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    The Effect of a Superior’s Perceived Expertise on the P...
    research summary posted April 19, 2017 by Jennifer M Mueller-Phillips, tagged 11.0 Audit Quality and Quality Control, 11.03 Management/Staff Interaction, 11.04 Industry Experience 
    The Effect of a Superior’s Perceived Expertise on the Predecisional Distortion of Evidence by Auditors
    Practical Implications:

    Most importantly, the findings of this study educate on the audit quality implications of a subordinate making judgments with knowledge of their superior’s preference. While knowledge of a superior’s preference may negatively affect the objectivity of audit judgments, the findings suggest that is also has the potential to improve audit judgment quality. Second, possible cross-nation variation in audit judgment has important implications for the audit of multinational organizations and offshoring of audit work, among others. 


    Kim, S. and N. Harding. 2017. The Effect of a Superior’s Perceived Expertise on the Predecisional Distortion of Evidence by Auditors. Auditing: A Journal of Practice and Theory 36 (1): 109 – 127.

    audit quality, culture, predecisional distortion, superior’s expertise, Australia, and South Korea
    Purpose of the Study:

    Auditors are influenced by the known preferences of their superiors such that they are motivated to make judgments that favor those preferences. In this study, the authors examine the potential for the influence of a superior’s known preferences to positively affect audit quality, and whether that influence varies across nations that differ in their hierarchical culture. There is a potential for a superior’s preference to have information value such that a judgment favoring the superior’s preference may not be entirely non-normative; however, there is an implicit assumption that this is a threat to the objectivity of auditor judgments and detracts from audit quality. With this study, the authors hope to address a gap in the existing literature and, in doing so, to contribute to an understanding of what superiors should communicate to their subordinates in order to enhance audit quality. 

    Design/Method/ Approach:

    The authors conduct an experiment in which auditors from Australia and South Korea evaluate a number of going concern evidence items and then make a judgment as to whether the firm for which the evidence items relate would continue as a going concern. 

    • The authors find that auditors exhibit greater levels of predecisional distortion toward the known preference of a superior perceived to possess higher levels of expertise as opposed to those perceived to have lower levels of expertise, and this is the case for auditors in both Australia and South Korea.
    • The authors find no evidence of differences in the level of predecisional distortion exhibited by auditors from Australia and South Korea. 
    Audit Quality & Quality Control
    Industry Expertise – Firm and Individual, Management/Staff Interaction