The effect of benchmarked performance measures and strategic analysis on auditors' risk assessments and mental models
| Autor: | Natalia Kochetova-Kozloski, W. Robert Knechel, Steven E. Salterio |
|---|---|
| Přispěvatelé: | Accounting & Information Management, RS: GSBE AIM |
| Jazyk: | angličtina |
| Rok vydání: | 2010 |
| Předmět: |
Organizational Behavior and Human Resource Management
Information Systems and Management Process management Sociology and Political Science Computer science Accounting Audit DECISION-MAKING JUDGMENTS Joint audit SYSTEMS QUALITY BALANCED SCORECARD Balanced scorecard business.industry Inherent risk (accounting) INFORMATION LOAD Benchmarking Business risks EARNINGS ANNOUNCEMENTS CUE UTILIZATION COMPETITOR ANALYSIS BUSINESS Internal audit Strategic business unit business |
| Zdroj: | Accounting Organizations and Society, 35(3), 316-333. Elsevier Limited |
| ISSN: | 0361-3682 |
| DOI: | 10.1016/j.aos.2009.09.004 |
| Popis: | As the audit environment becomes more demanding and complex, so does the set of analytical tools available to an auditor. The purpose of this paper is to examine the effect of two complex audit technologies commonly used by auditors, benchmarking of performance measures and strategic analysis, on the risk judgments of auditors carrying out the initial planning of an audit. We conduct an experiment that utilizes a Balanced Scorecard for organizing and evaluating analytical evidence about the performance of business units within a large client. Our first principal finding is that external benchmarking can cause an auditor to focus on performance measures that are unique to a business unit and disregard performance measures that are common to multiple business units but not benchmarked. However, our second finding is that an in-depth strategic analysis completed prior to assessing a client’s business risk or risk of material misstatement allows an auditor to incorporate more information from performance measures in risk assessments regardless of whether the performance measures are benchmarked. Strategic analysis facilitates a more balanced and accurate assessment of the risks across the business units being evaluated. We also provide evidence that the latter result occurs because in-depth strategic analysis allows auditors to develop a more complete mental model of a client, which has been a long time belief of advocates of business risk audit methodologies and consistent with current and emerging auditing standards on risk assessment. |
| Databáze: | OpenAIRE |
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