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Client data files and auditor skepticism: How do “dirty” files influence auditors’ skeptical judgments and actions?

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Title:Client data files and auditor skepticism: How do “dirty” files influence auditors’ skeptical judgments and actions?
Authors:Lindsay M. Andiola
Alisa G. Brink
Edward J. Lynch
Jodie L. Ferguson
Keywords:Client-prepared Data Files
Processing Fluency
Skeptical Judgments and Actions
Eye Tracking
Date Issued:16 Jul 2019
Abstract:Auditors receive an abundance of client-prepared data files when performing audit work. With today’s increasingly data-rich environment, these files are likely becoming even more challenging for auditors to cognitively process. Specifically, these data files may have characteristics (e.g., contain errors or irrelevant information; aka “dirty” files) that could challenge their ease of use and interpretation (i.e., processing fluency). Depending on this ease, auditors may view these files as relatively less reliable and trustworthy, resulting in skeptical judgments and actions that are sometimes excessive. This paper reports two experiments examining whether two features of the data files, the presence of minor errors (absent or present) and information load (low or high), influence auditors’ processing fluency, skeptical judgments, and actions. While minor errors should raise auditors’ concerns, greater information load should not. However, we find the lowest processing fluency and highest skeptical judgments and actions when minor errors are present and information load is higher. Our study contributes to the literature by presenting an alternative issue to those raised by regulators (i.e., too much skepticism rather than too little) that can occur when auditors struggle to interpret large amounts of data. From a practical perspective, while access to increased amounts of client data may have benefits, audit firms and clients need to be wary of the potential for wasted time that could create inefficiencies that may affect audit quality.
Appears in Collections: 03 Behavioral and Experimental Research

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