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What Happens to Judgment Quality when Accountants Change Roles Within Their Firm?

Robin Pennington, PhD, CPA; Jennifer B. Schafer, PhD, CPA; and Robert E. Pinsker, PhD, CPA
Published Date:
Sep 1, 2015

It is a common practice, even among large firms, to rotate staff accountants to other departments when needed. Small to mid-size firms, given their relatively limited staff, find it particularly challenging to meet the demand for accounting services: audit staff often assist with tax preparation during tax season, and tax professionals assist on audits when needed. Moreover, many accountants permanently switch departments over time. While these rotations provide benefits to the firm, such as increased staff utilization, recent research indicates that there may be unintended effects on job performance when accountants take on roles inconsistent with their specialization. Specifically, the judgments of accountants in these dual or mismatched roles may be impaired, reducing their ability to appropriately assess the aggressiveness of a recommendation to the client.

Professional Skepticism vs. Advocacy

Although all accounting professionals must maintain objectivity in their professional judgments (ET section 55), auditors are charged with professional skepticism in audit and assurance services (AU section 316, “Consideration of Fraud in a Financial Statement Audit”), whereas tax professionals have an obligation to legally act in the client’s best interests (Statements on Standards for Tax Services (SSTSs) 1, Tax Return Positions). Auditors are expected to protect firm stakeholders by maintaining independence throughout the audit process, while tax professionals generally sit at the table with clients and work toward a common objective. As discussed by R. H. Colson (“Advocacy and Independence,” The CPA Journal 75, no. 1 (2005): 80), “the advocacy relationship at the heart of tax services runs counter to the independence expectations for auditors.” Given these vastly different expectations, is it possible for accounting professionals to adapt when they are asked to switch hats?


Many accountants work for local and regional firms where specialization in “tax” or “audit” is not as explicit as in larger firms. Even in large national or international firms, staff may accept rotation assignments in a department other than that for which they were trained; they may also switch departments altogether. For example, a study of Price Waterhouse indicates that approximately half of the tax practitioners in that firm were initially trained in audit (J. A. Brierley and D. R. Gwilliam “Accountants, or Auditors, Tax Practitioners, Management Consultants Etc.? A Research Note,” Managerial Auditing Journal 16, no. 9 (2001): 514-518; E. Jones, True and Fair: A History of Price Waterhouse (London: Hamish Hamilton, 1995)). Further, increased tax disclosure requirements on financial statements (i.e., Accounting Standards Codification (ASC) Topic 740, governing the computation and disclosure of a company's income tax provision, and FASB Interpretation No. 48, addressing accounting for uncertainty in tax positions) require accounting professionals to make judgments under varying professional standards. While broad accounting knowledge can help accountants adapt to these different accounting roles, switching from an advocacy role to a role requiring independence (or vice versa) may not be so easy. Not only does adaptation to the task at hand require knowledge of the relevant professional requirements, it may also require behavior contrary to the accountant’s primary professional training or experience. As psychological research indicates, individuals try to make good decisions while minimizing cognitive effort (J. Payne, J. Bettman, and E. Johnson, The Adaptive Decision Maker (Cambridge: University of Cambridge Press, 1993)). Thus, accountants in new or less familiar roles may slip into the decision strategies of their primary role. Whether or not accountants can adapt is particularly important in judgments where the client has a clear preference for (or benefits from) a particular position.

Advocacy Effects on Judgments

Prior auditing and tax research argues that client advocacy is an innate attitude, which can also be learned over time (R. Pinsker, R. Pennington, and J. K. Schafer, “The Influence of Roles, Advocacy, and Adaption to the Accounting Decision Environment,” Behavioral Research in Accounting 21, no. 2 (2009); J. D. Mason & L. G. Levy, “The Use of the Latent Constructs Method in Behavioral Accounting Research: The Measurement of Client Advocacy,” Advances in Taxation 13 (2001): 123-139). This literature defines advocacy as a “state of mind in which one feels one’s primary loyalty belongs to the taxpayer.” Thus, where one spends one’s time (i.e., training in school or on the job) should influence one’s level of client advocacy. While there is certainly variation among individuals, studies find that tax professionals, as expected, are generally greater client advocates than auditors (Pinsker, Pennington, and Schafer 2009). Further, tax studies have shown that when regulations are ambiguous, greater levels of advocacy lead to judgments that are more likely to be in line with the client-preferred position (F. L. Ayers, B. R. Jackson, and P. A. Hite, “The Economic Benefits of Regulation: Evidence from Professional Tax Preparers,” The Accounting Review 64 (1989); L. M. Johnson, “An Empirical Investigation of the Effects of Advocacy on Preparers’ Evaluations of Judicial Evidence,” The Journal of the American Taxation Association  15 (1993); A. D. Cuccia, “Diversity in the Professional Tax Preparation Industry and Potential Consequences for Regulations: Linking Attitudes and Behavior,” Advances in Taxation  7 (1995)).

Importantly, the strength of client advocacy attitudes provides information about how influential the client-favored position is on the accounting professional’s judgments. This is not a problem for accountants if they understand how advocacy (or lack thereof) affects their judgments; however, accountants are often not aware that the client’s preference influences their decisions. In one study, for example, a particular court case was weighted as more relevant when the outcome was consistent with the client-preferred position than when the outcome was inconsistent (Johnson 1993). This creates an even larger concern: if the accountant is unaware of the influence of client preference, knowledge of the requirements of the task is necessary, but not sufficient, for good judgment.

