Philip M.J. Reckers

Perceived effects of gender, family structure, and physical appearance on career progression in public accounting: A research note

Abstract This study measured whether gender, family structure, and physical appearance are perceived to influence future career success in public accounting. Practicing auditors indicated perceptions of success for 16 hypothetical audit seniors on three separate measures of career potential. Data were analyzed with repeated-measure ANOVAs. Peers who were described as female, married with children, and poor in physical appearance were generally perceived as less likely to succeed. Implications of these findings for both auditors and public accounting firms are discussed.

Exploring the role of learning style research in accounting education policy

Abstract The purpose of this paper is to introduce and describe the Experiential Learning Model and the Learning Style instrument developed by Kolb [1976]. Further, it is postulated that learning style may be a useful concept in making the accounting education process more effective and efficient. As a preliminary test of the concept, the Learning Style Inventory (LSI) was administered to accounting student samples of n = 172 and n = 187, respectively. Six hypotheses were tested using data obtained from the instrument. It is concluded that the LSI shows promise for generation of information useful in helping students and instructors understand the differing cognitive processes in accounting learning.

An examination of tax practitioner decisions: The role of preparer sanctions and framing effects associated with client condition

Abstract Tax practitioners play an important role in the voluntary compliance system. Not only do professionally prepared returns account for a significant percentage of the tax returns filed in the U.S., but empirical evidence suggests that practitioners help taxpayers lower their tax liabilities by taking advantage of ambiguous features of the tax law. This study investigates whether selected factors influence the decisions made by professional tax preparers. The subjects include 107 experienced tax practitioners who are certified public accountants. The results reflect that there is a significantly greater likelihood that the tax practitioners would sign tax returns containing a large deduction associated with an ambiguous tax issue if (1) the signing decision is made in relation to an existing client (a loss decision frame in the context of the study) or (2) tax preparer penalties are communicated with high enforcement intent.

An examination of information search during initial audit planning

Abstract This paper examines the initial planning processes of auditors, a research topic which has received very limited attention to date. In this empirical study auditors were given the results of analytical tests and asked to assess the likelihood that observed “abnormalities” were due to accounting error or irregularity as distinct from environmental change (i.e., an initial hypothesis). They were further asked to indicate the information they would seek in response to the test results, in an effort to resolve the issue adequately to proceed with planning the audit. The authors posit that: (1) for relatively inexperienced auditors, their initial hypothesis of cause will positively correlate with the type of information the auditors will subsequently seek (i.e., they will follow a hypothesis confirming strategy); and (2) for relatively experienced auditors, their initial hypothesis of cause will not correlate with the type of information sought but rather they will follow a balanced information search strategy. Support for this hypothesis was found using a rank measure of information seeking. A second measure of information seeking based on unranked questions, did not support the hypothesis, however.

An examination of tax reporting recommendations of professional tax preparers

Abstract This study reports on an empirical examination of the decisions of professional tax preparers. The paper is motivated by recent advances in the cognition literature. Based upon this literature we hypothesize that for ambiguous tax matters: (1) recent outcome information will influence the reporting recommendations of tax preparers, and (2) the amount of tax experience interacts with situational economic variables to influence the reporting recommendations of tax preparers. Concerning non-ambiguous tax matters, we hypothesize that (1) situational economic variables will affect recommendations made by tax preparers, and (2) neither recent outcome information nor years of experience will influence the recommendations made by tax preparers. The results of an experiment generally provide support for the hypotheses.

An Empirical Investigation of the Interface Between Internal and External Auditors

Professional standards place specific responsibilities on auditors for the discovery of material mis-statements in reports of corporate financial performance. Certain factors have been shown to increase the likelihood of fraudulent financial reporting. One warning sign is the potentially pervasive effect of a weak internal control environment consistent with a weak internal audit group. This study investigates the impact of internal audit department quality differences on auditors ‘willingness to place reliance on the work performed by internal auditors. The study also gives consideration to auditors’ recent experiences with material errors and irregularities and examines the influence of two previously untested individual auditor differences on audit judgment decisions: (1) conflict management style and (2) perception of internal/external auditor communication barriers. The results indicate that auditors attend to internal audit department quality differences and that individual auditor differences exhibit significant influence over auditor judgments. Implications for audit practice are considered and directions for future research are suggested.

