When Documentation Inhibits Helpful Auditor Intuition: An Examination of Experience and Justification

37 Pages Posted: 23 Jun 2020

See all articles by Erin M Hawkins

Erin M Hawkins

Clemson University

Scott D. Vandervelde

University of South Carolina - Darla Moore School of Business

Aaron F. Zimbelman

University of South Carolina

Date Written: February 2020

Abstract

We examine whether more experienced auditors develop helpful intuition when evaluating risk factors. We expect documentation requirements to inhibit the use of intuition by activating different knowledge structures, reducing judgment quality in areas where auditors have helpful intuition. In an experiment with practicing auditors, we find evidence suggesting that more experienced auditors develop helpful intuition related to misstatements caused by error (detected with relative frequency in practice, conducive to the development of knowledge structures) but not fraud (detected with relative infrequency in practice, not conducive to the development of knowledge structures). Further, when auditors are asked to document justification for their error-related risk assessments, their judgment quality decreases relative to the judgments of an expert panel. This suggests that documentation requirements include a hidden cost that may decrease audit quality by activating different knowledge structures and thereby crowding out helpful intuitive knowledge structures.

Suggested Citation

Hawkins, Erin M and Vandervelde, Scott D. and Zimbelman, Aaron F., When Documentation Inhibits Helpful Auditor Intuition: An Examination of Experience and Justification (February 2020). Available at SSRN: https://ssrn.com/abstract=3613871 or http://dx.doi.org/10.2139/ssrn.3613871

Erin M Hawkins (Contact Author)

Clemson University ( email )

Clemson, SC 29634
United States

Scott D. Vandervelde

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

Aaron F. Zimbelman

University of South Carolina ( email )

Darla Moore School of Business
1014 Greene Street
Columbia, SC 29208
United States

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