Auditor Industry Range and Professional Skepticism

We develop the concept of auditor industry range as the extent to which an auditor has experiences in auditing clients from different industries, and we link this construct to auditor judgment based on prior research in psychology and cognitive science. We find that auditors with a wide range of industry experiences are more likely to require audit adjustments than auditors with a narrow range. This positive relation between auditor industry range and audit adjustments is stronger for more complex clients and in more uncertain environments. The effect of industry range on audit adjustments is also more pronounced for industry specialists than for non-specialists, consistent with the idea that industry specialization and industry range are complementary. Overall, our findings suggest that an auditor’s diverse experiences in different industries can facilitate the development of professional skepticism.