Procedural Instrumentality and Audit Group Judgment: An Exploration of the Impact of Cognitive Fallibility and Ability Differences

Kleinman, G. and D. Palmon. (2009) Procedural Instrumentality and Audit Group Judgment: An exploration of the impact of cognitive fallibility and ability differences. Group Decisions and Negotiations: Vol. 18(2): 147-168.

Posted: 27 Nov 2013

See all articles by Gary Kleinman

Gary Kleinman

Montclair State University

Dan Palmon

Rutgers, The State University of New Jersey - Accounting & Information Systems

Date Written: November 26, 2013

Abstract

The issue of auditor judgment prowess and resultant decision-making success has been an important topic in the behavioral auditing area for many years and has generated a voluminous research literature. However, relatively little literature exists on how differences in individual group member cognitive heuristics (fallibility) and ability impact the group process, and are impacted upon by the group process. This issue is important since so much of audit firm decision-making has its origins in audit group deliberations (Hunton, 2001). Accordingly, understanding circumstances that give rise to either more flawed ('process losses'), or better ('process gains'), group decision-making outcomes are important even though the literature generally recognizes the superiority of group over individual decision-making (e.g., Rich, Solomon and Trotman, 1997). The model developed here is intended to develop a better understanding of cognitive factors that impact positively or negatively on audit group process. We then develop a four stage model of group decision-making, during which the differing assets and liabilities (cognitive, ability, expertise) of audit group members are combined. The four stages are Diversity, Controvery, Insight and Resolution. These are then described at length.

Keywords: Group Decision Making, Auditing, Audit Judgment, Group Stages, Audit Teams, Cognitive Biases, Cognitive Heuristics

JEL Classification: M40, M42, M49

Suggested Citation

Kleinman, Gary and Palmon, Dan, Procedural Instrumentality and Audit Group Judgment: An Exploration of the Impact of Cognitive Fallibility and Ability Differences (November 26, 2013). Kleinman, G. and D. Palmon. (2009) Procedural Instrumentality and Audit Group Judgment: An exploration of the impact of cognitive fallibility and ability differences. Group Decisions and Negotiations: Vol. 18(2): 147-168., Available at SSRN: https://ssrn.com/abstract=2360098

Gary Kleinman (Contact Author)

Montclair State University ( email )

NJ 07043
United States

Dan Palmon

Rutgers, The State University of New Jersey - Accounting & Information Systems ( email )

96 New England Avenue, #18
Summit, NJ 07901-1825
United States
201-648-5472 (Phone)
201-648-1283 (Fax)

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