We focus on auditors’ failure to identify and incorporate contradictory
information into their analyses because this is a key judgment problem
undermining audit quality in this area (PCAOB [2010e], Griffith,
Hammersley, and Kadous [2014]). Moreover, it is not a problem that
can be readily addressed by writing new standards or creating more
comprehensive checklists. That is, all information that is relevant to a key
assumption underlying an estimate is not necessarily known or knowable
while planning an evaluation of the assumption. Some such information
will be available only incidentally—in another part of the audit or in
external information collected for another purpose. Auditors must be able
to recognize the relevance of the incidentally presented information and
must be open to incorporating it into their analysis of the assumption.
While prior research demonstrates various benefits of considering disconfirming
evidence (Koonce, Anderson, and Marchant [1995], Asare and
Wright [1997], Knechel and Messier [1990]) and alternative explanations
(Heiman [1990], Koonce [1992], Kennedy [1995]), research has not
examined general strategies for encouraging auditors to notice such
information or to engage in this consideration.