The Influence of Gender, Ethnicity, and Individual Differences on Perceptions of Career Progression in Public Accounting

Prior research examining gender and diversity issues has generally lacked supporting theory and experimental investigation. This study provides theory-based experimental evidence regarding the effects of gender, ethnicity, and other individual differences on performance evaluations of audit seniors. We utilized organizational socialization theory in examining the accounting professions view of diversity issues. The process model of performance evaluation provided guidance in the selection of ratee, rater, and contextual characteristics as factors to analyze. An experiment was conducted with 95 audit seniors from one of the Big 5 public accounting firms. Results indicate that gender and ethnic heritage are important factors in the career prospects of audit seniors. The demeanor of an auditor was also important as an interactive factor and influences judgments differently depending on the gender or ethnic origin of the auditor evaluated. These results suggest that diversity is a very complex issue. Examining single factors without considering the interactions of a variety of factors may lead to incorrect conclusions.

Causality as an influence on hindsight bias: An empirical examination of judges' evaluation of professional audit judgment

Abstract Evaluators often overestimate, ex-post, their ability to have predicted a known outcome. Arguably, judges and juries, in turn, blame external auditors for their failure to anticipate negative client outcomes and to disclose what in hindsight is outcome diagnostic information. The extent to which judges succumb to nonnormative hindsight bias may relate to the perceived feasibility (or ease) of reconstructing a causal relationship between the outcome and antecedent conditions. That is, hindsight bias arguably relies upon: (1) the ability of the evaluator, ex-post, to reconstruct a cogent causal series of related events leading up to the outcome, and (2) the tendency of overestimate the ex-ante likelihood of the reconstructed scenario. If ease of causal reconstruction of events is determined to enhance hindsight effects, remedial attention might be directed at this feature of the phenomenon. An experiment was conducted involving 96 general jurisdiction judges. We examined whether the nonsusceptibility of events to causal reconstruction would serve to moderate the magnitude of hindsight effects. Our hypothesis was that if an outcome could be attributed to a causal series of related events, judges would exhibit greater hindsight bias than if an outcome was perceived to be unforeseeable. That is, outcomes attributable in increasing degree to unforeseen causes were expected to be associated with decreasing hindsight effects. Results confirmed these expectations; implications for audit legal liability are also discussed.

Auditors' reporting decisions for accounting estimates: The effect of assessments of the risk of fraudulent financial reporting

The dangers of management bias and the resulting increased need for auditors to be cognizant of environmental characteristics may be particularly acute in the area of accounting estimates. Accounting estimates pose relatively unique auditing problems because it is an area where management has significant discretion (to set estimates) and there is limited ability to apply traditional accounting controls. Thus auditors have difficulty obtaining conclusive evidence to challenge management′s estimates. Research examining auditors′ accounting estimate judgments, however, has been scant, especially with regard to the relationship of auditors′ assessment of materiality and risks of fraudulent financial reporting. Reports the results of an empirical study examining the reporting decisions of audit seniors and audit managers related to a client′s decision to change four accounting estimates relative to the prior year. The auditor′s task was to review the changes and to indicate whether audit adjustments proposed b...

A new culture? Evidence of support for diversity in public accounting performance evaluation judgments

Prior research has documented the existence of a white male culture in large public accounting firms that has long dominated most aspects of these firms. This culture has arguably resulted in systematic workplace bias against females and minorities and their exclusion from opportunities for advancement. The accounting profession, led by the Big Five firms, has recently focused efforts on developing a new “diversity culture” intended to make the workplace more accessible to and supportive of all personnel. This exploratory study examines the current impact of race and gender on the performance evaluation judgments of audit seniors representing one Big Five firm. The results indicate that, under some circumstances, the job performance and career prospects of females (both non-white and white) were rated as high as, or higher than, those of white males. The implications of these findings for the profession and future research are discussed.