Improving Complex Audit Judgments: A Framework and Evidence

Posted: 8 Feb 2021

See all articles by Emily E. Griffith

Emily E. Griffith

University of Wisconsin - Madison

Kathryn Kadous

Emory University - Goizueta Business School

Donald Young

Indiana University - Kelley School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: October 19, 2020

Abstract

: Regulators and researchers provide evidence that auditors’ judgment quality is problematic in complex audit tasks. We introduce a framework for improving auditor judgment in these tasks. The framework builds on dual-process theory to recognize that high-quality judgment in complex tasks requires that auditors (i) possess the knowledge needed for the task, (ii) recognize the need for analytical (versus heuristic) processing, and (iii) have sufficient cognitive capacity to complete the analytical processing. Based on the framework, we predict that auditors’ need for cognition (NFC), a characteristic theoretically linked to recognizing the need for analytical processing, is associated with higher quality complex judgments. Analysis of 11 studies supports this assertion. We demonstrate the usefulness of the framework by predicting and finding that priming auditors with an accuracy goal improves judgments, particularly for lower NFC auditors who are less likely to spontaneously engage in analytical processing. The framework facilitates systematic development of interventions to improve auditor judgment by highlighting that solutions should address the specific conditions causing judgment problems.

Keywords: complex estimates, need for cognition (NFC), accuracy goal, goal priming, professional skepticism, dual-process theory

Suggested Citation

Griffith, Emily Elaine and Kadous, Kathryn and Young, Donald, Improving Complex Audit Judgments: A Framework and Evidence (October 19, 2020). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3762424

Emily Elaine Griffith

University of Wisconsin - Madison ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

Kathryn Kadous (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States
404-727-4967 (Phone)

Donald Young

Indiana University - Kelley School of Business ( email )

1309 East Tenth Street
Indianapolis, IN 47405-1701
United States

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