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March 18, 2026The Accounting Review

Auditor Review of Financial Forecasts: An Analysis of Factors Affecting Reasonableness Judgments.

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Authors

PDPaul DanosUniversity of MichiganEIEugene A. ImhoffUniversity of Michigan

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Implication

Experimental analysis reveals factors influencing auditors' judgment of financial forecast reasonableness.

Key Points

  • The aim is to explore factors that influence auditors' judgments regarding the reasonableness of financial forecasts in different corporate contexts.
  • Conducted an experimental study with auditors judging financial forecasts.
  • Utilized forecasting factors relevant to auditors in diverse corporate settings.
  • Analyzed the impact of management's track record on auditors' reasonableness judgments.
  • Auditors' judgment models were well specified for the two distinct corporate cases.
  • Management's historical accuracy in forecasting net income and sales significantly influenced judgments.
  • Judgments varied based on background information related to the two corporate scenarios.

Cite This Study

Danos et al. (1982) studied this question.

synapsesocial.com/papers/69ba44654e9516ffd37a612ehttps://doi.org/10.2308/tar-4489201
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1An Investigation of Auditor Judgment in Analytical Review.1985
  2. 2Forecast Systems: Construction and Attestation.1982
  3. 3Auditor Judgment in Analytical Review--Some Further Evidence.1989
  4. 4The Feasibility of Reporting Forecasted Information.1971
  5. 5Auditors' Causal Probability Judgments in Analytical Procedures for Audit Planning.1993