AAA Spark Meeting of Regions

Auditor Task Prioritization: The Effects of Time Pressure and Psychological Ownership

• In Event: Auditor Tasks and Advising the Client

Abstract

Auditors have discretion over how they order their tasks and which tasks they prioritize. However, the way in which auditors use this discretion, and how this affects effort allocation among tasks is poorly understood. Using Conservation of Resources Theory and a laboratory experiment, we predict and find that auditors prioritize easy tasks over difficult tasks. In addition, we find that easy task prioritization is more prominent when time pressure is high compared to when it is low. This is problematic as we find that easy task prioritization causes auditors to especially reduce effort in difficult tasks, where material misstatements are more likely. We propose psychological ownership as a mechanism that can reduce auditors’ tendency to prioritize easy tasks, and find that it works in low time pressure conditions, but not in high time pressure conditions. Our study contributes to practice and theory by documenting conditions under which easy task prioritization is more prevalent. Furthermore, we provide preliminary evidence on how this can be mitigated.

Authors

• Bart Dierynck, Tilburg University

• Christian Peters, Tilburg University