Audit and tax professionals tend to make judgments consistent with their client's preference, even when that preference is aggressive. Client preference affects judgments directly and indirectly, via information search. In particular, professionals focus their search on information that supports...

Tax professionals are responsible for objectively evaluating tax authorities and evidence relevant to their application and for serving as client advocates. We predict that practice risk, i.e., exposure to monetary and nonmonetary costs of making inappropriate recommendations, will affect tax...

We interview 24 very experienced auditors about how they audit complex accounting estimates such as fair values and impairments and what problems they experience in the process. We find that auditors overwhelmingly choose to audit the details of management's estimate rather than use other...

Auditors experience significant problems auditing complex accounting estimates, and this increasingly puts financial reporting quality at risk. Based on analyses of the specific errors that auditors commit, we propose that auditors need to be able to think more broadly and incorporate...

In the current environment of increasing exposure to liability in tax practice, it is particularly important to understand the judgment and decision processes of tax practitioners and the relation of those processes to features of the tax setting. One way that tax practitioners reduce their...

Under Section 302 of the Sarbanes Oxley Act, officers must evaluate the effectiveness of internal controls quarterly. We examine the stock price reaction to management's disclosure of internal control weaknesses and to their characteristics, controlling for other material announcements are made...

Auditors have difficulty evaluating the assumptions underlying management's estimates. One source of these problems is that auditors appear to dismiss evidence contradicting management's assumptions because their initial preference to support management's accounting biases their preliminary...

In this paper we report the results of two experiments that investigate auditing covariation-estimate revisions when there are countervailing incentives for effectiveness and efficiency. Covariation estimates assess the degree of association between a 'Clue' that auditors might observe, and its...

Auditors experience difficulty auditing accounts on which it is difficult to identify in advance all the evidence necessary to perform an effective audit. These accounts are challenging because they commonly require auditors to collect additional, relevant evidence in response to new information...

The Public Company Accounting Oversight Board (PCAOB) recently suggested that auditors' lack of specific fraud planning documentation has led auditors to devote insufficient attention to fraud risks in subsequent audit work. Guided by Support Theory, we experimentally investigate how the...