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Sequential auditor decision making: Information search and evidence evaluation

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  • W. ROBERT KNECHEL
  • WILLIAM F. MESSIER

Abstract

. This paper presents the results of an experiment that examined five hypotheses related to the information search and evidence evaluation that takes place as part of an auditor's sequential decision process. The results indicate the following. (1) When given a choice, auditors examined the most reliable type of evidence. (2) Auditors who stopped at intermediate stages in the sequential task had, on average, more extreme assessments of the outcome, although there were differential effects depending on whether the auditors based their decisions on positive or negative evidence. (3) Changes in the direction of the auditor's judgments were consistent with the signal in the audit evidence. (4) Negative evidence, in general, led to greater judgment revisions than positive evidence, and the most reliable negative evidence led to the greatest revisions. (5) Auditors searched for corroborating evidence, but their evaluation of that evidence did not impact the assessment of evidence received earlier in the sequential task. Résumé. Les auteurs présentent les résultats d'une expérience portant sur l'analyse de cinq hypothèses reliées à la recherche d'information et à l'évaluation de l'information probante qui s'inscrivent dans le processus de décision séquentiel du vérificateur. Les résultats obtenus indiquent ce qui suit: 1) lorsqu'ils ont le choix, les vérificateurs examinent l'information probante la plus fiable, 2) les vérificateurs qui s'arrêtent à des étapes intermédiaires de la tâche séquentielle produisent, en moyenne, des évaluations plus extrêmes des résultats, bien que l'on observe des incidences marginales selon que les vérificateurs ont fondé leurs décisions sur des informations probantes expresses ou tacites, 3) les modifications dans l'orientation des jugements posés par le verificateur sont conformes aux indications livrées par l'information probante, 4) l'information probante tacite mène, en général, à une révision plus importante des jugements que l'information expresse, et l'information tacite la plus fiable mène à la révision la plus approfondie, et 5) les vérificateurs cherchent à obtenir des preuves de corroboration mais leur évaluation de cette information probante n'a pas d'incidence sur lévaluation de l'information probante obtenue aux étapes antérieures de la tâche séquentielle.

Suggested Citation

  • W. Robert Knechel & William F. Messier, 1990. "Sequential auditor decision making: Information search and evidence evaluation," Contemporary Accounting Research, John Wiley & Sons, vol. 6(2), pages 386-406, March.
    • Handle: RePEc:wly:coacre:v:6:y:1990:i:2:p:386-406
    DOI: 10.1111/j.1911-3846.1990.tb00765.x
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    References listed on IDEAS

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    1. David N. Ricchiute, 2010. "Evidence Complexity and Information Search in the Decision to Restate Prior‐Period Financial Statements," Journal of Accounting Research, Wiley Blackwell, vol. 48(3), pages 687-724, June.
    2. Christopher Koch & Annette Koehler & Kristina Yankova, 2016. "Professional Skepticism and Auditor Judgment: Does Trait Skepticism Mitigate the Recency Bias?," Working Papers 1623, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 2016.
    3. Emily E. Griffith & Jacqueline S. Hammersley & Kathryn Kadous & Donald Young, 2015. "Auditor Mindsets and Audits of Complex Estimates," Journal of Accounting Research, Wiley Blackwell, vol. 53(1), pages 49-77, March.
    4. D. Eric Hirst & Lisa Koonce, 1996. "Audit Analytical Procedures: A Field Investigation," Contemporary Accounting Research, John Wiley & Sons, vol. 13(2), pages 457-486, September.
    5. Aaron Saiewitz & Elaine (Ying) Wang, 2020. "Using Cultural Mindsets to Reduce Cross‐National Auditor Judgment Differences," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1854-1881, September.
    6. Diane Janvrin, 2008. "To what extent does internal control effectiveness increase the value of internal evidence?," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(3), pages 262-282, March.
    7. Alexander Gelardi, 2010. "Information Quantity and Order in Students’ Tax Research Judgements," Asian Journal of Finance & Accounting, Macrothink Institute, vol. 2(1), pages 2546-2546, December.
    8. Johnson, Eric N., 1995. "Effects of information order, group assistance, and experience on auditors' sequential belief revision," Journal of Economic Psychology, Elsevier, vol. 16(1), pages 137-160, March.
    9. El-Hussein E. El-Masry, 2008. "Factors affecting auditors' utilization of evidential cues," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(1), pages 26-50, January.
    10. Rasso, Jason Tyler, 2015. "Construal instructions and professional skepticism in evaluating complex estimates," Accounting, Organizations and Society, Elsevier, vol. 46(C), pages 44-55.
    11. D. Eric Hirst, 1994. "Auditor Sensitivity to Earnings Management," Contemporary Accounting Research, John Wiley & Sons, vol. 11(1), pages 405-422, June.
    12. Mario J. Maletta, 1993. "An Examination of Auditors' Decisions to Use Internal Auditors as Assistants: The Effect of Inherent Risk," Contemporary Accounting Research, John Wiley & Sons, vol. 9(2), pages 508-525, March.
    13. Maksymov, Eldar, 2015. "Auditor evaluation of others’ credibility: A review of experimental studies on determinants and consequences," Journal of Accounting Literature, Elsevier, vol. 35(C), pages 104-124.
    14. Desai, Renu & Desai, Vikram & Libby, Theresa & Srivastava, Rajendra P., 2017. "External auditors' evaluation of the internal audit function: An empirical investigation," International Journal of Accounting Information Systems, Elsevier, vol. 24(C), pages 1-14.

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