Business Modeling to Improve Auditor Risk Assessment: An Investigation of Alternative Representations

35 Pages Posted: 11 Jan 2008 Last revised: 6 Jan 2015

See all articles by Paulo S.C. Alencar

Paulo S.C. Alencar

University of Waterloo

J. Efrim Boritz

University of Waterloo - School of Accounting and Finance

Carla Carnaghan

University of Lethbridge - Faculty of Management

Date Written: January 7, 2008

Abstract

This study investigates the effects of alternative methods for documenting business models on audit risk assessment behavior. We consider tabular versus diagrammatic representations of the relationship between business model components such as environmental factors, strategic goals, internal processes and resources, and financial statement accounts. Multiple scenarios based on a real company were constructed and 24 participants, including audit partners, managers, and novice auditors performed a risk assessment for each scenario, presented in either a diagrammatic or tabular format. The participants' verbal discussions as they performed the risk assessments were tape recorded, transcribed and coded. A content analysis of the participants' coded verbal behavior indicates that the tabular presentation appears to elicit more frequent mention of accounts by the participants, while the diagram format leads to more mentions of other business model components. There is also some evidence of expertise effects.

This study indicates that a tabular presentation can possess many of the benefits often associated with a diagrammatic representation. However, in our study, obtaining such benefits involved the deliberate structuring of the tabular presentation to organize the components of the business model and the links between them and financial statement accounts.

Keywords: Business model representations, audit risk assessment, content analysis

Suggested Citation

Alencar, Paulo S.C. and Boritz, Efrim and Carnaghan, Carla, Business Modeling to Improve Auditor Risk Assessment: An Investigation of Alternative Representations (January 7, 2008). Journal of Information Systems 2014, Forthcoming; (CAAA) 2008 Annual Conference Paper. Available at SSRN: https://ssrn.com/abstract=1081429 or http://dx.doi.org/10.2139/ssrn.1081429

Paulo S.C. Alencar

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Efrim Boritz (Contact Author)

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada
519-888-4567 (Phone)
519-888-7562 (Fax)

Carla Carnaghan

University of Lethbridge - Faculty of Management ( email )

4401 University Drive
Lethbridge, Alberta TIK 3M4
Canada
403 329-2351 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
131
Abstract Views
545
rank
221,779
PlumX Metrics