Improving Complex Audit Judgments: A Framework and Evidence
Posted: 29 Apr 2019 Last revised: 11 Jan 2021
There are 2 versions of this paper
Improving Complex Audit Judgments: A Framework and Evidence
Improving Complex Audit Judgments: A Framework and Evidence
Date Written: July 14, 2020
Abstract
We develop a framework for improving auditor judgment in complex audit tasks. The framework recognizes that high-quality judgment in complex tasks requires that auditors (1) possess the knowledge needed for the task, (2) recognize the need for analytical (versus heuristic) processing, and (3) have sufficient cognitive capacity to complete the analytical processing. Based on the framework, we predict that auditors’ need for cognition (NFC), an individual characteristic theoretically linked to recognizing the need for analytical processing, is associated with higher quality complex judgments. Analysis of 11 studies supports this assertion. We demonstrate the usefulness of the framework by predicting and finding that priming auditors with an accuracy goal improves judgments, particularly for lower NFC auditors who are less likely to spontaneously engage in analytical processing. The framework facilitates systematic development of interventions to improve auditor judgment by highlighting that solutions should address the specific conditions causing judgment problems.
Keywords: Complex estimates; Need for cognition (NFC); Accuracy goal; Goal priming; Professional skepticism; Intervention; Dual-Process theory
JEL Classification: M40, M41, M42
Suggested Citation: Suggested Citation