Is sophistication always better? The impact of data analytic tool sophistication and supervisor preferences on the evaluation of complex estimates
Is sophistication always better? The impact of data analytic tool sophistication and supervisor preferences on the evaluation of complex estimates
Date
2020-08-14
Authors
Koreff, Jared
Perreault, Steve
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Abstract
The rise of technology-enabled data analytic tools creates opportunities for firms to improve audit quality related to complex estimates. In an effort to combat auditors' resistance to using technology-enabled tools, firms may promote the sophistication of such tools to their audit staff. However, there is a paucity of research that has examined how auditors consider the sophistication of an analytic tool when making judgments about audit evidence. We conduct an experiment and find that, holding all other information constant, the perceived sophistication of an analytic tool interacts with the preferences of an audit supervisor to jointly impact auditors' anticipated evaluation from a supervisor and, in turn, their evidence evaluation decisions when auditing a complex estimate. As such, the promotion of tool sophistication by audit firms can significantly affect the audit of complex estimates to a greater degree than what would normatively be expected. Implications for audit theory and practice are discussed.
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Complex Estimates,
Data Analytics,
Supervisor Preference
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