How a Systems Perspective Improves Knowledge Acquisition and Performance in Analytical Procedures

Abstract

Auditors are required to understand dynamic business environments as part of the performance of analytical procedures. Prior evidence, though, suggests that auditors have difficulty understanding such environments. This study reports an experimental investigation of techniques that help auditors to identify incorrect management representations by developing expectations that are both accurate and adaptive to changing business conditions. My predictions suggest that analyzing a dynamic client environment through a systems perspective enhances information-processing ability, which then improves both evidence discrimination and the assimilation of new audit evidence. Results reveal that participants taking a holistic systems-based view of a client environment develop more coherently organized mental models that increase their likelihood of identifying management representations that are inconsistent with industry evidence. Furthermore, these participants more efficiently use their information-processing ability, thereby improving assimilation of newly learned evidence to understand how changing business conditions affect their initial expectations.

Training Auditors to Perform Analytical Procedures Using Metacognitive Skills

“…An auditor's mental representation of an analytic procedure situation contains his or her current beliefs about information relevance and links to potential explanations or solutions (Koonce 1993). A seminal paper on this point is by Bedard and Biggs (1991); they find that auditors who fail to generate the correct explanation in an analytical procedures task have incomplete mental representations (also see Brewster 2011).…”

Discussion of “Does Coordinated Presentation Help Credit Analysts Identify Firm Characteristics?”

“…These responses are coded to assess the causal chain evident in the response (i.e., how well the participants' thoughts are tied together). A stronger causal chain in the response is evidence of a more complete mental model (e.g., Brewster ; Chen, Trotman, and Zhou ). The authors in this study examine two types of process evidence expected to underlie analysts' credit‐rating decisions.…”

Riset Eksperimental Pengauditan: Evolusi Dan Topik Kontemporer

“…Dari tiga pengelompokan di atas dapat dikembangkan berbagai riset yang berkaitan dengan pertimbangan profesional auditor yang menyesuaikan perkembangan audit terkini yaitu: (1) pengauditan berbasis risiko, (2) cara penyajian informasi pengauditan, (3) penaksiran fraud, (4) prosedur analitis, (5) interaksi antara klien dengan auditor (negosiasi, perjanjian), (6) interaksi auditor dengan auditor (brainstorming). Riset dalam konteks prosedur analitis sebelumnya (Brewster 2011;Yen 2012) memiliki potensi luas untuk diekstensi lebih lanjut. Messier, Simon, dan Smith (2013) mereview riset-riset dalam konteks prosedur analitis menyimpulkan bahwa tatanan pengauditan dalam tim maupun proses review atas pekerjaan audit serta pengalaman audit dapat memengaruhi pertimbangan auditor.…”