A Potential Unintended Consequence of "Big Data": Does Information Structure Lead to Suboptimal Auditor Judgment and Decision-Making?

2021 ◽  
Author(s):  
Travis Holt ◽  
Tina M. Loraas
Keyword(s):  
Decision Making ◽  
Big Data ◽  
Information Structure ◽  
Time Budget ◽  
Judgment And Decision Making ◽  
Financial Statement ◽  
Auditor Judgment ◽  
Load Theory ◽  
Structure Lead ◽  
Time Budget Pressure

This study examines the effects of information structure on auditor judgment and decision-making. Based on cognitive load theory, we predict that the variety of evidence inspired by big data such as visualizations or emails likely lead to increased perceptions of ambiguity which in turn impacts audit-related decisions. Additionally, we examine whether those effects are moderated by time budget pressure. We conduct an experiment with 120 auditors and find that auditors presented with varied data, such as emails or visualizations, provide more conservative risk assessments and write down recommendations in an inventory obsolescence setting than auditors presented with a less ambiguous, more traditional memo format. Our findings also indicate that time budget pressure moderates the effects of information structure resulting in the most conservative obsolescence risk and inventory write-down assessments when presented with varied data in a high time budget pressure environment. We believe our study has important implications that should be considered before the implementation of technology-enabled tools to analyze big data on financial statement audits.

scholarly journals PENGARUH TIME BUDGET PRESSURE, AUDIT TENURE DAN UKURAN KAP TERHADAP KUALITAS AUDIT

2021 ◽  
Vol 4 (2) ◽  
pp. 136-151
Author(s):  
Mohamad Alfi Amrulloh ◽  
Made Dudy Satyawan
Keyword(s):  
Firm Size ◽  
Audit Quality ◽  
Time Budget ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Financial Statement ◽  
Primary Data ◽  
Analysis Model ◽  
Audit Firm ◽  
Time Budget Pressure

In carrying out their duties, auditors must be competence and have to maintain their audit quality to provide trust to stakeholder. However, currently there are many cases that will causes the audit quality to decline. The cases is about financial cases that are still being discussed in public and have connection about audit quality on financial statement. The objective of this study was to determine effect of Time Budget Pressure, Audit Tenure and Audit Firm Size on Audit Quality. This study uses the primary data from questionnaire that was distributed to auditor KAP in Surabaya. Method determination sample used purposive sampling criteria and have 55 sample data can used. Data analysis model is multiple linear regression analysis. The result of this study indicate time budget pressure have positive effect on audit quality, but audit tenure and audit firm size has no effect on audit quality.

The Elaboration Likelihood Model: A Meta-Theory for Synthesizing Auditor Judgment and Decision-Making Research

2018 ◽  
Vol 37 (4) ◽  
pp. 169-186 ◽  
Author(s):  
Emily E. Griffith ◽  
Christine J. Nolder ◽  
Richard E. Petty
Keyword(s):  
Decision Making ◽  
Elaboration Likelihood Model ◽  
Judgment And Decision Making ◽  
Future Research ◽  
Elaboration Likelihood ◽  
Auditor Judgment ◽  
Motivational Interventions ◽  
Two Samples ◽  
Likelihood Model ◽  
History Of

SUMMARY Critics argue that audit research rarely impacts practice, in part due to challenges associated with synthesizing and interpreting research. We propose that using the Elaboration Likelihood Model (ELM) as a meta-theoretical framework can help in understanding the collective findings within auditor judgment and decision-making (JDM) research. Our goal is to demonstrate the utility of the ELM by interpreting the results of two samples of studies on client cooperation and auditors' moods. Our synthesis of client cooperation studies suggests cooperation on a current issue affects auditors' judgments only when auditors lack motivation to think carefully about the task. In contrast, a history of client cooperation tends to bias even highly motivated auditors' judgments. Our synthesis of mood studies suggests motivational interventions are necessary, but not sufficient, to mitigate mood's effects on judgments. Our ELM interpretations offer theoretical explanations for seemingly unrelated predictions and findings that can inform future research and practice.

