The ABO Reporter


By: John T. Rigsby
Mississippi State University

I would appreciate hearing from section members with suggestions for papers that you feel would be of interest to others in the section. Please send any citations to me at

Anderson, B. H. and M. J. Maletta, "Primary Effects and the Role of Risk in Auditor Belief - Revision Processes," Auditing: A Journal of Practice and Theory (1999, Vol. 18, No. 1): pp. 75-89.

The authors investigated whether primary effects in auditor belief revisions are a conditional function of the level of inherent risk present in the audit risk environment (high/low), and the nature of the information contained in the latter portion of the information sequence (e.g., whether the information is positive or negative with respect to the client's controls.) They found that primacy is essentially the result of insufficient integration of late positive information in low interest risk settings and likely leads to overauditing.

Bhattacharjee, S., T. Kida, and D. M. Hanno, "The Impact of Hypothesis Set Size or the Time Efficiency and Accuracy of Analytical Review Judgments," Journal of Accounting Research (1999, Vol. 37, No. 1): pp. 83-100.

The authors examined the effect of generating and testing hypothesis sets of different sizes on the efficiency and accuracy of auditors' analytical review judgments. Three different groups of auditors were asked to generate and test either one, three, or six hypotheses, though they could evaluate as many total hypotheses as desired. A fourth group had no such restrictions. The authors found that the auditors who initially tested three hypotheses spent less time and were at least as accurate as the auditors in the other groups, suggesting that for similar tasks generating and testing a moderate number of hypotheses (e.g., three hypotheses) can improve auditors' time efficiency with no loss of decision accuracy.

Bierstaker, J. , J. C. Bedard, and S. F. Biggs, "The Role of Problem Representation Shifts on Auditor Decision Processes in Analytical Procedures," Auditing: A Journal of Practice and Theory (1999, Vol. 18, No. 1): pp. 18-36.

The authors investigated how problem representation shifts can lead auditors to better insight into possible explanations of discrepancies with the goal of improving auditor decision processes in analytical procedures. Think-aloud verbal protocols were collected from 12 senior auditors with three to five years' experience to provide evidence of problem representation shifts and decision processes. Their findings suggest that shifting to a productive problem representation was critical in achieving effective decision processes and identifying the seeded errors in the analytical procedures task.

Craswell, A. T. and J. R. Francis, "Pricing Initial Audit Engagements: A Test of Competing Theories," The Accounting Review (1999, Vol. 74, No. 2): pp. 201-216.

Two competing theories of initial engagement audit pricing are examined empirically. De Angelo's model predicts initial engagement discounts in all settings. Dye's model specifically predicts discounting will not occur in settings where audit fees are publicly disclosed. The authors examined initial engagement pricing in Australia where audit fees are publicly disclosed during a time period when comparable U.S. studies report discounts of 25 percent. The results of the study were generally consistent with Dye's conclusion that public disclosure of audit fees precludes initial engagement discounting.

Cushing, B. E., "Economic Analysis of Accountants' Ethical Standards: The Case of Audit Opinion Shopping," Journal of Accounting and Public Policy (1999, Vol. 18, No. 4-5): pp. 339-363.

The author argues that the present strict system of ethical standards that relies upon explicit rules plus monitoring and enforcement procedures for rule violations might usefully be replaced by a laissez faire approach utilizing moral training and leadership to motivate professional accountants to act in the public interest for the sake of the profession as a whole. A framework is developed for examining the relative economic merits of the strict and laissez faire approaches to ethical standards within the accounting profession.

Drake, A. R., S. Haka, and S. P. Ravenscroft, "Cost System and Incentive Structure Effects on Innovation, Efficiency and Profitability in Teams," The Accounting Review(1999, Vol. 74, No. 3): pp. 323-345.

The authors examine the costs and benefits of activity-based costing (ABC) relative to more traditional volume-based costing (VBC) systems. The authors found that profits are highest when ABC is linked with group-based incentives, while the lowest level of profits occurs when ABC is coupled with tournament-based incentives. ABC moderates the incentive effect. Thus, the authors demonstrate that the effectiveness of ABC relative to traditional VBC is influenced by its interactive effect with incentive compensation.

