A new study asserts that auditors who leave the field to become a CFO before, then, returning to auditing have better understanding of how to judge reported earnings from management than those who do not, according to CFO.com. The study's authors assert that auditors and management are engaged in what they called a "strategic game" when it comes to the numbers: management reports them, then the auditor must decide which ones to test.

This game was simulated in the study by 58 mostly undergraduate business majors who were assigned into the role of either manager or auditor. Some, however, switched from manager to auditor at a certain point, while others remained auditors the entire time. They then engaged in a sort of guessing game: students playing manager received two numbers adding up to total earnings, but the auditor only received one. Managers could, theoretically, overstate their total number. The auditor needed to decide whether to accept what the manager told them or to reject it, as well as estimate what the true number was based only on the information they received. 

The study found that those who at one time were on the other side of the table tended to play this game better. It is believed that this is because they were more aware of how managers think when interacting with auditors, and so were able to better judge whether to accept or reject the report. However, it may not be management experience alone that creates this effect: in a similar experiment, the study's authors, instead of having the students switch roles, had them take a test evaluating how good they were at imagining the perspective of other people before playing the game. They found that, much like those auditors who used to be managers, the ones who could better envision how others were thinking were also better at evaluating whether to accept or reject numbers from management. 

"We predict and find that auditors with high perspective-taking disposition are better able to judge managers’ reported earnings than auditors with low perspective-taking disposition. Taken together, the results of our two experiments highlight the importance of perspective taking as a means to enhance auditors’ performance in strategic interactions with managers," said the study's abstract.