Auditing with Data and Analytics: External Reviewers' Judgments of Audit Quality and Effort

52 Pages Posted: 24 Mar 2020 Last revised: 6 Mar 2021

See all articles by Scott A. Emett

Scott A. Emett

Arizona State University (ASU) - School of Accountancy

Steven E. Kaplan

Arizona State University

Elaine Mauldin

University of Missouri Trulaske College of Business

Jeffrey S. Pickerd

University of Mississippi

Date Written: March 06, 2021

Abstract

Audit firms increasingly rely on audit approaches using data and analytics (D&A) tools but express concern that external reviewers will excessively scrutinize such approaches. We conduct two experiments in which experienced external reviewers participate in an engagement review. We manipulate whether the audit team employed D&A or traditional audit procedures, while holding constant the procedures’ level of assurance. Our first experiment provides evidence that external reviewers judge D&A audit procedures as lower in quality than traditional audit procedures. Further analyses suggest external reviewers rely on the effort heuristic, judging D&A procedures as lower in quality because they entail less effort. Our second experiment evaluates a theory-based intervention that reduces reviewers’ reliance on the effort heuristic, causing them to judge audit quality similarly across D&A and traditional audit procedures. Overall, our evidence substantiates auditors’ concerns, identifies a specific cause for the concern, and introduces a theory-based intervention that addresses the concern.

Keywords: data and analytics, external reviewer, audit quality; effort heuristic

JEL Classification: M41; M42

Suggested Citation

Emett, Scott A. and Kaplan, Steven E. and Mauldin, Elaine and Pickerd, Jeffrey Scott, Auditing with Data and Analytics: External Reviewers' Judgments of Audit Quality and Effort (March 06, 2021). Available at SSRN: https://ssrn.com/abstract=3544973 or http://dx.doi.org/10.2139/ssrn.3544973

Scott A. Emett (Contact Author)

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Steven E. Kaplan

Arizona State University ( email )

Tempe, AZ 85287
United States
602-965-6498 (Phone)
602-965-8392 (Fax)

Elaine Mauldin

University of Missouri Trulaske College of Business ( email )

331 Cornell Hall
Columbia, MO 65211
United States
573-884-0933 (Phone)

Jeffrey Scott Pickerd

University of Mississippi ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
717
Abstract Views
2,366
Rank
58,041
PlumX Metrics