Fisher, J. G., J. R. Frederickson, and S. A. Peffer, "Budgeting: An Experimental Investigation of the Effects of Negotiation," The Accounting Review (2000, Vol. 75, No. 1): pp. 93-114.

This study examines how budgets and the economic consequences of the budget-setting process differ when budgets are set through a negotiation process vs. when set unilaterally. Also examined are factors associated with negotiation agreement and the relation between agreement and the economic consequences of negotiated budgets. The authors found that both budgets and the economic consequences differ between the two approaches, with budgets set through a negotiation process ending in agreement containing significantly less slack and failed negotiations followed by an imposed budget having detrimental effects on subordinate performance.

Fogarty, T. J. and L. P. Kalfers, "An Empirical Evaluation of the Interpersonal and Organizational Correlates of Professionalism in Internal Auditing," Accounting and Business Research (2000, Vol. 30, No. 2): pp. 125-136.

The authors designed the study to evaluate the extent of professional attitudes in internal auditors and to identify their association with interpersonal and organizational conditions of internal auditing. It was hypothesized that job characteristics would generally be negatively associated with job stress and positively related to professionalism. The results indicate that autonomy, feedback, and task significance from the set of job characteristics and role conflict and role ambiguity from role stress are related to some of the dimensions of professionalism. The strongest support for the hypothesized relationship between job characteristics and role stress was found for skill variety, autonomy, and feedback. The results indicate that a complex set of work design factors have selective importance for creating and maintaining professional attitudes and behaviors of internal auditors.

Ghosh, D. and R. F. Lusch, "Outcome Effect, Controllability and Performance Evaluation of Managers: Some Field Evidence From Multi-Outlet Businesses," Accounting, Organizations and Society, (2000, Vol. 25, No. 4-5): pp. 411-425.

The authors conducted a field study examining the influence of outcome effect in performance evaluations of managers in an organization. As expected, outcome determinants over which the managers had control influenced their performance evaluations, and environmental determinants of outcome over which they had no control did not influence their evaluations. Unexpectedly, however, central management's determinants of outcome over which the managers had no control also influenced their evaluations. Subjective evaluations of store managers by their supervisors were negatively impacted by failure of the store to meet its target outcome.

Houston, R. W., M.F. Peters, and J.H. Pratt, "The Audit Risk Model, Business Risk and Audit-Planning Decisions," The Accounting Review (1999, Vol. 74, No. 3): pp. 281-298.

In this study, the authors examine conditions under which the audit risk model does, and does not, describe audit-planning (investment and pricing) decisions. In the presence of errors, the audit risk model adequately described audit-planning decisions. In the presence of irregularities, business risk dominated the audit risk model in the explanation of the audit investment, and the fee contained a risk premium.

Jacob, J., T. Z. Lys, and M. A. Neale, "Expertise in Forecasting Performance of Security Analysts," Journal of Accounting and Economics (1999, Vol. 28, No. 1): pp. 51-82.

In this study of sell-side analysts' forecasts, the authors explore the effects of analyst aptitude, learning-by-doing, and the internal environment of the brokerage house on forecast accuracy. They found that analysts' aptitude and brokerage house characteristics are associated with forecast accuracy, while learning-by-doing is only associated with forecast accuracy when analysts' company-specific aptitude in forecasting is not controlled for.

Lillis, A. M., "A Framework for the Analysis of Interview Data From Multiple Field Research Sites," Accounting and Finance (1999, Vol. 39, No. 1): pp. 79-105.

The purpose of this paper is to describe in some depth the method choices and analytical protocol used in a field study project. The paper describes initially the link between research question, research design, and analytical protocol. Its major focus is the application of a systematic analytical protocol designed to encourage completeness and impartiality in the collection and analysis of qualitative information. Method issues are examined in the context of the author's experiences, in the field and through the process of data analysis. The methods used are also examined critically in retrospect.

MacIntosh, N. B., T. Shearer, D. B. Thornton, and M. Welker, "Accounting As Simulacrum and Hypereality: Perspectives on Income and Capital," Accounting, Organizations and Society (2000, Vol. 25, No. 1): pp. 13-50.

