Auditors' evaluation of evidence obtained through management inquiry: A cascaded-inference approach

This study uses the cascaded-inference paradigm to investigate how auditors evaluate evidence received during management inquiry. Contrary to predicti ons made by cascaded-inference theory. results indicate that auditors are r elatively more sensitive to source-related uncertainties than evidence-rela ted uncertainties when evaluating information provided by client management . In addition, management-provided evidence has less impact on auditors' be liefs than on nonauditors' beliefs. Finally, results also suggest that, und er certain conditions, auditors may fail to recognize the value of informat ion received during management inquiry.