The effect of goals on auditors' judgments and their perceptions of and conformity to other auditors' judgments

The purpose of this paper is to investigate the effect of goals on: auditors' inventory write‐off judgments; the conformity of their judgments (i.e. the degree of consistency between these judgments and the judgments they perceive other auditors will make); and the calibration of their judgments (i.e. the extent to which these perceived judgments agree with actual judgments of the other auditors).

An experiment was conducted in which 92 auditors are assigned either an accuracy goal, a goal to get along with the client, or a combined accuracy and get along goal (i.e. both goals), and are asked to make an inventory write‐off judgment.

Consistent with expectations, auditors with accuracy goals are more likely to recommend a write‐off of inventory than auditors in the other goal conditions; and auditors with both goals are more likely to recommend a write‐off than those with the get along goal. Also, while auditors' judgments are well calibrated, mixed evidence of conformity is found.

Goals may be a tool which audit regulators and practitioners could use to enhance audit effectiveness. In addition, the interactive audit environment may contribute to auditors' well calibrated judgments but judgment conformity may require more (such as accountability or incentives) than knowledge of other auditors' judgments.

This is the first paper to examine the impact of explicit and competing goals on the calibration and conformity of auditors' judgments.