（2008）The Influence of Auditor Experience on the Persuasiveness of Information Provided by Management.pdfVIP

AUDITING: A JOURNAL OF PRACTICE THEORY Vol. 27, No. 1 May 2008 pp. 67–83 The Influence of Auditor Experience on the Persuasiveness of Information Provided by Management Steven E. Kaplan, Edward F. O’Donnell, and Barbara M. Arel SUMMARY: In this paper, we test whether experience limits auditors’ reliance on management-provided information when that information is more favorable than an objective benchmark. In an experiment, we find that experience as an audit senior and the favorableness of management information interact to influence auditor assessments of the reliability of internal controls. While auditors with low levels of experience at the senior rank give assessments that are more favorable, when management’s assess- ment is favorable, high-experience senior auditors’ judgments are not influenced by management’s assessment. We conclude that as auditors gain experience, they also gain persuasion knowledge, which allows them to deflect management’s persuasion attempts. INTRODUCTION ne of the most pervasive sources of information auditors receive during the conduct Oof an audit engagement is management. Auditors’ consideration and evaluation of information from management presents a dilemma for the auditor. On one hand, management should be knowledgeable of the firm’s business strategies and risks, as well as details of accounting transactions and related internal controls. Given limitations on the scope of the audit process, auditors have incentives to utilize information from management (Haynes 1999), and professional standards recognize that ignoring management-provided information would be costly and impractical (PCAOB 2004, para. 109). On the other hand, management is not an objective information sour