Closing the Loop: Review Process Factors Affecting Audit Staff Follow-Through

Lambert, Tamara A.; Agoglia, Christopher P.

doi:10.1111/j.1475-679x.2011.00423.x

Cited by 99 publications

(40 citation statements)

References 70 publications

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“…If an auditor identifies an issue and records it, but does not immediately raise it with a supervisor, the issue may go unnoticed for some time, delaying the process and limiting auditors’ options for effective resolution. Prior auditing research supports the idea that inadequate time can lead to low audit quality, especially for unstructured audit tasks (McDaniel ; Braun ; Mocadlo ) and that practices that reduce time pressure such as early warning of time constraints (Low and Tan ), early notification of issues (Kadous et al ), and timely review of auditors’ work (Lambert and Agoglia ) improve audit quality.…”

Section: Background and Hypothesis Developmentmentioning

confidence: 99%

How Does Intrinsic Motivation Improve Auditor Judgment in Complex Audit Tasks?

Kadous

Zhou

2018

Contemporary Accting Res

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Intrinsic motivation is generally thought to be positively associated with performance on a variety of tasks. However, there is only sparse experimental evidence supporting this idea and we know little about the specific mechanisms behind any effect. We develop theory about how auditors' intrinsic motivation for their jobs can improve their judgments about complex accounting estimates. We experimentally test whether a prompt to make auditors' intrinsic motivation for their jobs salient improves the specific information processing behaviors necessary for high-quality judgments in complex audit tasks. It does: Prompted auditors attend to a broader set of information, process information more deeply, and request more relevant additional evidence. Supplemental analyses show that these processing behaviors mediate between salient intrinsic motivation and an improved ability to identify a biased complex estimate. Our theory and analyses indicate that auditors' intrinsic motivation for their work provides unique value for improving judgment quality, particularly in the context of performing complex audit tasks. Our study supports the view that high-quality cognitive processing can improve auditors' professional skepticism by providing a foundation for skeptical judgments.Comment la motivation intrinsèque améliore-t-elle le jugement des auditeurs dans les tâches d'audit complexes ? RÉSUMÉ L'on s'entend généralement sur l'existence d'un lien positif entre la motivation intrinsèque et le rendement dans l'exécution de diverses tâches ; les données expérimentales confirmant la présence de ce lien sont toutefois peu nombreuses, et nous connaissons mal les mécanismes précis qui lui servent de vecteur. Les auteurs élaborent une théorie quant aux modalités selon lesquelles la motivation intrinsèque des auditeurs, dans l'exercice de leurs fonctions, peut améliorer leur jugement à l'égard des estimations comptables complexes. Ils procèdent à un test expérimental afin de déterminer si un encouragement visant à stimuler la motivation intrinsèque des auditeurs dans leur travail améliore les comportements spécifiques de traitement de l'information nécessaires à la formulation de jugements de qualité dans des tâches d'audit complexes. Les résultats du test se révèlent positifs : les auditeurs dont la motivation intrinsèque est stimulée s'intéressent à un éventail plus large d'informations, approfondissent davantage le traitement de ces informations et réclament des éléments probants supplémentaires plus pertinents. Des analyses complémentaires indiquent que ces comportements à l'égard du traitement de l'information ont un effet de médiation entre la motivation intrinsèque stimulée et une capacité accrue de percevoir les estimations complexes peu fiables. Selon la théorie et les analyses des auteurs, la motivation intrinsèque des auditeurs dans leur travail joue un rôle exclusif dans l'amélioration de la qualité du jugement, en particulier dans le contexte de tâches d'audit complexes. L'étude confirme l'idée selon laquelle un traitement...

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Section: Background and Hypothesis Developmentmentioning

confidence: 99%

How Does Intrinsic Motivation Improve Auditor Judgment in Complex Audit Tasks?

