Abstract

http://ssrn.com/abstract=1727124
 


 



Auditors' Use of Inconsistent Evidence


James J. Maroney


Northeastern University - D’Amore-McKim School of Business

Jean C. Bedard


Bentley University - Department of Accountancy

September 1, 2003

International Journal of Auditing, Vol. 1, Issue 3, pp. 187-204, 2003

Abstract:     
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.

Number of Pages in PDF File: 18

Keywords: analytical procedures, explanation testing, auditor performance, verbal protocols

Accepted Paper Series


Date posted: December 19, 2010  

Suggested Citation

Maroney, James J. and Bedard, Jean C., Auditors' Use of Inconsistent Evidence (September 1, 2003). International Journal of Auditing, Vol. 1, Issue 3, pp. 187-204, 2003. Available at SSRN: http://ssrn.com/abstract=1727124 or http://dx.doi.org/10.1111/1099-1123.00023

Contact Information

James J. Maroney (Contact Author)
Northeastern University - D’Amore-McKim School of Business ( email )
404 Hayden Hall
360 Huntington Avenue
Boston, MA 02115
617-373-5976 (Phone)
617-373-8814 (Fax)
Jean C. Bedard
Bentley University - Department of Accountancy ( email )
175 Forest Street
Waltham, MA 02452
United States
781-891-2410 (Phone)
781-891-2896 (Fax)
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