Individual Judgment in Analytical Review Performance
Hamilton, Charles Thomas
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https://hdl.handle.net/2142/71398
Description
Title
Individual Judgment in Analytical Review Performance
Author(s)
Hamilton, Charles Thomas
Issue Date
1987
Department of Study
Accountancy
Discipline
Accountancy
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Business Administration, Accounting
Abstract
Professional auditors were used as subjects in order to investigate the effects of analytical review information on audit planning judgments. The subjects were presented a complex audit situation which included one of two variations of the internal accounting control system. The internal accounting control quality variable was based on a presentation of either a moderately weak or moderately strong system. Response to a debriefing question indicated that a correct categorization as to the internal accounting control quality was made by the auditor-subjects. The auditor-subjects were then asked to prepare an audit program for evaluating certain account balances of the subsystem in the company that was reviewed.
The auditor-subjects were then presented with financial statement information and asked to perform analytical review procedures. The analytical review information was varied across two levels. It reflected either a set of material or immaterial deviations between the provided financial information. Based on the results of their analytical review, the auditor-subjects were allowed to revise their audit program on the basis of the new audit evidence.
The primary problem addressed by this research was the low level of consensus observed in prior research studies. It was this author's opinion that the revision of audit judgments, which normally occurs in the audit process because of new audit evidence, would result in higher levels of consensus.
A moderate, not statistically significant, reduction in the variability of audit judgments was observed in the experiment. The expected combinations of the internal accounting control quality variable and the analytical review variable resulted in the reduction of variability. The unexpected combinations resulted in a slight increase in the variability of audit judgments. Higher levels of consensus were only observed when the sequential evidence reviewed by the auditor-subjects was consistent, i.e. predictable, based on the prior evidence obtained in the audit process.
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