Kadous

Zhou

2018

Contemporary Accting Res

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“…Prior studies identify increased regulatory pressure for more thorough audit reviews, thus highlighting the need for time budgets (Lambert and Agoglia 2011). Another aspect related to the audit budget is the audit fee, which was found in a recent survey by Protiviti (2013) to maintain a persistent year-over-year increase.…”

Section: H1c the Differential Effect Of The Internal Audit Testing Amentioning

confidence: 99%

The Reliance of External Auditors on Internal Audit's Use of Continuous Audit

Mălăescu

Sutton

2014

Journal of Information Systems

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Abstract:As a response to the increased demand for timely and ongoing assurance over the effectiveness of risk management and control systems, companies are moving towards a more automated control environment through the implementation of continuous audit modules. The purpose of this study is to evaluate external auditors' reliance on internal audit's work when advanced audit techniques are introduced by the internal auditor and the impact this reliance has on budgeted audit hours. Prior literature suggests that internal control deficiencies also have an impact on external auditor reliance and the audit budget. The reliance decision of an external auditor has important economic consequences and implications for efficiency and effectiveness of the overall audit. In recent years, the PCAOB has encouraged greater such reliance to improve audit efficiency. An experiment is conducted with 87 experienced external auditors to investigate the theorized effects. Using a 2 x 2 between subjects factorial design, the frequency of the internal audit (traditional vs. continuous audit) and prior year material weakness (absent vs. present) are manipulated. Consistent with predictions, we find that auditors are willing to rely more on internal audit work in a continuous audit environment than in a traditional environment, and this effect is magnified when the prior year audit report on the effectiveness of internal controls indicates that controls are working properly. The presence of a material weakness, however, negatively impacts judgments on the budget for the valuation of a complex account. In addition, both material weakness and continuous audit have an impact on the overall audit budget, which is reduced only when the company has no prior year material weakness and a functioning continuous audit module is put in place. The results show that auditors increase budgeted hours for the engagement at a higher rate when the client uses traditional internal audit procedures.Keywords: Continuous Audit; Continuous Monitoring; Material Weakness; Internal Audit Reliance; Audit Budgets 3 INTRODUCTIONCompanies are under constant pressure to improve the reliability and accountability of their financial information in order to comply with regulatory bodies and to compete for capital in the evolving global business environment. As a response to global demands for timely and ongoing assurance over the effectiveness of risk management and control systems, companies are increasingly moving towards automated control environments through the implementation of technologies such as continuous audit modules (PwC 2006;IIA 2009;Protiviti 2013).Continuous audit is defined as "a method used to perform control and risk assessments automatically on a more frequent basis" (Coderre, 2006, pg. 1). Continuous audit technology allows ongoing audit testing of financial transactions and associated controls in real time. The internal audit profession is thus better equipped for addressing the needs of stakeholders, in spite of the challenges it faces: question...

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“…As discussed above, the review process has many contextual features that impact its efficiency and effectiveness. Lambert and Agoglia () focus on two further features of the review process, timeliness of the review and the review note framing by the reviewer, to investigate how these contextual features impact reviewee follow‐through. Broadly, compared to a timely review, a delayed review elicits lower reviewee effort and increases dysfunctional behavior (i.e., over‐documentation, aka ghost ticking).…”

Section: Literature Review By Audit Taskmentioning

confidence: 99%

External Auditors' Judgment and Decision Making: An Audit Process Task Analysis

MacTavish

McCracken

Schmidt

2018

Accounting Perspectives

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This manuscript reviews the external auditor judgment and decision making (JDM) literature from the past decade by specific tasks in the auditing process. Decomposing the literature review by audit task was chosen to enable audit and behavioral researchers and graduate students to identify the trends of JDM research subsequent to Nelson and Tan's (2005) literature review. In addition to identifying gaps/omissions in the current literature, suggestions for future research are also advanced based on forthcoming transformations in the auditing institutional environment.

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Closing the Loop: Review Process Factors Affecting Audit Staff Follow-Through

Cited by 99 publications

References 70 publications

How Does Intrinsic Motivation Improve Auditor Judgment in Complex Audit Tasks?

How Does Intrinsic Motivation Improve Auditor Judgment in Complex Audit Tasks?

The Reliance of External Auditors on Internal Audit's Use of Continuous Audit

External Auditors' Judgment and Decision Making: An Audit Process Task Analysis

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