Client Data Files and Auditor Skepticism: How Do 'Dirty' Files Influence Auditors’ Skeptical Judgments and Actions?

49 Pages Posted: 12 Jun 2019

See all articles by Lindsay M. Andiola

Lindsay M. Andiola

Virginia Commonwealth University (VCU) - Department of Accounting

Alisa Gabrielle Brink

Virginia Commonwealth University

Edward Lynch

California State University, Fullerton

Jodie L. Ferguson

Virginia Commonwealth University (VCU) - School of Business

Date Written: May 28, 2019

Abstract

Auditors receive an abundance of client-prepared data files when performing audit work. With today’s increasingly data-rich environment, these files are likely becoming even more challenging for auditors to cognitively process. Specifically, these data files may have characteristics (e.g., contain errors or irrelevant information; aka “dirty” files) that could challenge their ease of use and interpretation (i.e., processing fluency). Depending on this ease, auditors may view these files as relatively less reliable and trustworthy, resulting in skeptical judgments and actions that are sometimes excessive. This paper reports two experiments examining whether two features of the data files, the presence of minor errors (absent or present) and information load (low or high), influence auditors’ processing fluency, skeptical judgments, and actions. While minor errors should raise auditors’ concerns, greater information load should not. However, we find the lowest processing fluency and highest skeptical judgments and actions when minor errors are present and information load is higher. Our study contributes to the literature by presenting an alternative issue to those raised by regulators (i.e., too much skepticism rather than too little) that can occur when auditors struggle to interpret large amounts of data. From a practical perspective, while access to increased amounts of client data may have benefits, audit firms and clients need to be wary of the potential for wasted time that could create inefficiencies that may affect audit quality.

Keywords: Client-Prepared Data Files; Processing Fluency; Skeptical Judgments and Actions; Eye Tracking

JEL Classification: M42

Suggested Citation

Andiola, Lindsay M. and Brink, Alisa Gabrielle and Lynch, Edward and Ferguson, Jodie L., Client Data Files and Auditor Skepticism: How Do 'Dirty' Files Influence Auditors’ Skeptical Judgments and Actions? (May 28, 2019). Available at SSRN: https://ssrn.com/abstract=3395571 or http://dx.doi.org/10.2139/ssrn.3395571

Lindsay M. Andiola (Contact Author)

Virginia Commonwealth University (VCU) - Department of Accounting ( email )

Richmond, VA 23284
United States

Alisa Gabrielle Brink

Virginia Commonwealth University ( email )

301 W. Main St.
PO Box 844000
Richmond, VA 23284
United States

Edward Lynch

California State University, Fullerton ( email )

800 N State College St
Fullerton, CA 92831
United States

Jodie L. Ferguson

Virginia Commonwealth University (VCU) - School of Business ( email )

301 W Main Street
Richmond, VA 23284
United States

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