An Examination of Different Performance Outcomes in an Analytical Procedures Task

Green, Wendy J.; Trotman, Ken T.

doi:10.2308/aud.2003.22.2.219

Cited by 24 publications

(34 citation statements)

References 11 publications

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“…Auditors have long been using analytical methods to identify relationships between sets of data (Tabor and Willis, 1985;Hirst and Koonce, 1996;Chen and Leitch, 1999;Cohen et al, 2000;Glover et al, 2000;Church et al, 2001;Green and Trotman, 2003;O'Donnell and Schultz, 2003). Analytical review usually applies to account balances in financial statements.…”

Section: Predictive Modelingmentioning

confidence: 99%

The Predictive Audit Framework

Kuenkaikaew¹,

Vasarhelyi²

2013

IJDAR

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Abstract.Assurance is an essential part of the business process of the modern enterprise. Auditing is a widely used assurance method made mandatory for public companies since 1934. The traditional (retroactive) audit provides after-the-fact audit reports, and is of limited value in the ever changing modern business environment because it is slow and backwards looking. Contemporary auditing and monitoring technologies could shorten the audit and assurance time frame. This paper proposes the predictive audit, a forward looking contemporary audit that will bring the assurance processes, financial and non-financial, closer to the corresponding events. Rather than merely looking backward to historical data and past errors or anomalies, a predictive audit will identify possible exceptions proactively by comparing each transaction to a normative model before that transaction is executed. The paper also discusses the possibility of performing a predictive audit in a preventive manner -a preventive audit where transactions are blocked prior to execution.Key words: auditing, assurance, continuous auditing, predictive auditing, preventive audit. INTRODUCTION"Clearly the vast majority of internal auditors think that the traditional retrospective audit process adds far less value than the ability to inform the organization of risk and control trends and issues that are of importance to management" (Verver, 2012) 38 The International Journal of Digital Accounting Research Vol. 13Most accounting and auditing standards were set prior to the existence of current information technologies. This fact does not by itself invalidate their necessity but raises questions about their desirability, efficiency, and effectiveness. Auditing is the process of validation of the measurement provided by management to stakeholders and depends upon 1) the formality and quality of measurement rules, 2) the economics of the verification process, and 3) the purpose of the particular verification effort.The formality and quality of measurement rules affects verifiability. Poor accounting rules that lead to vague accounting procedures allow for a wide range of allowable measures that are difficult to verify. On one hand, historical cost measures are more reliable than fair value, and, therefore, easier to verify, on the other hand the measurement relevance may counterbalance the difficulties of its verification.The economics of the verification process determine the acceptability/framework of audit rules. Sampling procedures balanced the costs and benefits of audit verification, creating the concept of materiality which allows for "fair representation" as opposed to exact measurement. The development of faster and more effective verification processes using information technology have changed this cost/benefit equation, but the accounting and auditing standards have not yet been adapted to reflect this fact.

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Section: Predictive Modelingmentioning

confidence: 99%

The Predictive Audit Framework

Kuenkaikaew¹,

Vasarhelyi²

2013

IJDAR

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“…In addition, because these studies examine only one or two audit decision processes in isolation, it has not been possible to identify whether process gains by specialists for one aspect of the task flow through to process and audit effectiveness gains over the entire task. The need to examine all stages of an audit task has been identified in prior research, particularly in analytical procedures, where it has been shown that performance differences in one stage of the overall process (such as hypothesis generation) do not necessarily translate to performance differences overall (Green & Trotman, 2003).…”

Section: Introductionmentioning

confidence: 99%

“…This design not only allows a determination of whether specialist auditors provide efficiency and effectiveness gains over the entire task, but also whether the use of specialists benefits all or only some of these stages. Two related studies have utilised a similar group of auditors to examine performance over the entire analytical procedures process; however, neither of these studies addressed auditor specialisation (Green & Trotman, 2003; Green, 2004). 3 The current study contributes to our understanding of performance in this task by identifying the incremental benefits of specialisation over experience.…”

Section: Introductionmentioning

confidence: 99%

Are Industry Specialists More Efficient and Effective in Performing Analytical Procedures? A Multi‐stage Analysis

