The Effect of Graphical Presentation of Information on Auditors’ Weighting of Diagnostic Non-financial Data in Analytical Procedures

• In Event: External Auditor Judgment and Decision Making

Abstract

Substantial accounting research literature has examined the use of analytical procedures by auditors; however, relatively little research has investigated the use of non-financial data in analytical procedures and whether auditors have a bias in favor of financial data over non-financial data. In this paper, I investigate whether auditors put more weight on the importance of financial data even when financial data and non-financial data are equally diagnostic. The study also investigates whether auditors weight more heavily the importance of non-financial data when the presentation of the data is disaggregated into several graphs compared with data aggregated into one graph. In this research, I use a 2 X 2 experimental design and a sample of 77 undergraduate accounting students. The results show that novice auditors generally underweight the importance of non-financial data compared with financial data. However, when the graphical presentation is disaggregated instead of aggregated, auditors weight non-financial data more heavily, but do not increase the weight they place on financial data. Collectively, the results suggest that during analytical procedures, in order to encourage novice auditors to weight non-financial data more heavily, disaggregated presentation is superior to aggregated presentation.

Authors

• Yibo James Zhang, University of South Florida

• Patrick Wheeler, University of South Florida