Strategies to Improve Auditor Judgment in the Audit of the Statement of Cash Flows

• In Event: Continental Breakfast & Research and Education Forum
  In Paper Session: Table 17: Auditor Judgment

Abstract

The rising number of restatements of Statement of Cash Flows has captured the attention of the SEC, PCAOB, and FASB. This study examines two strategies designed to improve audit judgment in the performance of analytical procedures on the statement of cash flows. In order to reduce the expectation bias (a.k.a. anchoring) influence we test a deliberative mindset condition to encourage critical thinking and we test an implemental mindset by providing additional guidance on the preparation of the statement. The results of our pilot study show that groups with guidance performed significantly better on a several tests of knowledge than either the deliberative only or control group.

Authors

• Laura C Alford, Louisiana State University

• Dana Hollie, Louisiana State University - Baton Rouge