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Auditors, Specialists, and Professional Jurisdiction in Audits of Fair Values†

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  • Emily E. Griffith

Abstract

Auditors frequently use valuation specialists to help them evaluate fair values, but researchers and regulators know little about how auditors use these specialists. Based on interviews with 28 auditors and 14 valuation specialists, I develop a theoretical framework informed by expert systems and professional competition theories. The interviews suggest that institutional pressures in the fair value environment unevenly impact auditors and specialists, causing tension between auditors' needs for ontological security and jurisdictional claims. This tension leads to one‐sided competition between auditors and specialists and incomplete acceptance of specialists' work. Auditors' competitive behaviors coupled with this incomplete acceptance result in a tendency to make specialists' work conform to auditors' views. Collectively, these findings suggest that auditors use specialists as an institutional mechanism to create comfort, but not insight. This study links expert systems and professional competition theories, and it provides critical insight into some assumptions underlying tenets of each theory. It also informs researchers, regulators, and practitioners interested in understanding and addressing problems related to the use of specialists. Auditeurs, spécialistes et champ de compétence professionnelle dans les audits des justes valeurs Les auditeurs ont fréquemment recours à l'aide de spécialistes en évaluation pour déterminer les justes valeurs, mais les chercheurs et les autorités de réglementation en savent peu quant à l'usage que font les auditeurs de ces services. À partir d'entrevues menées auprès de 28 auditeurs et de 14 spécialistes en évaluation, l'auteure élabore un cadre de référence théorique s'appuyant sur les théories des systèmes experts et de la concurrence professionnelle. Les renseignements tirés de ces entrevues semblent indiquer que les pressions institutionnelles, dans le contexte des justes valeurs, s'exercent de manière inégale sur les auditeurs et les spécialistes, ce qui crée une tension entre les besoins qu'ont les auditeurs de sécurité ontologique et de protection de leur champ de compétence professionnelle. Cette tension donne lieu à une concurrence unidirectionnelle entre auditeurs et spécialistes et à une acceptation fragmentaire du travail des spécialistes. Les comportements concurrentiels des auditeurs associés à cette acceptation fragmentaire engendre une tendance à faire en sorte que le travail des spécialistes s'aligne sur le point de vue des auditeurs. Dans leur ensemble, ces observations donnent à penser que les auditeurs envisagent le recours aux spécialistes comme un mécanisme institutionnel destiné à rassurer, mais non à approfondir. L'étude établit un lien entre les théories des systèmes experts et de la concurrence professionnelle et fournit des informations essentielles sur certaines hypothèses sous‐jacentes aux principes sur lesquels repose chacune de ces théories. Elle informe également les chercheurs, les autorités de réglementation et les professionnels en exercice soucieux de comprendre et de résoudre les problèmes liés au recours aux services de spécialistes.

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  • Emily E. Griffith, 2020. "Auditors, Specialists, and Professional Jurisdiction in Audits of Fair Values†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(1), pages 245-276, March.
    • Handle: RePEc:wly:coacre:v:37:y:2020:i:1:p:245-276
    DOI: 10.1111/1911-3846.12506
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    2. Benjamin P. Commerford & Sean A. Dennis & Jennifer R. Joe & Jenny W. Ulla, 2022. "Man Versus Machine: Complex Estimates and Auditor Reliance on Artificial Intelligence," Journal of Accounting Research, Wiley Blackwell, vol. 60(1), pages 171-201, March.
    3. Dierynck, Bart & Kadous, Kathryn & Peters, Christian P. H., 2024. "Learning in the auditing profession: A framework and future directions," Other publications TiSEM eb74c8e4-bc4a-4b71-b88a-4, Tilburg University, School of Economics and Management.
    4. Esraa Esam Alharasis & Hossam Haddad & Maha Shehadeh & Ahmad Saleem Tarawneh, 2022. "Abnormal Monitoring Costs Charged for Auditing Fair Value Model: Evidence from Jordanian Finance Industry," Sustainability, MDPI, vol. 14(6), pages 1-21, March.
    5. Esraa Esam Alharasis & Ahmad Saleem Tarawneh & Maha Shehadeh & Hossam Haddad & Ahmad Marei & Elina F. Hasan, 2022. "Reimbursement Costs of Auditing Financial Assets Measured by Fair Value Model in Jordanian Financial Firms’ Annual Reports," Sustainability, MDPI, vol. 14(17), pages 1-21, August.
    6. Cassandra Estep & Emily E. Griffith & Nikki L. MacKenzie, 2024. "How do financial executives respond to the use of artificial intelligence in financial reporting and auditing?," Review of Accounting Studies, Springer, vol. 29(3), pages 2798-2831, September.
    7. Nicolás Gambetta & Laura Sierra García & María Antonia García Benau & Josefina Novejarque Civera, 2022. "The informative value of Key Audit Matters in the audit report," Documentos de Investigación 129, Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales.

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