Green

2008

Int J Auditing

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A substantial body of audit research has shown that auditor specialisation through training and experience in one main industry improves auditor judgements. However, because this research examines only one or two audit processes in isolation, it has not been possible to identify whether these improvements lead to gains over an entire task. Further, the comparison of auditors with very different industry specialisations has not allowed these studies to identify incremental gains of specialisation over task and domain experience within a specific industry. The purpose of this study is to examine incremental gains in auditor performance by specialist auditors over auditors with some industry experience (non-specialists) when both groups complete all stages of an analytical procedures task within the same industry. The results of a controlled experiment where both specialists and non-specialists had equivalent general and task-specific experience reveal that, while specialists do not exhibit superior performance in the initial hypothesis generation stage, differences do manifest in later stages. Compared to non-specialists, specialists had a more focused and efficient information search, were more able to generate the correct cause during the task, and identified the correct cause more often.Key words: Audit judgement, analytical procedures, audit quality, external audit SUMMARY Audit firms are increasingly designating individual auditors as specialists, a term suggesting superior performance in providing services to clients. While research to date has supported superior performance of audit tasks by specialists, there has been limited exploration of the processes used by specialists in their decision making and how these processes differ from those used by non-specialists.This study compares the decision processes and performance outcomes for a manufacturing industry analytical procedures task between two

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“…Bedard and Biggs (1991) demonstrated that auditors' performance in analytical tests is influenced by their ability to recognise relationships among pieces of audit evidence and to generate explanations about them. Green and Trotman (2003) extend the factors influencing audit performance to include the ability to search information and evaluate hypotheses. Based on these views, this study defines quality of analytical tests as the degree to which auditors believe that they are able to confidently identify patterns/issues in the data, generate likely explanations about the identified patterns/issues, and properly evaluate the identified patterns/issues.…”

Section: Quality Of Analytical Testsmentioning

confidence: 99%

“…Bedard and Biggs (1991) argue that auditors' performance in analytical tests is characterised by their ability to recognise relationships among pieces of audit evidence and to generate explanations about them. Additionally, Green and Trotman (2003) argue that auditors' analytical test performance is influenced by their abilities to search information and evaluate hypotheses. This study considers Bedard and Biggs's (1991) and Green and Trotman's (2003) components of auditors' analytical test performance to develop measurement items for quality of analytical tests and presents the items in Table 5.6.…”

Section: Quality Of Analytical Testsmentioning

confidence: 99%

Investigating the impact of direct access on the use of generalised audit software (gas) and on the quality of auditors’ analytical tests

Muliawan¹

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Audit software for data analytics, most commonly known as Generalised Audit Software (GAS), has been used by audit organisations since the deployment of IT in business organisations. The use and importance of GAS has increased with the growth in the sophistication and proliferation of IT within business organisations. Despite this development, recent studies have reported that GAS is still underused and identified that the factor contributing most to such underutilisation of GAS isThis is a preliminary stage of thesis development. Publications included in this thesis No publication included Contributions by others to the thesisNo contributions by others. My thanks also go to the faculty of UQBS and within the BIS cluster in particular for their advice and assistance. From my interactions with them, especially during the research seminars, I learnt a lot about how to conduct a good research project, including how to deal with issues I have. My special thank goes to Dr Terry Rowlands who helped me understand data analysis using R and gave me advice when I stuck with R.Secondly, I would like to thank the audit organisation who agreed to participate in my study, especially for the staff and auditors who gave support and assistance during the data collection processes.Lastly, I would like to send my thanks to my PhD fellows at PhD zone for their support, sharing, and motivation especially during the challenging times of doing research.

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An Examination of Different Performance Outcomes in an Analytical Procedures Task

Cited by 24 publications

References 11 publications

The Predictive Audit Framework

The Predictive Audit Framework

Are Industry Specialists More Efficient and Effective in Performing Analytical Procedures? A Multi‐stage Analysis

Investigating the impact of direct access on the use of generalised audit software (gas) and on the quality of auditors’ analytical tests

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