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...

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...

CFOs and other managers depend on consultants to provide advice on management control systems (MCS) and the expertise to implement these systems. However, there is little evidence on the determinants of the consultant’s advice about whether managers should adopt management control systems. I...

Private and Public Relative Performance Information underDifferent Incentive SystemsBy: Ivo TafkovThis study investigates the conditions under which providingrelative performanceinformation to employees has a positive effect on effort andperformance. Specifically, Istudy, via an experiment, the...

U.S. auditors are concerned that the greater imprecision in accounting standards under IFRS will lead to increased legal liability. We conduct an experiment with 749 mock jurors to examine how juries evaluate auditor conduct under precise and imprecise standards. We find that juries return more...

Relevance and reliability (now referred to as “representational faithfulness”) are qualities of financial information that both the Financial Accounting Standards Board and the International Accounting Standards Board use in setting standards for financial reporting. Despite their...

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 frequently seek informal advice from peers to improve judgment quality, but the conditions under which advice improves auditor judgment are poorly understood. We predict and find evidence of a trust heuristic among auditors receiving advice from advisors with whom they share a social...

Auditors rely on specialists in auditing complex estimates, but do they rely on specialists for the right reasons? We examine whether specialists' high social status influences auditor assessments of specialists' competence and, in turn, auditors' conclusions about the reasonableness of client...