An experimental study of factors affecting auditors' reliance on analytical procedures
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Abstract
This research investigated the moderating effects of some environmental and task-related variables on auditor judgment in an audit planning task focusing on the evaluation of the results of analytical procedures. The dependent variables of the research were the assessment of the likelihood of material error and changes in planned audit hours for a hypothetical company. The research hypothesized that auditors' judgments would be affected by the favorableness of results of analytical procedures and that this effect would be moderated by (1) the balance predictability of the accounts being examined, (2) the precision of the expectation generated by the analytical procedures, (3) the reliability of the data used to develop the expectation, and (4) uncontrollable risk. In addition, these effects would be further moderated by auditor acceptance of analytical procedures.
The data were collected from practicing auditors, who served as subjects in an experiment involving an audit case analysis. The data were analyzed using analysis of covariance (ANCOVA) techniques.
The general ANCOVA results indicated that the main effects for all five manipulated independent variables were statistically significant in at least one stage of an audit decision model developed. In addition, the covariate "acceptance of analytical procedures" was significant in connection with the change in planned audit hours.
The research hypotheses were tested using planned comparisons. In general, the majority of hypotheses concerning moderating effects on "favorable" results of analytical procedures were confirmed by the data at a significance level of a = .05. The null hypotheses regarding moderating effects on "unfavorable" results, however, were not rejected at any reasonable level of significance. Interestingly, a number of significant differences in the opposite direction from that hypothesized were noted. A number of alternative explanations for these unexpected findings are provided as a basis for further research.
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Dissertation (D.B.A.)--Boston University
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