Open AccessCognitive Decision Process: The Context of Auditors' Diagnostic Reasoning
Author(s) -
Zakaria Abas
Publication year - 2020
Publication title -
malaysian management journal/malaysian management journal
Language(s) - English
Resource type - Journals
eISSN - 2289-6651
pISSN - 0128-6226
DOI - 10.32890/mmj.3.1.1999.8551
Subject(s) - audit , process (computing) , context (archaeology) , cognition , quality (philosophy) , computer science , representation (politics) , psychology , accounting , business , paleontology , philosophy , epistemology , neuroscience , politics , political science , law , biology , operating system
Based on a cognitive psychology framework, this article provides an insight into how auditors perform diagnostic reasoning tasks through an analytical review (AR) process. AR refers to the diagnostic process of identifying, investigating, and resolving unexpected fluctuations in account balances and other financial relationships in financial statements. Auditors perfuming AR typically follow four distinct components of a diagnostic, sequential and iterative (DS1) process, namely: mental representation, hypothesis generation, information search, and hypothesis evaluation. Through the DS1 process, auditors are able to recognize and detect errors and irregularities in financial statements for the purpose of presenting a true and fair view of financial reporting, with the intention of communicating quality and reliable economic information of an enterprise to users.