The Joint Effects of Rich Data Visualization and Audit Procedure Categorization on Auditor Judgment

64 Pages Posted: 12 Jan 2021

See all articles by Spencer B. Anderson

Spencer B. Anderson

University of Illinois at Urbana-Champaign - Department of Accountancy

Jessen L. Hobson

University of Illinois at Urbana-Champaign

Mark E. Peecher

University of Illinois at Urbana-Champaign; University of Illinois College of Law

Date Written: November 24, 2020

Abstract

We predict that the audit-effectiveness benefits of richer visualization depend on how auditors categorize the procedures used to generate visualized evidence. We experimentally test our prediction using analytical procedures, which can be categorized either as risk assessment or substantive procedures under certain conditions. As predicted, audit-senior participants more frequently identify more richly visualized outliers as high risk, but only when these visuals arise from risk assessment procedures rather than substantive procedures. Richer visuals also increase the comprehensiveness of auditors’ prescribed follow-up tests, again only when risk assessment procedures generate these visuals. Post-experimental responses corroborate our theory: Auditors view evidence as more persuasive and sufficient when categorized as substantive procedures rather than as risk assessment procedures, in which case they view evidence as more preliminary. We conclude that whether and the degree to which richer data visuals improve audit effectiveness depends on how audit procedures generating these visuals are categorized.

Keywords: Audit, Data visualization, Classification, Audit procedures

JEL Classification: M42, M41, O33

Suggested Citation

Anderson, Spencer B. and Hobson, Jessen L. and Peecher, Mark E., The Joint Effects of Rich Data Visualization and Audit Procedure Categorization on Auditor Judgment (November 24, 2020). Available at SSRN: https://ssrn.com/abstract=3737234 or http://dx.doi.org/10.2139/ssrn.3737234

Spencer B. Anderson (Contact Author)

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Jessen L. Hobson

University of Illinois at Urbana-Champaign ( email )

4011 Business Instructional Facility
515 East Gregory Drive
Champaign, IL 61820
United States

Mark E. Peecher

University of Illinois at Urbana-Champaign ( email )

Gies College of Business
1206 South Sixth Street
Champaign, IL 61820
United States
217-333-4542 (Phone)
217-244-0902 (Fax)

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States

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