What Did the Client Say? The Impact of Note Taking During Client Inquiry on Auditor Memory and Judgment.

• In Event: Client Effects in Auditing

Abstract

Client inquiry is a fundamental procedure for gathering audit evidence and is one of the most used procedures in both external and internal audit. However, there is significant cognitive complexity in conducting a face-to-face inquiry, particularly in regard to memory, that may limit its effectiveness. Auditor memory is vital to audit quality, as it impacts the accuracy of evidence gathered (due to the potential for error during memory encoding and retrieval) and subsequent judgment. Since inquiries are not audio recorded in practice, audit professionals often take notes during client inquiries, whether typed or hand-written, to benefit his or her memory. We investigate whether the extent of notes taken during a client inquiry affects memory accuracy and judgment.
We design and execute a video-based experiment to examine the impact of note taking on auditor memory accuracy of a client inquiry. Using 48 professional auditors, we find evidence that the extent of notes taken is positively associated with memory accuracy. Surprisingly, memory accuracy is negatively associated with assessment of the likelihood of misstatement. This is likely due to a lack of identification of inconsistent evidence during the inquiry. Implications of these findings are discussed.

Authors

• Jeremy Vinson, Clemson University

• Jesse C Robertson, University of North Texas

• Mary B Curtis, University of North Texas