The persuasiveness of audit evidence: The case of accounting policy decisions

The persuasiveness of audit evidence: The case of accounting policy decisions This study examines how auditors respond to precedents in accounting situations where authoritative guidance does not exist. Three experiments were conducted with practicing audit managers and partners from a Canadian Big Six accounting firm. The results show that auditors rely to a greater extent on precedents that are similar (versus not similar) to the problem situation. When the client's position on the accounting matter was known to the auditor and all available precedents pointed to the same treatment of the accounting issue in question, auditors did not heed the client's position. Rather, they used the available precedents to judge the appropriate accounting. In contrast, when the client's position was known and the available precedents were mixed in their implications for the appropriate accounting treatment, auditors tended to follow the client's position. These results are considered in light of issues of auditor independence and the accounting regulatory environment. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting, Organizations and Society Elsevier

The persuasiveness of audit evidence: The case of accounting policy decisions

Accounting, Organizations and Society, Volume 22 (6) – Aug 1, 1997

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Publisher
Elsevier
Copyright
Copyright © 1977 Elsevier Ltd
ISSN
0361-3682
D.O.I.
10.1016/S0361-3682(97)00002-0
Publisher site
See Article on Publisher Site

Abstract

This study examines how auditors respond to precedents in accounting situations where authoritative guidance does not exist. Three experiments were conducted with practicing audit managers and partners from a Canadian Big Six accounting firm. The results show that auditors rely to a greater extent on precedents that are similar (versus not similar) to the problem situation. When the client's position on the accounting matter was known to the auditor and all available precedents pointed to the same treatment of the accounting issue in question, auditors did not heed the client's position. Rather, they used the available precedents to judge the appropriate accounting. In contrast, when the client's position was known and the available precedents were mixed in their implications for the appropriate accounting treatment, auditors tended to follow the client's position. These results are considered in light of issues of auditor independence and the accounting regulatory environment.

Journal

Accounting, Organizations and SocietyElsevier

Published: Aug 1, 1997

References

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