EXPERIENCE AND AUDITORS SELECTION OF RELEVANT INFORMATION FOR PRELIMINARY CONTROL RISK ASSESSMENTS

The ability to recognize and select relevant information (cue selectio n) in a complex judgment process is a hallmark of superior performance achieved by experienced decision makers. This study examines whether experience influences auditors' approaches to selecting relevant infor mation and whether selection of more relevant information leads to imp roved judgment performance for preliminary control risk assessments (C RAs). The study emphasizes situational knowledge gained from experienc e by comparing new audit seniors and experienced audit seniors from a non Big 6 auditing firm. The auditors each made use of their firm's in ternal control evaluation software as a decision aid. The decision aid was used to enhance external validity and largely control for differe nces in conceptual (deductively-based) knowledge that is usually obtai ned in ways other than task specific experience such as instruction an d consulting a decision aid. A neural network-based model for predicti ng auditors' preliminary CRAs was developed that included auditors' se lection of relevant information as an integral component of the global judgment process. The model provided a means of measuring auditors' s elective attention to relevant internal control (IC) information. Numb er of relevant cues selected, judgment time and judgment accuracy were also measured. The results show that in comparison with new senior au ditors, experienced senior auditors exhibited a higher level of select ive attention to relevant information. Experienced seniors also exhibi ted more consistency between the selected relevant information and the CRA response, selected fewer cues, and made their judgments in less t ime than new senior auditors. These results are consistent with a top- down approach to making CRAs. However, experience did not improve judg ment accuracy since both groups were equally conservative in relation to the firm's suggested solution. This judgment response result may be due to experienced seniors' tendency not to rely on controls nor audi t through the computer, while the new seniors tended toward overauditi ng. An implication for audit practice and theory is that auditor compe tence in planning and performing tests of controls is becoming more of an issue in relation to audit risk. Heavy reliance on substantive tes ts, even for smaller clients, may not produce enough audit evidence to provide an acceptable level of audit risk due to innovations in compu terized accounting information systems. Another implication is that in addition to conceptual training to develop conceptual knowledge, trai ning using many client situations could help auditors develop better s ituational knowledge. Training using the repetition of many client exa mples could supplement experience from real audits to help audit senio rs develop and retain the ability to select more relevant information and make more efficient, effective CRAs.