Conscious and Subconscious Influences of a Superior’s Known Preferences on the Judgments of Auditors in Large and Small Firms

• In Event: Auditing 3

Abstract

The known preferences of an auditor’s superior have been shown to influence audit judgments. We examine, across large and small audit firms, the extent to which conscious and subconscious processes underlie this influence. We contend that variation in control structures across large and small audit firms lead to differences in the influence of conscious and subconscious processes. Consistent with our expectations, the results from analyzing judgments made by 125 senior auditors in an experimental setting revealed that while auditors from both large and small firms made judgments favoring the known preference of their superior, this was more pronounced in the judgments of auditors from small firms. Importantly, the source of this influence was not consistent across variation in firm size. That is, while subconscious predecisional distortion underlies most of the superior’s influence in large firms, the influence in small firms is dominated by conscious, impression management, processes. These results inform efforts directed towards minimizing the detrimental effects of audit judgments that are excessively aligned with the known preferences of a superior, and attempts to positively influence audit outcomes with deliberate expressions by superiors made in an attempt to encourage desired behavior.

Authors

• Sarah Yeonjeung Kim, The University of New South Wales

• Noel James Harding, The University of New South Wales