Two Decades of Behavioral Research on Analytical Procedures: What Have We Learned?
William F. Messier Jr.
University of Nevada, Las Vegas - Department of Accounting; Norwegian School of Economics (NHH) - Department of Accounting, Auditing and Law
University of Nevada, Las Vegas - Department of Accounting
Jason L. Smith
University of Nevada, Las Vegas
July 28, 2011
This paper presents a comprehensive review of behavioral research on external auditors’ use of analytical procedures published over the past two decades. We frame our review around four phases of the analytical procedures process: develop an expectation, establish a tolerable difference, compare the expectation to the recorded amount and investigate significant differences, and evaluate explanations and corroborative evidence. We find that while considerable research has focused on auditors’ performance of the latter phases of the analytical procedures process (i.e., investigate significant differences and evaluate explanations and evidence), relatively less research has focused on the initial phases of the process (i.e., setting expectations and establishing thresholds). We also find that prior research has primarily focused on the preliminary and substantive analytical procedure settings with little research examining auditors’ judgments and decisions when using analytical procedures at the overall review stage of the audit engagement. Finally, we summarize the significant findings from research in each phase and provide a number of research questions whose answers could improve our understanding and the performance of analytical procedures.
Number of Pages in PDF File: 67
Keywords: Analytical Procedures, risk assessment procedures; auditing standards
JEL Classification: M41working papers series
Date posted: July 28, 2011 ; Last revised: November 22, 2012
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