Big Data Analytics in Financial Statement Audits

2015 ◽  
Vol 29 (2) ◽  
pp. 423-429 ◽  
Author(s):  
Min Cao ◽  
Roman Chychyla ◽  
Trevor Stewart
Keyword(s):  
Decision Making ◽  
Big Data ◽  
Data Analytics ◽  
Big Data Analytics ◽  
Financial Statement ◽  
Practical Implementation ◽  
Efficiency And Effectiveness ◽  
Advanced Analytics ◽  
Support Decision Making

SYNOPSIS Big Data analytics is the process of inspecting, cleaning, transforming, and modeling Big Data to discover and communicate useful information and patterns, suggest conclusions, and support decision making. Big Data has been used for advanced analytics in many domains but hardly, if at all, by auditors. This article hypothesizes that Big Data analytics can improve the efficiency and effectiveness of financial statement audits. We explain how Big Data analytics applied in other domains might be applied in auditing. We also discuss the characteristics of Big Data analytics, which set it apart from traditional auditing, and its implications for practical implementation.

Reviewers' Responses to Expectations about the Client and the Preparer

2004 ◽  
Vol 79 (2) ◽  
pp. 497-517 ◽  
Author(s):  
Jay S. Rich
Keyword(s):  
Decision Making ◽  
Relative Proportion ◽  
Judgment And Decision Making ◽  
Financial Statement ◽  
Decision Making Processes ◽  
Experimental Findings

Reviewers use expectations about the client and preparer to help form perceptions of the probability of preparer error and relative accountability to the client and financial statement users (Gibbins and Trotman 2002; Rich et al. 1997b). Experimental findings suggest these perceptions interact to affect reviewers' agreement with the preparers' work and decisions about the amount of preparer follow-up work required. Further, the nature of reviewer cognition, as measured by the relative proportion of critical and supportive reviewer elaboration explains a significant portion of the effect of these perceptions on reviewer judgment and decisions. Elaboration is a stage of reviewers' judgment and decision-making processes in which the reviewer assesses the strengths and weaknesses of the preparer's work (Petty and Cacioppo 1986; Rich et al. 1997b; Lerner and Tetlock 1999). Although the extent of reviewer elaboration is also affected by expectations about the client and the preparer, extent of elaboration does not explain a significant portion of the effect on reviewer judgment. These findings increase our understanding of how and why expectations of the client and preparer interact to affect reviewer judgments and decisions.

scholarly journals Emotional Intelligence Moderates the Effects of Time Budget Pressure and Compliance Pressure on the Central BPK Auditor Judgment

2019 ◽  
Vol 28 (3) ◽  
pp. 1698
Author(s):  
Prema Laksmi Wijaksana ◽  
Luh Gede Krisna Dewi
Keyword(s):  
Emotional Intelligence ◽  
Regression Analysis ◽  
Data Analysis ◽  
Data Collection ◽  
Time Budget ◽  
Auditor Judgment ◽  
Data Analysis Technique ◽  
Analysis Technique ◽  
Questionnaire Method ◽  
Time Budget Pressure

This study aims to determine the moderating ability of emotional intelligence to time budget pressure and compliance pressure to the auditor. The population in this study was the entire auditor auditor IIIA at the Central BPK office. The number of samples used in this study were 68 respondents from 68 auditor auditor IIIA at the Central BPK office. The size of the sample is based on the technique of determining saturated samples. Data collection in this study was conducted by questionnaire method. The data analysis technique used is the analysis of Moderated Regression Analysis (MRA). The results showed that time budget pressure and compliance pressure negatively affected auditor auditor auditor IIIA Central BPK and emotional intelligence were able to moderate the influence of time budget pressure and auditor compliance judgment auditor auditorat pressure IIIA Central CPC. Keywords : Time budget pressure, Compliance pressure, emotional intelligence, Auditor judgment.

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