Are Reviewers' Judgments Influenced by Memo Structure and Conclusions Documented in Audit Workpapers?

24 Pages Posted: 11 Dec 2001

See all articles by Hun-Tong Tan

Hun-Tong Tan

Nanyang Business School, Nanyang Technological University

Jackson Yip-Ow

Mediacorp Private Limited

Multiple version iconThere are 2 versions of this paper

Date Written: Undated

Abstract

This paper investigates how the initial conclusion reached by the preparer of audit workpapers and the manner with which the preparer structures the associated evidence can influence the reviewer's judgment in an audit setting. We conducted an experiment in which auditors reviewed the work of a preparer who had either concluded that the account of the client's major customer was collectible or not collectible. The preparer's memo was structured either in a neutral manner, or stylized to emphasize (de-emphasize) evidence consistent (inconsistent) with the preparer's conclusion. Results showed that reviewers placed less reliance on the conclusions reached by the preparer when the preparer's memo was stylized than when the memo was structured in a neutral manner. These results suggest that reviewers are sensitive to stylization attempts by preparers. Implications of the paper are discussed.

Keywords: Review process; Audit workpapers; Memo structure; Preparer's conclusion

JEL Classification: M49

Suggested Citation

Tan, Hun-Tong and Yip-Ow, Jackson, Are Reviewers' Judgments Influenced by Memo Structure and Conclusions Documented in Audit Workpapers? (Undated). Available at SSRN: https://ssrn.com/abstract=291820 or http://dx.doi.org/10.2139/ssrn.291820

Hun-Tong Tan (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore
+65 6790 4819 (Phone)
+65 6793 7956 (Fax)

Jackson Yip-Ow

Mediacorp Private Limited ( email )

Singapore
Singapore

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