Using Audit Programs to Improve Auditor Evidence Collection

Hammersley, Jacqueline S.; Ricci, Michael A.

doi:10.2308/tar-2018-0120

Cited by 15 publications

(9 citation statements)

References 42 publications

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“…Alternatively, they can bypass recognition and invoke these processes directly by priming a deliberative mindset (Griffith, Hammersley, Kadous, and Young 2015), or indirectly by priming intrinsic motivation (Kadous and Zhou 2019) or an accuracy goal (as in the current paper). Judgment frameworks that prioritize particular issues (Backof et al 2016), documentation instructions that require broad consideration of why certain outcomes could occur (Rasso 2015), and audit programs that emphasize the overall task or a balanced consideration of evidence (Austin et al 2020; Hammersley and Ricci 2020) may also encourage analytical processes with or without prompting awareness of the need for such processes.…”

Section: Frameworkmentioning

confidence: 99%

Improving Complex Audit Judgments: A Framework and Evidence*†

Griffith

Kadous

Young

2021

Contemporary Accting Res

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Regulators and researchers provide evidence that auditors' judgment quality is problematic in complex audit tasks. We introduce a framework for improving auditor judgment in these tasks. The framework builds on dual‐process theory to recognize that high‐quality judgment in complex tasks requires that auditors (i) possess the knowledge needed for the task, (ii) recognize the need for analytical (versus heuristic) processing, and (iii) have sufficient cognitive capacity to complete the analytical processing. Based on the framework, we predict that auditors' need for cognition (NFC), a characteristic theoretically linked to recognizing the need for analytical processing, is associated with higher quality complex judgments. Analysis of 11 studies supports this assertion. We demonstrate the usefulness of the framework by predicting and finding that priming auditors with an accuracy goal improves judgments, particularly for lower NFC auditors, who are less likely to spontaneously engage in analytical processing. The framework facilitates systematic development of interventions to improve auditor judgment by highlighting that solutions should address the specific conditions causing judgment problems.

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Section: Frameworkmentioning

confidence: 99%

Improving Complex Audit Judgments: A Framework and Evidence*†

Griffith

Kadous

Young

2021

Contemporary Accting Res

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“…Future research can also consider examining other situations in which innovative audit procedures could be particularly valuable, such as audits of complex estimates. Such accounts often require the collection of nonstandard evidence (Asare and Wright 2004;Griffith, Hammersley, Kadous, and Young 2015) and academics (Hammersley and Ricci 2018) as well as regulators (PCAOB 2014; CPAB 2014) have suggested that the reliance on standard step-by-step audit programs is preventing auditors from effectively responding to such demands. Future research could consider the issue of implementing innovative procedures in audit programs, as well as the effectiveness of conducting more innovative audit procedures, in overcoming this issue.…”

Section: Resultsmentioning

confidence: 99%

Does an Audit Judgment Rule Increase or Decrease Auditors' Use of Innovative Audit Procedures?

Kang

Piercey

Trotman

2019

Contemporary Accting Res

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The current audit environment encourages auditors to conduct defensive auditing procedures in lieu of using new, innovative, and potentially more effective audit procedures, due to concerns these procedures may be second‐guessed in litigation or by audit inspectors such as the PCAOB. As a result, auditors may prefer traditional “generally accepted” procedures over innovative procedures that are potentially more effective. We test recent proposals that an Audit Judgment Rule (AJR) encourages the use of innovative, and potentially more effective, audit procedures analogous to the similar Business Judgment Rule that affords legal protections to corporate directors. Under an AJR, litigators or audit inspectors could not second‐guess auditor judgments, even if they perceive that alternate judgments would have ordinarily been reached, provided the auditor's judgment was made in good faith and in a rigorous manner. However, the AJR's requirements that auditors must defend the rigor of their innovative judgments could potentially backfire and lead auditors to select more traditional procedures. Under the framework of goal activation theory, we conduct an experiment with audit managers and seniors and find that an AJR makes auditors less likely to select innovative audit procedures, particularly when audit risk is high. They do so despite believing the innovative procedures to be more effective than the traditional procedures. Findings from a supplementary experiment with experienced auditors further suggest that national office affirmation of the reasonableness of the procedures does not help overcome this effect. Overall, our findings suggest that an AJR may have the unintended consequence of further increasing auditors' focus on more traditional, and potentially less effective, audit procedures.

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“…Hammersley and Ricci (2021) study whether audit programs with either a plan‐focus (i.e., focus on planned audit procedures) or a goal‐focus (i.e., focus on the task goal) affect auditors' evidence collection. Results from an experiment with 123 experienced auditors from the United States suggest that goal‐focused auditors collect more effective evidence than plan‐focused auditors and, in turn, follow up on this evidence in a way that could improve audit quality.…”

Section: Review Of the Relevant Literaturementioning

confidence: 99%

Audit evidence, technology, and judgement: A review of the literature in response to ED‐500

Barr‐Pulliam,

Calvin,

Eulerich

et al. 2023

Financ Manag Account

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In October 2022, the International Auditing and Assurance Standards Board (IAASB) issued Exposure Draft 500 (ED‐500). This is focused on revising and integrating the standard auditors use when evaluating audit evidence during an external audit. This study contributes to the ongoing discourse as the IAASB evaluates feedback to ED‐500 and executes its standard‐setting agenda. We review academic literature published in the past 10 years to synthesize extant knowledge specifically on the use of technology and the application of professional skepticism during audit evidence evaluation. Our review offers factors the IAASB should consider when seeking to modernize and future‐proof its standards, suggesting improvements to the proposed ED‐500. We also identify fruitful avenues for future academic research.

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Using Audit Programs to Improve Auditor Evidence Collection

Cited by 15 publications

References 42 publications

Improving Complex Audit Judgments: A Framework and Evidence*†

Improving Complex Audit Judgments: A Framework and Evidence*†

Does an Audit Judgment Rule Increase or Decrease Auditors' Use of Innovative Audit Procedures?

Audit evidence, technology, and judgement: A review of the literature in response to ED‐500

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