Behavioral Research in Accounting
Published annually by the Accounting, Behavior and Organizations Section
of the AAA

1994, Volume 6


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Auditor Attendance to Negative and Positive Information: The Effect of Experience-Related Differences

Brenda H. Anderson and Mario Maletta
Prior audit judgment research indicates that auditors exhibit a preferential attendance to negative evidence in their decision making processes [Kida, 1984; Trotman and Sng, 1989; Butt and Campbell, 1989; Anderson and Kida, 1990]. This study examines whether experience-related differences play a role in this tendency to focus on negative data. Specifically, we investigate whether auditors with low levels of audit experience attend to more negative (and less positive) audit evidence than auditors with higher levels of experience, and whether less experienced auditors make more negative audit planning judgments than more experienced auditors. The study employs an analysis of variance design using three subject groups: audit seniors, staff auditors, and auditing students. The experimental task involves an evaluation of control risk in the sales/receivables area.

The results indicate that experience plays a primary role in auditor attendance to negative audit evidence but does not affect attendance to positive information. Auditing students and staff auditors were found to attend to more negative evidence than audit seniors. This focus on negative data was further reflected in auditor control risk assessments in that auditing students rated control risk to be higher than audit seniors. The results indicate that the less experience auditors possess, the more they focus on negative information and the more negative they are in making audit judgments.

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The Effects of Audit Task on Evidence Integration and Belief Revision

David S. Kerr and D. Dewey Ward
This paper reports the results of a study investigating the effects of audit task on auditors' evidence integration processes and subsequent belief revision. Hogarth and Einhorn [1992] recently proposed a belief-adjustment model which predicts that evaluation-type tasks will produce data which fit additive summation integration models, while estimation-type tasks are expected to produce data which fit nonadditive averaging integration models. Results of the experiment are consistent with these predictions.

This study found that the degree of nonadditivity in auditors' judgment processes is affected, in a predictable manner, by characteristics of the audit task. One implication of the results is that nonadditive, configural cue utilization by auditors may be more common than suggested by previous research. A second implication is that the effect of a given piece of audit evidence on auditors' judgments may depend on whether the audit task is an estimation-type or a evaluation-type task.

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Identification of Auditors' Propositions Related to Assessments of Management Estimates

George F. Klersey
One of the most difficult areas of audit judgment is the evaluation of management estimates. The problem facing CPA firms is that individual auditors bring different experiences to the evaluation task. These differences can lead to disparate opinions and may ultimately result in errors in judgment regarding the estimates. To investigate this problem, practicing auditors provided judgments and recalled case materials to elicit their propositions (basic knowledge units) related to the collectibility of trade accounts receivable. Results based on the use of discourse analysis indicate that recalled propositions can be categorized into meaningful information sets that are related to auditors' levels of experience and judgments. In particular, while all auditors recalled some of the same propositions, specific differences were noted based both on their level of experience and judgment. In addition, experienced auditors were more likely to disagree with management's collectibility assertion than inexperienced auditors.

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The Effects of Independence Allegation on Peer Review Evaluation of Audit Procedures

James King, Robert Welker and Gary Keller
This paper reports the results of a study which examined whether an allegation of lack of independence influenced peer review assessment of audit work quality. Forty-nine experienced auditors reviewed an attestation engagement performed by auditors from a small accounting firm. In one experimental condition (n=25), each subject was told that the request for peer evaluation was made as a consequence of an allegation that the auditors lacked independence. In the other experimental condition (n=24), each subject was told that the request was a routine tri-annual peer review. The results supported two hypotheses: (1) knowledge of the allegation negatively influences a peer reviewer's evaluation of the employed audit procedures, and (2) the effect of the allegation on a final assessment of audit quality is attributed primarily to differences in evaluations of those procedures.

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The Impact of Responsibility and Framing of Budgetary Information on Group-Shifts

Robert W. Rutledge and Adrian M. Harrell
Considerable research has found that group decisions are either more or less risky as compared to previous decisions made by individual group members. This study proposes and tests two conditions that may influence whether group decisions become more or less risky: (1) the framing of decision alternatives, and (2) the level of responsibility for a prior related decision. The results suggest that both framing and responsibility affect the initial risk-taking of individuals in a predictable manner, and that subsequent group decisions will enhance this risk-taking. Implications for decision making in organizations are discussed.

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Measuring Auditors' Reliance on Internal Auditors: A Test of Prior Scales and a New Proposal

Annhenrie Campbell
Use of the work and/or personnel of a client's internal audit department in the annual independent audit is commonly termed "reliance." Reliance in experimental cases is often measured with a simple, ad hoc scale. This study examines whether auditors actually think of reliance activities in terms of a single scale of increasing values. The question is addressed by attempting to create a reliance scale from 52 subjects' paired comparison of seven reliance scenarios. A consistent scale resulted suggesting the subjects shared a common concept of reliance. The findings supported the use of Likert and interval scales of reliance in previous studies and provide an illustrated scale for future use.

