Can auditors pursue firm-level goals nonconsciously on audits of complex estimates? An examination of the joint effects of tone at the top and management’s specialist

We examine whether tone at the top emphasizing firm-level commercial, audit quality, or both goals (balanced) can nonconsciously affect auditors’ engagement-level tendency to accept management’s estimates, and whether the effects differ if management engages a specialist. This study is motivated by academics’ and regulators’ increasing attention on firm-level tone at the top and concerns about management bias in audited estimates, especially when the evidence is prepared by management’s specialist. We find firm-level goals can be pursued nonconsciously by auditors when performing a complex task. When management’s specialist is absent, a balanced approach reduces auditors’ tendency to agree with management’s estimate compared to a commercial approach; however, it is less effective when management’s specialist is present. We find an audit quality approach reduces auditors’ tendency to accept management’s estimate compared to a commercial approach, regardless of the absence/presence of a specialist. Our results have important implications for regulators and audit firms.