KRiskSM: A Computerized Decision Aid for Client Acceptance and Continuance Risk Assessments

2002 ◽  
Vol 21 (2) ◽  
pp. 97-113 ◽  
Author(s):  
Timothy B. Bell ◽  
Jean C. Bedard ◽  
Karla M. Johnstone ◽  
Edward F. Smith
Keyword(s):  
Risk Management ◽  
Quality Control ◽  
Decision Aid ◽  
Audit Quality ◽  
Decision Aids ◽  
Risk Assessments ◽  
Innovative Technology ◽  
Full Potential ◽  
Business Risk ◽  
Client Acceptance

This paper describes the development and implementation of KRisk, an innovative technology-enabled auditor decision aid for making client acceptance and continuance risk assessments. KRisk, developed and designed by KPMG LLP, is part of the firm's audit quality control and risk management processes. In this paper, we discuss the environmental and technological forces that affect auditor business risk management. We also describe important aspects of the development, functionality, and implementation of KRisk. We discuss possible impediments to realizing the full potential of decision aids that have been reported in prior auditing research, and describe how KRisk and related audit quality control procedures implemented at KPMG were designed to overcome such impediments. Also, we present some ideas for scholarly research dealing with auditor business risk management issues, and issues related to the design and use of decision aids in general.

The Effects of Decision Aid Orientation on Risk Factor Identification and Audit Test Planning

2002 ◽  
Vol 21 (2) ◽  
pp. 39-56 ◽  
Author(s):  
Jean C. Bedard ◽  
Lynford E. Graham
Keyword(s):  
Risk Factors ◽  
Risk Management ◽  
Decision Aid ◽  
Decision Aids ◽  
Management Strategies ◽  
Risk Identification ◽  
Matched Pair ◽  
Audit Planning ◽  
Audit Firms ◽  
Risk Management Strategies

In auditing, risk management involves identifying client facts or issues that may affect engagement risk, and planning evidence-gathering strategies accordingly. The purpose of this paper is to examine whether auditors' identification of risk factors and planning of audit tests is affected by decision aid orientation, i.e., a “negative” focus wherein client risk and its consequences are emphasized, or a “positive” focus where such factors are not emphasized. Specifically, we expect that auditors will identify more risk factors using a negatively oriented risk identification decision aid, but only when engagement risk is relatively high. We address this issue in the context of auditors' knowledge of actual clients, manipulating decision aid orientation as negative or positive in a matched-pair design. Results show that auditors using the negative decision aid orientation identify more risk factors than do those using a positive orientation, for their higher-risk clients. We also find that decisions to apply substantive tests are more directly linked to specific risk factors identified than to direct risk assessments. Further, our results show that auditors with repeat engagement experience with the client identify more risk factors. The findings of this study imply that audit firms may improve their risk management strategies through simple changes in the design of decision aids used to support audit planning.

Designing Decision Aids to Promote the Development of Expertise

2012 ◽  
Vol 26 (1) ◽  
pp. 7-34 ◽  
Author(s):  
Jacob M. Rose ◽  
Britton A. McKay ◽  
Carolyn Strand Norman ◽  
Anna M. Rose
Keyword(s):  
Decision Aid ◽  
Expert Knowledge ◽  
Decision Aids ◽  
Knowledge Structure ◽  
Knowledge Structures ◽  
Risk Assessments ◽  
Accounting Students ◽  
Fraud Risk ◽  
Expert Knowledge Structures ◽  
Novice Users

ABSTRACT We investigate whether the use of decision aids that integrate experts' knowledge structures into their designs can effectively promote the acquisition of expert-like knowledge and improve future judgments. Results of two laboratory experiments (one involving 115 senior accounting students and one involving 78 master of accounting students) indicate that: (1) novice users of a decision aid that has an expert knowledge structure embedded into its interface make complex fraud risk assessments that are more similar to experts' risk assessments than do users of aids without expert knowledge structures; (2) users of a decision aid that has an expert knowledge structure embedded into its interface develop knowledge structures that are more similar to the knowledge structures of experts than do users of aids without expert knowledge structures; (3) knowledge structures mediate the relationship between decision aid design and judgment performance; and (4) novices develop expertise through decision aid use even when they are not instructed to learn from the decision aid.

