When Documentation Inhibits Helpful Auditor Intuition: An Examination of Experience and Accountability

• In Event: Auditor Thinking: Approach, Intuition, and Mindset

Abstract

We examine whether more experienced auditors develop helpful intuition through pattern recognition. We expect documentation requirements to inhibit the use of intuition by activating different knowledge structures, reducing judgment quality in areas where auditors have helpful intuition. In an experiment with practicing auditors, we find evidence suggesting that more experienced auditors develop helpful intuition related to misstatements caused by error (detected with relative frequency in practice, conducive to the development of knowledge structures) but not fraud (detected with relative infrequency in practice, not conducive to the development of knowledge structures). Further, when auditors are asked to document justification for their error-related risk assessments, their judgment quality decreases relative to the judgments of an expert panel. This suggests that documentation requirements include a hidden cost that may decrease audit quality by activating different knowledge structures and thereby crowding out helpful intuitive knowledge structures.

Authors

• Erin Michelle Hawkins, Clemson University

• Scott David Vandervelde, University of South Carolina

• Aaron F Zimbelman, University of South Carolina