Experience effects in the components of analytical risk assessment.

In planning audits, experienced auditors assess analytical risk, while novice auditors assess control risk. Both of these risk assessments, however, require performance of the same component procedures. The objective of this project was to determine which of the components of analytical risk assessment require experience. Hypotheses were that experience is required for cue selection, weighting, and measurement. This project contributed by exp and ing our underst and ing of the effect of experience on audit judgment in two areas. First, because most prior researchers did not consider the knowledge needed to perform the audit task in question, they examined tasks normally performed in the field by novice auditors. Second, some studies which examined tasks normally performed by experienced auditors also found few experience-related differences. This may have been because the researchers omitted the components which the psychology literature predicts would require experience. By examining two tasks, one of which is normally performed by experienced auditors and one of which is normally performed by novice auditors, and by including those components which are hypothesized to require experience within each of the tasks, this study aided in determining if prior results were caused by choice of task or by omission of components within task. The effect of experience on the components of control risk and analytical risk assessment were investigated in a series of three experiments, whose participants were experienced and novice auditors from two large accounting firms. In the first experiment, the hypothesized effect of experience on cue selection accuracy was found for only one of the two firms. In the second experiment, the hypothesized effect of experience on cue measurement agreement was not found, i.e. there were no experience effects in cue measurement. Finally, in the third experiment, the hypothesized effect of experience on cue weighting agreement was found. Furthermore, experience-related differences in cue weighting agreement accounted for most of the differences in global judgment agreement. The hypothesized effect of cue measurement on judgment agreement was not found, consistent with the results of the second experiment.PhDAccountingUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/161773/1/8812859.pd