The Joint Effects of Rich Data Visualization and Audit Procedure Categorization on Auditor Judgment

Abstract

We predict that the audit-effectiveness benefits of richer visualization depend on how auditors categorize the procedures used to generate visualized evidence. We experimentally test our prediction using analytical procedures, which can be categorized either as risk assessment or substantive procedures under certain conditions. As predicted, audit-senior participants more frequently identify more richly visualized outliers as high risk, but only when these visuals arise from risk assessment procedures rather than substantive procedures. Richer visuals also increase the comprehensiveness of auditors’ prescribed follow-up tests, again only when risk assessment procedures generate these visuals. Post-experimental responses corroborate our theory: Auditors view evidence as more persuasive and sufficient when categorized as substantive procedures rather than as risk assessment procedures, in which case they view evidence as more preliminary. We conclude that whether and the degree to which richer data visuals improve audit effectiveness depends on how audit procedures generating these visuals are categorized.

Keywords: Audit, Data visualization, Classification, Audit procedures

JEL Classification: M42, M41, O33