How Economic Conditions Affect Auditors’ Judgment

Auditor judgment and technical competence are central to audits, and a lack of those qualities has led to many audit deficiencies, according to the Public Company Accounting Oversight Board (PCAOB), the UK’s Financial Reporting Council (FRC), and other regulators around the world. In our recent article, “Long-Term Impact of Economic Conditions on Auditors’ Judgment,” available here, we use two newly-available archival datasets on auditors’ personal information and their audit adjustments, and provide evidence on whether and how the economic conditions at the time of an auditor’s entry into the labor market affect her judgment and decision-making years later.

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