If accountants appropriately adapt to their decision environment, their behavior should differ for audit decisions and tax decisions. In audit decisions, accountants should exhibit professional skepticism (both perceived and actual) that is independent of their primary training or experience: the client’s preference should not be considered at all. In tax decisions, they should consider the client’s preference because professional guidelines allow them to be client advocates. Switching roles from audit to tax (or vice versa) requires accountants to flip the switch from independence to advocacy for different job assignments, and perhaps even for the same client. If these accounting professionals are unable to appropriately adapt to and incorporate the professional expectations required by the particular decision at hand, suboptimal decisions may result. For instance, expressing high client advocacy when performing an audit task may result in a more risky client recommendation in terms of firm liability. Alternatively, low client advocacy in a tax task may result in lower quality recommendations (i.e., less tax savings) or incorrect assessments of whether the position meets the appropriate reporting standard (i.e., substantial authority).

One recent study (Pinsker, Pennington, and Schafer 2009) takes a holistic approach to simultaneously examine the effects of professional role, levels of client advocacy, and the decision environment (audit task versus tax task) on judgments. It compares the decisions of tax professionals to those of audit professionals in both decision environments. This study provides information about whether there are differences in the judgments of those who regularly perform a specific task compared to those who “rotate in.” Specifically, the study examines how the judgments of auditors and tax professionals differ in general, and whether auditors or tax professionals can adapt to the professional standards required of decisions outside their normal domain.

Pinsker et al. (2009) Study

 Participants included 82 accounting professionals and 80 Master of Accountancy (MAcc) students. The majority of professionals (44) had worked in more than one area, which highlights the significant number of accountants that either rotate between or switch accounting roles. Over 90% of the students were scheduled to start positions in public accounting shortly after the semester ended, and as such were representative of new associates just prior to entering the workforce.

Participants were randomly assigned to a tax case or audit case, which was not necessarily congruent with their professional training or experience. (A summary of the participants’ primary area of work (tax or audit) and the procedures for the cases are provided in the Appendix.)  As expected, results indicate that tax participants scored significantly higher on the advocacy questionnaire (F=35.63, p<.0001) than audit participants (mean 24.52 vs. mean 19.50, respectively) (see Exhibit 1). Regression results (not tabulated) support that accountants’ professional roles are a predictor of advocacy attitude, with tax professionals demonstrating a stronger advocacy attitude.  

More importantly, the professionals’ advocacy attitudes are found to interact with the decision environment to influence judgments. Exhibit 2 is a graph of the decision environment and client advocacy interaction. In the audit environment, the judgments of both audit and tax participants are similar--that is, participants with high advocacy attitudes (due to training or experience in tax) were able to adapt to the professional standards of skepticism. Conversely, in the tax environment, those with low advocacy attitudes (due to training or experience in audit) were less likely to recommend a position that favored the client than those with high advocacy attitudes (due to training or experience in tax).

Further examination reveals that for the audit group, judgments are correlated with client advocacy attitudes (p=.001); thus, regardless of which decision environment auditors were placed in, the audit participants had judgments that were highly correlated with their overall low level of client advocacy. Conversely, tax participants’ judgments were not significantly correlated with their client advocacy attitudes (p=.295), providing evidence that they adapted better than the audit participants to the decision environment at hand. Interestingly, the study also finds that those who had worked in both audit and tax roles exhibit more neutral attitudes than professionals possessing only tax or only audit experience.


The Pinsker et al. study provides evidence that an individual’s professional role as either an auditor or tax professional influences his or her level of client advocacy. As expected due to professional role requirements, tax professionals are found to be stronger client advocates than auditors. These professional requirements may, however, become a hindrance to effective decision-making for those professionals whose jobs require them to perform multiple roles or to switch roles from audit to tax (or vice versa). Evidence indicates that accountants who have more experience or training with tasks requiring professional skepticism may have a difficult time adapting to the role of client advocate when the task demands it. Audit professionals asked to perform tax duties may err on the side of recommending a more conservative position (possibly resulting in a higher tax liability) to the client. Conversely, those who primarily work in an advocacy role (such as tax professionals) may be better able to adapt to the role of professional skeptic when the task requires it. The post-Sarbanes-Oxley Act environment is one in which accountants are more aware of the risks associated with recommending client-favorable positions. Although tax professionals are expected to be advocates, they are likely astutely aware of the litigation risks associated with aggressive audit positions. This result is good news to accounting firms who may sometimes use tax professionals in an audit function. If tax professionals were unable to adjust their client advocacy behavior in such a domain, it could be perceived as a lack of independence and disciplinary action could ensue.

Recommendations for Training

Accounting professionals are not necessarily aware of the decision bias that can result from their advocacy attitudes. Decision bias research shows that awareness training can help to mitigate the effects of the bias and improve objective decision-making. Accounting firms should consider context-based training for accountants who are working in environments that differ from their prior experience, training, and education. Training should include context-specific expectations regarding the appropriate level of client advocacy to exercise, taking into account both the task as well as the potential outcomes should advocacy be used inappropriately (i.e., overly conservative tax positions resulting in higher liabilities). Training focused on attitude awareness and its consequences should help accounting professionals better adapt to the task at hand. Because accounting professionals without appropriate advocacy training may have difficulty adapting to new environments, which could lead to reduced performance and quality, managing partners should consider if training is a necessary prerequisite before scheduling individuals for particular assignments.

PenningtonRobin Pennington, PhD, CPA, is an associate professor in the department of accounting at North Carolina State University in Raleigh, NC. She can be reached at 919-515-4509 or

SchaferJennifer B. Schafer, PhD, CPA,  is an associate professor at the school of accountancy at
Kennesaw State University in Kennesaw, GA. She can be reached at 770-423-6095 or

PinskerRobert E. Pinsker, PhD, CPA, is an associate professor at the school of accountancy at 
Florida Atlantic University in Boca Raton, FL. He can be reached at 561-297-3422 or