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Auditors' Use of Inconsistent Evidence
Author(s) -
Maroney James J.,
Bedard Jean C.
Publication year - 1997
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/1099-1123.00023
Subject(s) - audit , set (abstract data type) , task (project management) , accounting , psychology , audit evidence , process (computing) , going concern , auditor's report , computer science , business , internal audit , joint audit , management , economics , programming language , operating system
Analytical procedures are an important audit tool worldwide (ISA 520, SAS 56). Auditors use analytical procedures to develop explanations for unexpected changes in accounts, and evaluate those explanations on the basis of further audit evidence. Research has found that people have difficulty using evidence inconsistent with proposed explanations, and thus may accept explanations that are false. The purpose of this paper is to study how auditors treat evidence inconsistent with analytical procedures explanations. Practising auditors at three levels of experience completed a two‐stage task, generating explanations for an initial set of financial information and then revising their explanation list after receiving an expanded information set. Decision processes were captured through verbal protocols. Process analysis showed that the ability to evaluate evidence varied by experience level. Managers and seniors were better than assistants at recognizing inconsistent evidence, while managers outperformed other experience levels in integrating inconsistent evidence. Further, managers generated more and better explanations than other ranks after encountering new information. The implications for auditing research and practice are discussed.