Experts’ Collective Judgments and Learning in Analytical Review

Abstract

Accurate estimation of financial information has become one of the most critical issues in today’s auditing environment. This study extends the literature by investigating how auditors’ collective probability and state judgments in the estimation process are affected by the saliency of the prior probability of relevant events. Consistent with current audit practice, this study performed investigations based on collective judgments by expert groups. The results indicate that expert audit teams make more accurate judgments regarding account default and learn more significantly from feedback in the more salient prior probability condition. We also found that while audit teams are somewhat biased in probability judgments, their state judgments are highly accurate. Overall, they make judgments more normatively than individual experts.