Project Number – 2018B01

2018B01 – How auditors’ internal and external interactive relationships impact their judgment and decision-making

What?

This study explores junior auditors’ tendency to imitate senior auditors’ auditing practices styles and, additionally, how the firm’s promotion pressures may affect audit quality through such mimicking behavior. Second, the research project considers audit team engagements and investigates factors that may either foster or hamper auditors’ herd behavior in fraud assessment tasks. Third, the project examines how auditor tenure and shareholder involvement in the selection of auditors influence auditors’ decision to report more original information than management discloses in the financial report.

Why?

The main goal of this research project is to investigate key elements that affect the quality of auditor judgment and decision-making and the resulting quality of audits. This project gives consideration to: (1) the underlying drivers of auditor judgment and decision-making, such as organizational circumstances (e.g., junior-senior relationships, team interactions, tenure time) that may stimulate auditors or, conversely, prevent them from working in the manner expected of them; (2) the underlying causes of good and poor audit quality such as the role of imitation and herding (and related reputation concerns); and (3) the effectiveness of potential interventions (e.g., the firm’s incentive system, institutional rules of hiring and selecting auditors) that could be implemented to enhance audit quality.

August 15, 2025

JAPP publication: If team consensus already exists, auditors may conform and hesitate to raise issues

FAR is proud to announce that a recent FAR study has been published in the Journal of Accounting and Public Policy. The study by Eddy Cardinaels, Viola Darmawan, Evelien Reusen and Kristof Stouthuysen shows that junior auditors are more likely to conform to a team consensus formed by senior members and feel less comfortable sharing their own risk assessments, especially in an authenticity-focused climate (encouraging individuals to be true to themselves). However, a climate of belongingness (creating a sense of belonging within the group) reduces this conformity and encourages juniors to speak up, improving information sharing within audit teams. https://doi.org/10.1016/j.jaccpubpol.2025.107334

FAR Online Masterclass report ‘The Impact of Auditor Interactions on Audit Quality’

On June 5 2020, Eddy Cardinaels and Kristof Stouthuysen presented an online masterclass concerning their study ‘The Impact of Auditor Interactions on Audit Quality’. This report provides a summary of the masterclass, including preliminary findings from the experiment they conducted. The study, so far, shows that:

Concerning imitation, junior auditors imitate a more diligent superior more than a lower diligent superior. This effect is even more pronounced under a superior-based promotion system (as opposed to consensus-based promotion system).
Regarding audit quality, junior auditors perform better when facing a diligent superior.

Furthermore, (self-reported) imitation does not improve audit quality. In particular, when facing a low diligent auditor, audit quality deteriorates. Hence, there seems to be a possibility to imitate a superior too much, particularly in the low diligent situation.

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The imitation behaviors of junior auditors: Does it enhance or hamper audit quality?

KEY TAKE-AWAYS Imitation of senior auditors might be a valuable strategy for juniors to learn on-the-job and improve their performance. In this paper, the research team experimentally examines how a senior auditor’s working style (high diligence vs. low diligence) interacts with the nature of the audit firm’s promotion system (superior-based vs. consensus-based) to influence junior auditor judgment by affecting junior auditors’ imitation behavior.

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Silence is not Golden: How Team Consensus and Inclusive Climate Affects Junior Auditors’ Conformity Behavior and Risk Assessment Sharing

In hierarchically structured audit teams, it is common that junior auditors gather a large part of the evidence used as the basis for the audit opinion, which makes information sharing critical. However, if a team consensus already exists, individual auditors may conform to the team and thus hesitate to raise important issues they themselves acquired about a client. This study experimentally investigates how the origin of team consensus (i.e. consensus coming from junior members vs. consensus coming from senior members) and the type of the inclusive climate (i.e. authenticity vs. belongingness) impact junior auditors’ conformity behavior and their willingness to share their own risk assessment with their team. Drawing on conformity theory, we hypothesize and find that junior auditors are more likely to conform to a team consensus of senior members, and are also less likely to share their risk assessment with the team, particularly within an authenticity climate. These effects of conforming more to senior members, however, are mitigated when firms focus on a climate of belongingness.

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Copycat behavior by junior auditors – The impact of their senior’s working style and the role of promotion incentives

As a key attribute to audit quality, regulators specify that more experienced staff (i.e. managers, senior auditors) should provide less experienced staff with appropriate coaching and on-the-job training (IAASB 2014). It is fairly common for junior auditors to start their auditing career by mimicking a more senior person who performs similar tasks; as the saying goes, “Monkey see, monkey do” (Cannon, 2016). Yet, while imitation is an inherent human tendency, limited evidence exists on the impact of such imitative behavior on the quality of an individual auditor’s judgment. The objective of our research project is to examine the extent to which mimicking behavior occurs in junior–senior auditor relationships and its consequences for audit quality. In particular, we advance the argument that this imitation tendency may lead junior auditors to follow seniors’ auditing practices, even when those practices are not always ideal. We also examine whether promotion opportunities for the junior can be an important contributor in mimicking an audit style of a senior (which in turn would affect audit quality). The tendency to imitate their senior – even though his working practices might not be ideal – might be higher when the direct senior has a strong voice in the promotion decision of the junior.

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The impact of auditor interactions on audit quality

The judgment and decision-making literature in auditing largely focuses on individual auditor judgments. However, auditors do not work in isolation. They interact with other auditors in audit engagements and with other participants in the financial reporting process. For this reason, scholars have called for more research on how the people, tasks, and environment that auditors interact with influence their performance and hence, the audit quality of their work. This review identifies three specific issues related to these influences that, we believe, warrant additional research and consideration. The first two issues relate to between-auditor interactions within the audit firm. The third issue relates to interactions with groups outside the firm.

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