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Behavioral Determinants of Auditor Aggressiveness in Client Relations

Jeffrey Cohen, Laurie Pant and David Sharp
Aggressiveness by auditors in client relations could lead to ethical problems by possibly impairing the independence or the appearance of independence of auditors. This study employs a widely used social psychology model, the theory of reasoned action [Fishbein and Ajzen, 1975; Ajzen and Fishbein, 1980; and Ajzen, 1988], to identify the behavioral determinants of auditor aggressiveness in client relations. The model posits a relationship between behavior and intention to perform that behavior. Intention, in turn, is determined by two antecedent factors, attitude and subjective norm. The results from the responses of sixty-two audit managers indicate that the model's overall fit was good and its two variables were highly associated with the aggressiveness intention variable.

Comparisons were also conducted between more and less aggressive auditors on individual questions comprising attitude and subjective norm. For the attitude questions, differences emerged in respondents' perceptions of the likelihood that certain outcomes would occur if one is aggressive. In every case, more aggressive auditors believed that there was a greater (lesser) likelihood of positive (negative) outcomes as a result of aggressive behavior. Examining the individual subjective norm questions, differences occurred in respondents' perceptions of whether important referents, such as peers and business contacts, would approve of aggressiveness in client relations.

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Role Ambiguity, Role Conflict, and Perceived Environmental Uncertainty: Are the Scales Measuring Separate Constructs for Accountants?

Terry Gregson, John Wendell and June Aono
A sample of (N=216) certified public accountants was surveyed using modified versions of Rizzo et al.'s (1970) role ambiguity and role conflict questionnaire and Duncan's (1972) perceived environmental uncertainty questionnaire to determine whether these concepts are measurements of distinct constructs. The question of the distinctness of the scales has important implications for the integrity of prior research. The items which comprised each of the questionnaires were examined using latent variable analysis. The results indicated the construct validity of role ambiguity and role conflict, and support was found for the distinctness of role ambiguity, role conflict, and perceived environmental uncertainty.

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The Effect of Experience on Consensus of Going-Concern Judgments

Joanna L. Ho
Statement on Auditing Standards No. 59 requires that auditors evaluate the going-concern status of each client. Determining whether a firm will continue as a going concern can be a complex process. Since many data items are potentially relevant, the task is relatively unstructured. In spite of these cognitive demands, previous studies suggest significant agreement among auditors' going-concern judgments. Results of this study reveal a lack of consensus among both experienced and less experienced auditors who were given information for a problem firm. This lack of consensus may explain why auditors often disagree on the appropriate audit report for a problem firm. Also reported are models of the judgment processes of both experienced and less experienced auditors. Auditors in both groups placed more emphasis on the current liquidity and expected profitability of the client than on other financial indicators. Moreover, experienced auditors generated more positive going-concern judgments.

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Examination of Contextual Effects and Changes in Task Predictability on Auditor Calibration

Rosina Mladenovic and Roger Simnett
Research on calibration is mainly located in the psychology literature, where the general finding is that individuals are overconfident in their judgments. On the other hand, the results of studies examining auditor calibration suggest auditors are less confident, tending towards underconfidence. There appear to be two competing explanations for the divergence, namely task predictability [Lichtenstein et al. 1982] and contextual effects of auditing [Solomon et al. 1985]. This study aims to reconcile these findings by obtaining auditors' and non-auditors' responses to both auditing and general knowledge questions across different levels of task predictability. This enables the consideration of both the task predictability and the contextual effects explanations in a single experimental design. When examining the explanations separately, both appear to account for the observed differences in calibration. However, when task predictability is controlled for, most of the task contextual effect disappears while some subject contextual effect remains. The findings of this study suggest that task predictability is a means for explaining and reconciling the conflicting findings of the audit and psychology calibration literatures.

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The Effect of an Anticipated Performance Evaluation on Willingness to Perform: The Intervention of Self-Presentational Motives

Richard J. Palmer and Robert B. Welker
Prior research has identified anticipated performance evaluations as fraught with negative motivational implications for the evaluatee. The purpose of this laboratory experiment was to show that the performance of a task while anticipating a performance evaluation can stimulate either a positive or negative sentiment and that the direction of the sentiment depends upon the protective or acquisitive self-presentational orientation of the evaluatee. Forty-seven accounting students addressed a complex tax problem after being told that the results of their performance would be reviewed by their major professors. Self-presentational orientations within the subjects were induced by altering the performance standard level against which the evaluators would judge each subject's work. The results supported the hypothesis that, given a desire to impress the evaluators, individuals who perform a task for acquisitive purposes will be more willing to continue to participate in the task than their protective counterparts.

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