Abstract:
In order to formulate an opinion about the fairness of their clients' financial statements independent auditors must both collect and evaluate evidence. Increasingly these activities must be undertaken under pressure of deadlines, raising obvious questions concerning the maintenance of professional standards of judgement and audit work.
The purpose of this study was to investigate the impact of time pressure on auditors' judgements, their cue utilization patterns, and inter-auditor judgement consensus in an internal control evaluation task. It was hypothesized that under high time pressure auditors would simplify their task by adopting a cue focusing strategy which would accentuate the impact on their judgements of those cues commonly perceived to be the most important. Consequently, a high degree of inter-auditor judgement consensus was anticipated.
This hypothesis and several related ones were tested in a laboratory experiment in which ten experienced auditors, assigned to either a high or low time pressure condition, evaluated the strength of internal control of 38 cases (32 + 6 repeated cases) of accounts receivable sub-systems on the basis of responses to five system indicators. The time pressure effect was investigated at the aggregate level via a 26 (SPF 2.22222) ANOVA and each auditor's cue utilization pattern was assessed via a 25 (SPF .22222) ANOVA and the associated ω2 values. Differences in inter-auditor judgement consensus and auditors' cue utilization patterns under the two time pressure conditions were measured through the application of nonparametric tests. Correlation analysis was used to investigate judgement stability and self-insight.
The results of the above analyses indicated that while time pressure had no effect on auditors' judgements per se, inter-auditor judgement consensus was significantly higher under high time pressure than under low time pressure. Judgement stability was remarkably high in both time pressure conditions, but evidence of systematic insight biases was observed. Two unexpected results were evidence of greater configural cue processing under high time pressure than under low time pressure and the virtual ignoral of the segregation-of-duties cue.
These results are discussed in terms of their implications for: (1) auditors' continuing use of consensual validation procedures (such as peer review and second partner review) to maintain professional standards of judgement; (2) the use of computer-based bootstrapping models to reduce judgement variance; (3) the acceptance and implementation of recommended auditing procedures; and (4) the need for further refinement of the information overload concept.
