Cassandra Estep
Assistant Professor of Accounting | Emory University, Goizueta Business School
Atlanta, GA, UNITED STATES
Biography
Cassandra Estep joined the Goizueta faculty in 2016, after completing her PhD in Accountancy at the University of Illinois at Urbana-Champaign. Prior to her PhD program, she spent six years with Ernst & Young as an IT auditor. Her primary research focus is judgment and decision making in auditing, with specific interest in the role of audit specialists and information technology. Professor Estep's work has been published in The Accounting Review, Journal of Accounting Research, Contemporary Accounting Research, and Review of Accounting Studies.
Education (2)
University of Illinois at Urbana-Champaign: PhD, Accountancy 2016
University of Virginia: BS, Commerce 2005
Areas of Expertise (3)
Social Cognition of Professionals
Auditing
Behavioral Decision Making
Publications (5)
How Do Financial Executives Respond to the Use of Artificial Intelligence in Financial Reporting and Auditing?
Review of Accounting Studies2023-05-01
Financial reporting quality can benefit from companies and auditors using artificial intelligence (AI) in complex and subjective financial reporting areas. However, benefits will only accrue if managers incorporate AI-based information into their financial reporting decisions, which the popular press and academic literature suggest is uncertain. We use a multi-method approach to examine how financial executives view and respond to AI. In a survey, respondents describe various uses of AI at their companies, spanning from simple to complex functions. While managers are not averse to the use of AI by their companies or their auditors, they appear to be uncertain about how auditors’ use of AI will directly benefit their companies. In an experiment that manipulates whether a company and/or its auditor use AI, managers whose companies use AI record larger audit adjustments for a complex accounting estimate when the auditor uses AI. Auditor AI use does not affect managers’ adjustment decisions in the absence of company AI. This study highlights the importance of considering the effects of AI use by both companies and their auditors when evaluating how AI influences auditing and financial reporting.
Auditor Integration of IT Specialist Input on Internal Control Issues: How a Weaker Team Identity Can Be Beneficial
The Accounting Review2021-09-01
I investigate how auditors integrate information technology (IT) specialist input into internal control over financial reporting (ICFR) issue classifications. Given the ill-structured nature of evaluating ICFR issues and the impact of these issues on audit quality, combining knowledge from different perspectives is likely beneficial. Drawing on social identity theory, I predict and find that a weaker one-team identity between auditors and IT specialists yields benefits. Auditors with a weaker versus stronger team identity place more weight on IT specialist input for IT-related issues and differentially weight higher and lower quality input for non-IT issues. I also find that more severe ICFR issues drive the predicted results. My study provides insight into how team identity influences auditor integration of input from specialists. The implications of my study are of interest to researchers, regulators, and practitioners, especially as recent firm initiatives encourage a one-team view for auditors and IT specialists.
The Unintended Consequences of Material Weakness Reporting on Auditors’ Acceptance of Aggressive Client Reporting
The Accounting Review2020-07-01
Regulators are concerned that auditors do not sufficiently identify and report material weaknesses in internal control over financial reporting (ICFR). However, psychological licensing theory suggests reporting material weaknesses could have unintended consequences for acceptance of aggressive client financial reporting. In an experiment, we predict and find auditors accept more aggressive client reporting after they report a material weakness in ICFR than after they report no material weakness. We provide evidence licensing underlies this effect. In a second experiment, we investigate the efficacy of an intervention to reduce the identified licensing effects by prompting an audit quality goal. We find this prompt mitigates the unintended consequence when auditors report a material weakness. While regulators are concerned companies are undeservedly receiving clean ICFR audit opinions, our findings indicate adverse ICFR opinions may lead auditors to give companies undeservedly clean financial statement opinions. We provide a potential remedy to this unintended consequence.
One Team or Two? Investigating Relationship Quality between Auditors and IT Specialists: Implications for Audit Team Identity and the Audit Process
Contemporary Accounting Research2019-03-27
While prior research focuses on the audit team made up of auditors, we focus on the collective audit team made up of auditors and specialists—in our context, information technology (IT) specialists. Complex systems in today’s audits and researcher and regulator concerns regarding ineffective coordination and communication between the two specializations motivate better understanding of this collective audit team. We investigate how auditors and IT specialists perceive their relationship and how the audit process unfolds when these relationships are good and when they are difficult. Results of interviews conducted with Big 4 audit and IT practitioners provide evidence that they perceive their relationship quality to depend on the level of mutual value and respect. Auditors assert a one-team view of the collective audit team that includes IT specialists, but IT specialists feel auditors see them as a separate team and a “necessary evil.” The audit process vastly differs between relationships perceived as difficult and good. In difficult relationships, the two specializations often struggle for status, with limited communication or effort to understand how their work fits together. Our findings imply difficult relationships are at risk for poor integration and unsupported reliance on IT functions, shedding light on recurring threats to audit quality identified by PCAOB inspections. In good relationships, auditors and IT specialists appear motivated to engage in frequent and open communication to help understand, coordinate, and complete the audit. Inferences gleaned from good relationships let us highlight prescriptions for audit firms to improve effectiveness of collective audit teams.
The Role of Tacit Knowledge in Auditor Expertise and Human Capital Development
Journal of Accounting Research2018-09-01
Two critical aspects of the model of auditor expertise development in Tan and Libby [1997] are that audit firms do not value tacit knowledge in inex- perienced auditors but do value it in experienced auditors. We update the former and extend the latter. Our paper predicts and finds that audit firms now do value tacit knowledge in inexperienced auditors, especially when their supervisors have higher tacit knowledge. Our proxies of value include higher promotability assessments, annual evaluations, and cash bonuses. Our paper also extends Tan and Libby [1997] by positing that enhanced development of expertise and audit firm human capital are two reasons audit firms value tacit knowledge in experienced auditors. As predicted, higher tacit knowledge in experienced auditors is positively associated with higher tacit knowledge acquisition by their inexperienced subordinates and with stronger firm com- mitment of inexperienced subordinates having higher tacit knowledge.
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