Title:
The Effect of Opaque Audit Methods and Auditor Ownership on Reliance on Independent Expectations
The Effect of Opaque Audit Methods and Auditor Ownership on Reliance on Independent Expectations
Author(s)
Holmstrom, Kathryn M.
Advisor(s)
Kadous, Kathryn
Rupar, Kathy
Rupar, Kathy
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Abstract
Increasing access to data and advanced statistical methods can help auditors generate independent expectations of estimates, but expectations are not useful unless auditors rely on them. However, advanced methods are likely more opaque (i.e., more difficult to understand due to a lack of transparency), which in turn affects understanding of the output of the method, such as independent expectations. I predict that auditors rely less on independent expectations generated with more opaque audit methods. I further predict that developing psychological ownership of independent expectations increases reliance on expectations generated using more opaque methods, while ownership is not critical for reliance on expectations generated using less opaque methods. In an experiment with senior auditors, I find results supporting my predictions, specifically for auditors with relevant task experience. This study provides insights into auditors’ use of independent expectations and advanced methods that are becoming more pervasive in practice.
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Date Issued
2021-07-30
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Text
Resource Subtype
Dissertation