The authors draw on Baudrillard's concepts of simulacra, hyperreality and implosion to trace the historical transformations of the accounting signs of income and capital from Sumarian times to the present. The paper posits that accounting today no longer refers to any objective reality but instead circulates in a "hyperreality" of self-referential models. It then examines this conclusion from the viewpoint of recent clean surplus model research and argues that the distinction between income and capital is arbitrary and irrelevant provided the measurement process satisfies the clean surplus relation. Although accounting is arbitrary and hyperreal, it does impart a sense of exogeniety and predictability, particularly through the income calculation. Therefore, it can be relied on for decisions that do have real, material and social consequences.

Maletta, M. J., B. H. Anderson, and J. P. Angelini, "Experience, Instruction, and Knowledge Acquisition: A Study in Taxation," Journal of Accounting Education (1999, Vol. 17, No. 4): pp. 351 - 366.

The authors investigate whether the benefits of prior direct work experience on knowledge acquisition is a function of the nature of the learning tasks (structured versus unstructured) used in subsequent educational experiences. They found that inexperienced subjects were assisted to a greater extent in the knowledge acquisition process by structured rather that unstructured tasks, and that the opposite was true for experienced subjects. They also found that the benefits of direct work experiences or subsequent knowledge acquisition are generally greater for individuals with low versus high learning aptitudes.

Mock, T. J. and A. M. Wright, "Are Audit Program Plans Risk-Adjusted?," Auditing: A Journal of Practice and Theory (1999, Vol. 18, No. 1): pp. 55-74.

The authors sought to corroborate and extend archival research on the extent to which audit program plans are responsive to client risks as prescribed by the Audit Risk Model. Data were gathered on risk assessments and evidential plans in the accounts receivable area from the working papers of 74 randomly selected manufacturing clients. They found a statistical association between the level of and changes in a limited number of assessed client risks and evidential plans, though little change in audit programs were found with many tests done across a broad array of engagements. As with prior research, the results indicate a lack of strong relationship between client risks and audit programs.

Rau, S. E. and D. V. Moser, "Does Performing Other Audit Tasks Affect Going-Concern Judgments?" The Accounting Review (1999, Vol. 74, No. 4): pp. 493-508.

The study examines whether personally performing other audit tasks can bias supervising seniors' going-concern judgments. The authors did find a positive relationship with the senior's subsequent going-concern judgment. The authors also examined subjects attention to positive and negative information.

Saleb, N. M. and M. S. Hassan, "Consensus of Audit Judgement in the Post-Modernist Era," International Journal of Management (1999, Vol. 16, No. 2): pp. 266-275.

The authors explore the use of judgement consensus in auditor judgement experimentation, and present an alternative route to understanding auditor's judgement in the hope of bridging the gap between practitioners and researchers, integrating research with practice, and providing a benchmark against which current research could be evaluated in relation to practice.

Shields, M. D., F. J. Deng, and Y. Kato, "The Design and Effects of Control Systems Tests of Direct -and Indirect - Effects Models," Accounting Organization and Society (2000, Vol. 25, No. 2): pp. 185-202.

The authors develop two models on the effects of a control system that include participative standard setting, standard-based incentives, and standard tightness. The direct model proposes that the control system directly affects performance, whereas the indirect model proposes that the effects of the control system on performance are indirect through the mediating influence of job-related stress. Hypothesis tests and a models-comparison test using structural equation modeling indicate that the indirect model has a significantly better fit to the data than does the direct model.

Skelton, S. W., "The Effect of Experience on the Use of Irrelevant Evidence in Auditor Judgment," The Accounting Review (1999, Vol. 74, No. 2): pp. 217-224.

The author examined whether experience moderates the diluting effect of irrelevant information on auditors' judgments. The effects of irrelevant information on the going-concern judgments of audit seniors is compared to the effect on the judgments of audit managers and partners. An experience effect was found, with the irrelevant information affecting the judgments of the less experienced auditors, but not those of more experienced auditors.

Trotman, K. T., "Audit Judgment Research - Issues Addressed, Research Methods and Future Directions," Accounting and Finance (1998, Vol. 38, No. 2): pp. 115-156.

The paper outlines the purpose of judgment and decision making research in auditing. It examines the following area of research: policy capturing, heuristics and biases, information search, hypothesis generation and protocol analysis; knowledge and memory; group decision making; decision aids; and environmental and motivational issues. The author outlines for each of these areas the key research issues that have been addressed, the research methods used, and a summary of past research and potential future research.

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