scholarly journals Role of Information and Communication Technology in Applying Quality Control Procedures in Audit Offices in the Hashemite Kingdom of Jordan

2019 ◽  
Vol 12 (7) ◽  
pp. 57
Author(s):  
Reem Aqab
Keyword(s):  
Information Technology ◽  
Quality Control ◽  
Audit Quality ◽  
Relevant Literature ◽  
Personal Management ◽  
Management Procedures ◽  
Control Procedures ◽  
Client Acceptance ◽  
The Impact ◽  
Audit Performance

The study aims to determine the impact of information technology on quality control elements and procedures, including vocational requirements, personal management procedures, client acceptance and continuance, audit performance, and following up and monitoring procedures used by auditing offices in Hashemite Kingdom of Jordan. The researcher has used descriptive analytical approach for conducting relevant literature reviews. In addition, a questionnaire has been distributed to study sample (i.e audit offices) in order to identify to which extent information technology affects audit quality control. The recent study has found that information technology affects highly quality control procedures and elements including vocational requirements, personal management procedures, client acceptance and continuance, plus audit performance in audit offices. In addition, it has concluded that information technology has a medium impact on following-up and monitoring procedures used by audit offices moreover, the study showed that using information technology has contributed to achieve quality control goals, desired.

e-Business Risk Management : with Integrated Assessment

2009 ◽  
Vol 10 (4) ◽  
pp. 85-103 ◽  
Author(s):  
김석태 ◽  
김태인
Keyword(s):  
Risk Management ◽  
Integrated Assessment ◽  
Business Risk

E-Learning Business Risk Management with Real Options

2008 ◽  
Author(s):  
Georgios Angelou ◽  
Anastasios A. Economides
Keyword(s):  
Risk Management ◽  
Real Options ◽  
Business Risk ◽  
E Learning

The Halo Effect in Business Risk Audits: Can Strategic Risk Assessment Bias Auditor Judgment about Accounting Details?

2005 ◽  
Vol 80 (3) ◽  
pp. 921-939 ◽  
Author(s):  
Ed O'Donnell ◽  
Joseph J. Schultz
Keyword(s):  
Risk Assessment ◽  
Performance Evaluation ◽  
Laboratory Experiments ◽  
Halo Effect ◽  
Risk Assessments ◽  
Business Risk ◽  
Auditor Judgment ◽  
Strategic Risk ◽  
Strategic Assessment ◽  
Assessment Bias

Many auditors use an audit methodology that requires a strategic risk assessment of their client's business model as a first step for assessing audit risks. This study examines whether the holistic perspective that auditors acquire in making a strategic risk assessment influences the extent to which they adjust account-level risk assessments when they encounter changes in accounts that are inconsistent with information about client operations. Based on halo theory from the performance evaluation literature, we hypothesize that auditors who (1) perform (do not perform) strategic assessment, and (2) develop favorable (unfavorable) strategic risk assessments, are less (more) likely to adjust account-level risk assessments for inconsistent fluctuations. Data from two laboratory experiments using experienced auditors support both hypotheses. Findings suggest that the halo effect generated during strategic assessment influences judgment by altering auditor tolerance for inconsistent fluctuations.

Decision Aids for Generating Analytical Review Alternatives: The Impact of Goal Framing and Audit-Risk Level

2002 ◽  
Vol 14 (1) ◽  
pp. 157-177 ◽  
Author(s):  
Jennifer M. Mueller ◽  
John C. Anderson
Keyword(s):  
High Risk ◽  
Cognitive Load ◽  
Information Search ◽  
Decision Aid ◽  
Decision Aids ◽  
Risk Level ◽  
Audit Risk ◽  
Goal Framing ◽  
Analytical Review ◽  
The Impact

An auditor generating potential explanations for an unusual variance in analytical review may utilize a decision aid, which provides many explanations. However, circumstances of budgetary constraints and limited cognitive load deter an auditor from using a lengthy list of explanations in an information search. A two-way between-subjects design was created to investigate the effects of two complementary approaches to trimming down the lengthy list on the number of remaining explanations carried forward into an information search. These two approaches, which represent the same goal (reducing the list) but framed differently, are found to result in a significantly different number of remaining explanations, in both low- and high-risk audit environments. The results of the study suggest that the extent to which an auditor narrows the lengthy list of explanations is important to the implementation of decision aids in analytical review.

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