The auditors' going concern opinion decision: Interaction of task variables and the sequential processing of evidence.

Persistent Link:
http://hdl.handle.net/10150/184633
Title:
The auditors' going concern opinion decision: Interaction of task variables and the sequential processing of evidence.
Author:
Asare, Stephen Kwaku.
Issue Date:
1989
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
Drawing on the relevant psychology literature, three procedural variables that could influence the auditors' information processing when making going concern opinion decisions were identified. These procedural variables are the decision frame, the order in which evidence is evaluated and the initial belief held by the auditor. With respect to the decision frame, it was predicted that belief revision after processing contrary information (mitigating factors) is higher for auditors who frame their initial hypothesis in terms of viability (failure). This prediction hinges on the assumption that more weight is put on disconfirmatory information than on confirmatory information, holding "information content" constant. Second, denoting P(C) as the auditors' judgment just before processing contrary information (mitigating factors), it was hypothesized that contrary information (mitigating factors) has a bigger effect on belief revision as ex ante P(C) increases (decreases). Finally with respect to the order of evaluating evidence, it was posited that recency effects occur in belief revision and that these recency effects will be manifest in the auditors' opinion decision. These predictions were tested in a field experiment using 70 experienced auditors from four Big Eight firms. Results of the experiment provided support for the predictions relating to the initial belief and the order in which evidence was evaluated. However, the predictions relating to the decision frame were not supported. Furthermore, the study indicated that auditors exhibited considerable variability in their interpretation of substantial doubt (the standard of proof in SAS 59). Whereas some auditors interpreted this requirement as the preponderance of probability, others required a substantially higher level of probability as a threshold of proof for issuing unqualified opinions. Incidentally, it was discovered that this variability was partly accounted for by auditors' firm affiliation. Implications of these results for the audit review, the standard setting process and the nature of expertise in auditing are discussed.
Type:
text; Dissertation-Reproduction (electronic)
Keywords:
Going concern (Accounting); Auditing -- Decision making.
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Business Administration; Graduate College
Degree Grantor:
University of Arizona
Advisor:
Waller, William S.

Full metadata record

DC FieldValue Language
dc.language.isoenen_US
dc.titleThe auditors' going concern opinion decision: Interaction of task variables and the sequential processing of evidence.en_US
dc.creatorAsare, Stephen Kwaku.en_US
dc.contributor.authorAsare, Stephen Kwaku.en_US
dc.date.issued1989en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractDrawing on the relevant psychology literature, three procedural variables that could influence the auditors' information processing when making going concern opinion decisions were identified. These procedural variables are the decision frame, the order in which evidence is evaluated and the initial belief held by the auditor. With respect to the decision frame, it was predicted that belief revision after processing contrary information (mitigating factors) is higher for auditors who frame their initial hypothesis in terms of viability (failure). This prediction hinges on the assumption that more weight is put on disconfirmatory information than on confirmatory information, holding "information content" constant. Second, denoting P(C) as the auditors' judgment just before processing contrary information (mitigating factors), it was hypothesized that contrary information (mitigating factors) has a bigger effect on belief revision as ex ante P(C) increases (decreases). Finally with respect to the order of evaluating evidence, it was posited that recency effects occur in belief revision and that these recency effects will be manifest in the auditors' opinion decision. These predictions were tested in a field experiment using 70 experienced auditors from four Big Eight firms. Results of the experiment provided support for the predictions relating to the initial belief and the order in which evidence was evaluated. However, the predictions relating to the decision frame were not supported. Furthermore, the study indicated that auditors exhibited considerable variability in their interpretation of substantial doubt (the standard of proof in SAS 59). Whereas some auditors interpreted this requirement as the preponderance of probability, others required a substantially higher level of probability as a threshold of proof for issuing unqualified opinions. Incidentally, it was discovered that this variability was partly accounted for by auditors' firm affiliation. Implications of these results for the audit review, the standard setting process and the nature of expertise in auditing are discussed.en_US
dc.typetexten_US
dc.typeDissertation-Reproduction (electronic)en_US
dc.subjectGoing concern (Accounting)en_US
dc.subjectAuditing -- Decision making.en_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineBusiness Administrationen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.advisorWaller, William S.en_US
dc.contributor.committeememberFelix, William L.en_US
dc.contributor.committeememberNiles, Marcia S.en_US
dc.contributor.committeememberWagner, Garyen_US
dc.identifier.proquest8915945en_US
dc.identifier.oclc702124756en_US
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