Expert Judgment in the Audit Team: A Source Reliability Approach

An audit is usually conducted by an audit team which is characterized by a hierarchical structure and division of labor. As a result, auditors frequently form judgments on audit evidence prepared by subordinate auditors (e.g., see Anderson [1977] and Watson [1975]). This decision context increases the complexity of the auditor's information-processing task, since the capabilities of subordinates must be assessed in order to determine the extent to which their work can be relied upon by the auditor in making his (her) own judgments. In effect, auditors must evaluate the reliability of their subordinates aso information sources (source reliability). Although this seems a natural subject for human information-processing studies, there have been few attempts to study this issue; moreover, the results are inconclusive. For example, Joyce and Biddle [1981a] examined auditors' sensitivity to the reliability of an information source external to the audit team and found mixed evidence with respect to the attention given by auditors to the reliability of the source. Similarly, in the only study to consider interactions in the audit team, Mock and Turner [1981] found that the review of the auditor's work by a superior did not reduce the significant variation between auditors' sample-size recommendations. In this study I examined the sensitivity of audit managers' judgments to the reliability of the audit senior. This allowed me to focus on a more