and Judgments in Audits

39 Pages Posted: 20 Jun 2016 Last revised: 30 May 2024

See all articles by Tim Bauer

Tim Bauer

University of Waterloo - School of Accounting and Finance

Cassandra Estep

Emory University

Emily E. Griffith

University of Wisconsin - Madison

Date Written: May 24, 2024

Abstract

While valuation specialists employed by public accounting firms primarily prepare valuations for advisory clients, they also play an important role evaluating components of valuations for audit clients when auditors lack the necessary expertise. This sets the stage for questions about the extent and impact of specialists’ psychological ownership of their audit work. We conduct a survey and an experiment with practicing valuation specialists to investigate their ownership of their audit work and the effects of ownership on specialists’ evidence evaluation and judgments. In the survey, we provide insight into specialists’ psychological ownership – the feeling that something is your own – and its contributing factors, which vary across specialists’ experiences. In the experiment, we vary specialists’ psychological ownership of their audit work and whether auditor behavior infringes upon specialists’ audit work. We predict and find that specialists with higher psychological ownership identify more contradictions during their evidence evaluation and make more evidence-informed judgments, but only when auditors do not infringe on the specialists’ work. These outcomes are a necessary precursor to auditors’ effective use of valuation specialists, and our study suggests the success of targeting specialists’ psychological ownership to achieve these outcomes is contingent upon auditors’ behavior.

Keywords: Accounting estimates, audit team interactions, infringement, psychological ownership, specialists, valuation

Suggested Citation

Bauer, Tim and Estep, Cassandra and Griffith, Emily Elaine, Specialists’ Evidence Evaluation and Judgments in Audits (May 24, 2024). Available at SSRN: https://ssrn.com/abstract=2798346 or http://dx.doi.org/10.2139/ssrn.2798346

Tim Bauer

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada

Cassandra Estep

Emory University ( email )

1300 Clifton Road
Atlanta, GA 30322
United States

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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