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

70 Pages Posted: 13 Jul 2016

Multiple version iconThere are 2 versions of this paper

Date Written: July 09, 2016

Abstract

Auditors frequently use valuation specialists to help them evaluate fair values, but problems related to specialists’ involvement suggest the potential benefits of specialists’ involvement are under-realized. I interviewed 28 auditors and 14 valuation specialists to investigate how auditors use valuation specialists in audits of fair values. I analyze the interviews using theories of trust in expert systems (Giddens 1990, 1991) and systems of professions (Abbott 1988). This analysis reveals that auditors’ reliance on specialists for valuation knowledge threatens auditors’ perceived jurisdictional claim to the audit. This triggers defensive behaviors by auditors that collectively form a tendency to make specialists’ work conform to the audit team’s perspective. By identifying auditors’ tendency to make specialists’ work conform to their perspective and theorizing jurisdictional defense as a root cause of this tendency, this study informs researchers, practitioners, and standard setters interested in understanding and addressing problems in the fair value setting.

Keywords: Accounting Estimates, Auditing, Fair value, Professions, Specialist

JEL Classification: M40, M41, M42

Suggested Citation

Griffith, Emily Elaine, Auditors, Specialists, and Professional Jurisdiction in Audits of Fair Values (July 09, 2016). Available at SSRN: https://ssrn.com/abstract=2808581 or http://dx.doi.org/10.2139/ssrn.2808581

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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