Using an Interactive Artificial Intelligence System to Augment Auditor Judgment in a Complex Task

51 Pages Posted: 6 Jan 2023 Last revised: 14 Apr 2023

See all articles by Danielle Lombardi

Danielle Lombardi

Villanova University

Helen L. Brown-Liburd

Rutgers University, Newark - Rutgers Business School - Department of Accounting and Information Systems

Ivy Munoko

University of Florida

Date Written: January 5, 2023

Abstract

Emerging research highlights the benefits and challenges of advanced technologies in auditing. However, research examining how these technologies impact auditor judgment is limited, particularly when performing complex tasks. Thus, this study experimentally examines whether using an artificial intelligence system with interactive and structured information processing features augments auditor judgment when performing a fraud risk assessment. Prior research reveals fraud risk assessments are challenging for auditors, causing susceptibility to judgment biases. Auditors’ exposure to increased and complex information due to intensified digitization by firms likely results in greater susceptibility to judgment bias. While prior research report mixed results regarding the use of decision aids to mitigate judgment biases, we posit that interactive and structured information processing features will reduce cognitive load resulting in enhanced auditor judgment. As such, auditors will make more appropriate fraud risk assessments. Experimental results are consistent with our expectations. Specifically, after using the artificial intelligence system with interactive and structured information processing features, auditors disregarded irrelevant information and made fraud risk assessments consistent with an expert panel of experienced auditors. We further investigate experimental results with a verbal protocol analysis using a subset of the participants and find auditors interacting with the AI system demonstrate information processing strategies consistent with a reduction in cognitive load and effort.

Keywords: auditor judgment bias, artificial intelligence, augmented, verbal protocol analysis, fraud risk, cognitive load theory

Suggested Citation

Lombardi, Danielle and Brown-Liburd, Helen L. and Munoko, Ivy, Using an Interactive Artificial Intelligence System to Augment Auditor Judgment in a Complex Task (January 5, 2023). Available at SSRN: https://ssrn.com/abstract=4318689 or http://dx.doi.org/10.2139/ssrn.4318689

Danielle Lombardi (Contact Author)

Villanova University ( email )

Villanova, PA 19085
United States

Helen L. Brown-Liburd

Rutgers University, Newark - Rutgers Business School - Department of Accounting and Information Systems ( email )

180 University Avenue
Newark, NJ 07102
United States

HOME PAGE: http://raw.rutgers.edu/helenbrownliburd

Ivy Munoko

University of Florida ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

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