The Impact of Individual Versus Team-Based Decision Processing on Audit Judgments: An Exploratory Analysis of Choice-Shifts

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

Abstract

This experimental study explores the risk assessment and financial statement adjustment decisions of auditors as decision making moves from individual to team based processing in face-to-face (F2F) versus computer mediated communication (CM) settings. Results indicate that while team processing generally does not significantly shift the risk assessments of individual auditors, team processing does significantly impact auditors’ proposed adjustment decisions. Results suggest that in making both risk assessment and adjustment decisions, auditors exhibit less conservative decision making after team processing when team discussions are conducted F2F versus CM. Findings also reveal that how auditors respond to team interactions in making final risk assessment decisions is associated with an individual’s level of audit experience, experience working with team members on prior audit engagements, and whether communication with team members was conducted F2F or through CM. Results show, however, that higher levels of task experience may moderate these effects on auditors’ adjustment decisions. Analyses of post-team auditor judgments also reveal strong within-team agreement with the most experienced team member. Lastly results show that requiring team members to make their own individual assessments prior to entering team discussions does not have a significant impact on the outcome of team audit judgments.

Authors

• Patricia Alvaro Wellmeyer, University of California-Irvine

• Theodore Jaye Mock, University of California-Riverside

• Iris Stuart, Norwegian School of Economics