The Effects of Audit Risk and Information Importance on Auditor Memory During Working Paper Review

Abstract

Auditors were required to review two working-paper areas (accounts) and, twenty-four hours later, recognize if information items had been present in the working papers and express how willing they would be to rely on their memory for each item (i.e., whether they would refer back to the working papers to verify the truth or falsity of each item). The results indicate that: (1) the accuracy of auditors' memories is positively related to the level of audit risk of the area and the degree of importance of an information item within the area; (2) the auditors' willingness to rely on memory is negatively related to the degree of information importance but not related to the audit risk of the area; and (3) the auditors' willingness to rely on memory is positively related to the accuracy of auditors' memories, and this positive relationship increases with the degree of information importance.

JEL Classification: M40, M48