Are Auditors' Reliance on Conclusions from Data Analytics Impacted by Different Data Analytic Inputs?

Abstract

ABSTRACTGlobal stakeholders have expressed interest in increasing the use of data analytics throughout the audit process. While data analytics offer great promise in identifying audit-relevant information, auditors may not uniformly incorporate this information into their decision making. This study examines whether conclusions from two data analytic inputs, the type of data analytical model (anomaly versus predictive) and type of data analyzed (financial versus nonfinancial), result in different auditors' decisions. Findings suggest that conclusions from data analytical models and data analyzed jointly impact budgeted audit hours. Specifically, when financial data are analyzed, auditors increase budgeted audit hours more when predictive models are used than when anomaly models are used. The opposite occurs when nonfinancial data are analyzed; auditors increase budgeted audit hours more when anomaly models are used compared to predictive models. These findings provide initial evidence that data analytics with different inputs do not uniformly impact auditors' judgments.Data Availability: Data used in this study are available upon request.JEL Classifications: M41; M42; C53; C55.