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

48 Pages Posted: 24 Mar 2020 Last revised: 27 Jul 2023

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

Brigham Young University - School of Accountancy

Date Written: July 2023

Abstract

Audit firms hesitate to take full advantage of data and analytics (D&A) audit approaches because they lack certainty about how external reviewers evaluate those approaches. We propose that external reviewers use an effort heuristic when evaluating audit quality, judging less effortful audit procedures as lower quality, which could shape how external reviewers evaluate D&A audit procedures. We conduct two experiments in which experienced external reviewers evaluate one set of audit procedures (D&A or traditional) within an engagement review, while holding constant the procedures’ level of assurance. Our first experiment provides evidence that external reviewers rely on an effort heuristic when evaluating D&A audit procedures—they perceive D&A audit procedures as lower in quality than traditional audit procedures because they perceive them to be less effortful. Our second experiment confirms these results and evaluates a theory-based intervention that reduces reviewers’ reliance on the effort heuristic, causing them to judge quality similarly across D&A and traditional audit procedures.

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 (July 2023). Contemporary Accounting Research, Forthcoming, 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

Brigham Young University - School of Accountancy ( email )

Provo, UT 84602
United States

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