Auditors' usage of unaudited book values when making presampling audit value estimates_*

Abstract

Abstract. An important issue in audit judgment research concems auditors' use of unaudited book values when making judgments in the presampling phase of the audit. This paper presents a rudimentary model of the auditor's belief revision process with respect to unaudited book values from an audit value estimation perspective. An experiment testing some implications of the model is also presented. The model proposes that the auditor should judge the validity of unaudited book values in the circumstances and use them accordingly when making presampling audit value estimates. The experimental results indicated that the subjects (auditors) used available unaudited book values and that the extent of usage varied over accounts. However, the results also indicated some inaccurate presampling validity judgments which led to overweighting of unaudited book values.ResumS. Une question importante qui pr^occupe les chercheurs dans le domaine de la formulation de jugements en verification a trait it ['utilisation par les verificateurs de valeurs comptables non \6riMes dans la formulation de jugements au cours de la phase de la verification pr6c6dant l'echantillonnage. Les auteurs pr^sentent un modele rudimentaire du processus de revision des convictions du verificateur en ce qui a trait aux valeurs comptables non v6rifi6es dans une perspective d'estimation de la valeur de verification. Ils font egalement etat d'une experience destinee a verifier certaines des consequences du modele. Selon le modae, Ie verificateur devrait juger de la validite des valeurs comptables non vedfiees dans Ies circonstances et les utiliser en consequence dans la formation d'estimations de la valeur de verification avant echantillonnage. Les resultats de I'experience revfelent que les sujets (verificateurs) utilisent les valeurs comptables non vedfiees disponibles et que retendue de cette utilisation vade avec les comptes. Toutefois, les resultats revMent aussi l'inexactitude de certains jugements relatifs a la validite antedeure h rechantillonnage, h la suite desquels une importance trop grande a ete accordee aux valeurs comptables non vedfiees.

The Effect of Data Reliability on the Influence of Unaudited Values in Audit Analytical Procedures

“…The commonality of focus on gross profit helps compare conclusions across studies, but reduces the generalizability of results to other accounts. This point is especially important given that Shields et al (1988) and Asare and Davidson (1995) found differences in error estimation judgments across accounts.…”

“…Neither Biggs and Wild (1985) nor Heintz and White (1989) contained indications that data reliability might be suspect. Case materials of Shields et al (1988) contained indications of audit risk (e.g., increased competition in the client's industry, past audit adjustments, electronic data processing system inadequacy) but this information was common to all experimental conditions. Similarly, McDaniel and Kinney (1995) used rich case materials, but did not vary data reliability.…”

“…1. Studies of audit balance estimation (not manipulating direction of unaudited values) have found that these judgments are contingent on the nature of the account and on features of the client (Rebele et al, 1988;Shields et al, 1988;Asare and Davidson, 1995). 2.…”

Witnessing Your Own Cognitive Bias: A Compendium of Classroom Exercises

“…Auditors who receive unaudited values with material errors are less accurate than auditors who do not receive these anchors (Shields et al 1988).…”

Oordeelsvorming bij cijferanalyse

“…Biggs en Wild, 1985Shields, Solomon en Waller, 1988Heintz en White, 1989Wild en Biggs, 1990Heintz, White en Bedard, 1995Vaassen en Hassink, 1995 Cijferanalyses die betrekking hebben op een meer gedetailleerde periode leiden tot zinvollere en betrouwbaardere analyse.…”