1994, Volume 6
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Auditor Attendance to Negative and Positive Information:
The Effect of Experience-Related Differences, B. Anderson and M. Maletta
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The Effects of Audit Task on Evidence Integration
and Belief Revision, D. Kerr and D. Ward
-
Identification of Auditors' Propositions Related
to Assessments of Management Estimates, G. Klersey
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The Effects of Independence Allegation
on Peer Review Evaluation of Audit Procedures, J. King, R. Welker and
G. Keller
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The Impact of Responsibility and Framing of Budgetary
Information on Group-Shifts, R. Rutledge and A. Harrell
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Measuring Auditors' Reliance on Internal Auditors:
A Test of Prior Scales and a New Proposal, A. Campbell
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Behavioral Determinants of Auditor Aggressiveness
in Client Relations, J. Cohen, L. Pant and D. Sharp
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Role Ambiguity, Role Conflict, and Perceived Environmental
Uncertainty: Are the Scales Measuring Separate Constructs for Accountants?,
T. Gregson, J. Wendell and J. Aono
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The Effect of Experience on Consensus of
Going-Concern Judgments, J. Ho
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Examination of Contextual Effects and Changes in
Task Predictability on Auditor Calibration, R. Mladenovic and R. Simnett
-
The Effect of an Anticipated Performance
Evaluation on Willingness to Perform: The Intervention of Self-Presentational
Motives, R. Palmer and R. Welker
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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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