Accountability and auditors' materiality judgments: The effects of differential pressure strength on conservatism, variability, and effort

This study investigates the effects of differential accountability pressure strength on auditors' materiality judgments. We evaluate whether incremental levels of accountability (i.e., review, justification. feedback) increase judgment conservatism, decreases judgment variability, and increases effort. One hundred sixty auditors participated in a between-subjects experiment that included a planning materiality task and a proposed audit adjustment materiality task. As predicted, auditors under higher levels of accountability pressure (i.e., justification. feedback) provided more conservative materiality judgments and had less judgment variability than auditors under lower levels of pressure (i.e., review, anonymity). The results also indicate that accountability strength was positively related to the amount of time spent on the task, explanation length, and consideration of qualitative materiality factors. Finally, the results show that use of a planning materiality decision aid influenced the accountability effects for the planning materiality judgment. These judgments were more conservative and less variable when the planning materiality decision aid was available. We consider implications for research, practice, and policy in the context of the study's limitations. (c) 2005 Elsevier Ltd. All rights reserved.