Can Audit Partners Predict Subordinates' Ability to Detect Errors?

This study examines audit partners' predictions of the ability of managers and seniors to detect financial statement errors. If partners are unable to predict the ability of their subordinates to detect errors, audit effectiveness may be affected. Audit partners were asked to predict which members of the audit team (managers or seniors) are able to detect specific types of errors. These predictions were then compared to errors detected by managers and seniors that were seeded in working papers. The results show that partners (1) exhibit significant overconfidence in the ability of subordinates to detect errors, (2) are more accurate in predicting managers' performance than seniors (cf. Kennedy and Peecher [1997]), (3) are more accurate at predicting subordinates' ability to detect mechanical (simple) errors than conceptual (complex) errors (cf. Tan and Jamal [2006]) and (4) are not better at predicting subordinates' ability to detect more frequent and more important errors than less frequent and less important errors