Strategic considerations for unaudited account values in analytical review
Article Abstract:
Previous research indicates that auditors' knowledge of a company's book value affects their account value estimates in the analytical review. Research using a Bayesian decision theoretic model was conducted on a sector of environmental and audit conditions to examine the affects on audit cost and risk consequences when auditors rely on book value for the analytical review. Research reveals that risk consequences are dependent on the auditors' decision parameters: confidence in account estimate; confidence in the book value; and the dependence between the auditors' and managers' estimates. There is some substance to the assertion that unaudited book values and audit values are correlated significantly when the book value is within a tolerable error. Furthermore, research reveals that incorporating book value in the analytical review gives an auditor minimal advantage in the audit process.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1990
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Pattern recognition, hypotheses generation, and auditor performance in an analytical task
Article Abstract:
Auditors must hypothesize possible causes for unexplained patterns in some financial statement balances and develop investigative procedures, which means that audit effectiveness and efficiency rely on the auditor's pattern recognition in financial data and ability to hypothesize the likely causes. Auditor performance is analyzed in laboratory conditions where 21 auditors participated in think-aloud experiments that indicated hypothesis generation was the stage at which processing errors occurred most frequently.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1991
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