Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    Improving Assessments of Another Auditor’s Competence
    research summary posted April 23, 2012 by The Auditing Section, last edited May 25, 2012, tagged 09.0 Auditor Judgment, 09.10 Prior Dispositions/Biases/Auditor state of mind 
    Improving Assessments of Another Auditor’s Competence
    Practical Implications:

    The results of this study are important for auditors to consider when assessing others and when deciding what audit actions to take based on those assessments.  The results are also important for audit firms when considering what types of performance feedback to provide related to assessments of other auditors.  The evidence indicates that auditors use multiple anchors when assessing others. 
    Furthermore, it indicates that familiarity affects the anchors used by auditors in various assessment.  The study suggests that providing auditors with feedback on the accuracy of their assessments can increase performance, but only when the feedback type is appropriate to the level of familiarity between the auditor and the assessee.


    Harding, N. and K.T. Trotman. 2009. Improving Assessments of Another Auditor’s Competence. Auditing: A Journal of Practice and Theory 28 (1): 53-78.

    competence assessments, outcome feedback, audit judgments, overconfidence
    Purpose of the Study:

    Audit standards require auditors to assess the work of other auditors as part of numerous tasks such as determining the proper level of supervision for subordinates and when relying on the work of other auditors.  Auditors also use their assessments of other auditors when determining engagement staffing, budgeting, and the extent of work paper review.  However, prior studies find that auditors tend to overstate others’ competence and are overconfident in their assessments.  Overstating the competence of peers and  subordinates may lead to under-auditing or inappropriate conclusions.  Therefore, improving auditors’ assessments of other auditors may improve audit quality.  This paper investigates the effect of familiarity on the process auditors use to assess other auditors and whether assessment accuracy is influenced by various levels of feedback. 

    The first study in this paper is aimed at identifying the process and anchors that auditors use in assessing others, both when they are familiar with the assessee and when they are not. The second study examines the effect of different types of outcome feedback on auditors’ performance when assessing the work of auditors that they are familiar and unfamiliar with. The three types of outcome feedback are based on the anchors identified in the first study.

    Design/Method/ Approach:

    The research evidence for both studies was collected prior to November 2007.  For the first study, the authors used senior associates from international auditing firms in Australia.  Participants thought aloud as they assessed the competence of four other auditors – one known staff, one known senior, one unknown staff, and one unknown senior.  The authors recorded the participants’ thoughts and examined the transcripts to identify any anchors used in assessing the other auditors.  For the second study, the authors used accounting graduate students. Participants completed multiple-choice tests, predicted performance of familiar vs. unfamiliar other subjects, and received one of three forms of feedback.


    Study 1:

    • The authors find that auditors assessing a peer that they are unfamiliar with use their perception of generic senior performance as an anchor.
    • The authors find no significant results related to assessments of unfamiliar subordinates.
    • The authors find that auditors assessing either a peer or subordinate they are familiar with use their perception of that specific auditor as an anchor.

    Study 2:

    • The authors find that, in general, the students poorly predicted performance and exhibited overconfidence in their predictions.
    • Students assessing a familiar individual performed better when provided with individual-specific feedback.
    • Students assessing an unfamiliar individual performed better when provided with average-group feedback.
    • Participants assessed a higher likelihood that the peer would answer the question correctly when they themselves had answered the question correctly (i.e. exhibited a curse of knowledge effect).
    • The authors find that overconfidence is not affected by familiarity. When assessing an unfamiliar auditor, overconfidence is positively related to the knowledge gap between the assessor and assessee.
    Auditor Judgment
    Prior Dispositions/Biases/Auditor state of mind
    home button