A test of audit deterrent to financial reporting irregularities using the randomized response technique

Article Abstract:

A study by W.C. Uecker researching the effect of auditors' aggressiveness on the behavior of the audited party addressed the question of whether the presence of internal and external auditing affects the behavior of the audited party. An experiment involving 264 subjects, many of whom were experienced managers, was conducted to test the effects of managers' perceptions as to the quality of internal and external auditing on the subsequent commission of financial reporting mistakes. Research results reveal that internal and external auditing were deterrents to the commission of financial reporting irregularities when four conditions were present: Generally Accepted Accounting Principle violations, lack of incentives for misstating income, asset overstatement irregularities, and material dollar amounts.

Accounting and auditing, Corporation reports, Company reports, Deterrence (Strategy), Uecker, W.C.

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Experience effects in auditing: the role of task-specific knowledge

Article Abstract:

Accounting firms often rely on the judgements of experienced auditors as a substitute for performance measures when determining auditing standards. Research was conducted to investigate the impact of task-specific knowledge on experienced auditors' judgements and how knowledge affects certain components of auditors' judgements. Research tested the role of task-specific knowledge on cue selection and cue weighting in two audit tasks, analytical risk assessment and control risk assessment. Research results reveal that task-specific knowledge aids experienced auditors in cue selection and cue weighting performance only in the area of analytical assessment. Differences in cue-weighting related to experience are the primary determinants of experience-related differences in overall judgement.

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Configural information processing in auditing: the role of domain-specific knowledge

Article Abstract:

Domain-specific knowledge has been revealed to be essential to an understanding of auditors' judgment and decision-making strategies. Two experiments were conducted using auditors as subjects to investigate the hypothesis that auditors exhibit configural information processing in situations where it is deemed appropriate by domain-specific knowledge. The first experiment entailed assessing account misstatement risk, and the second experiment entailed assessing the results of audit planning procedures. The results of the experiments support the hypothesis: in the second experiment, 20 of 22 subjects used the configural strategy that had been predicted. Research results indicate that the information processing of auditors is more complex than has been revealed by previous studies.

Methods, Decision-making, Decision making, Human information processing

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