Audit technology structures’ effect on probabilistic judgement

Abstract

Attempts to assess the impact of structured and unstructured audit approaches on the auditor’s professional judgement. The auditor’s use of judgement was measured by using the anchoring and adjustment instrument developed by Biddle and Joyce and the representativeness and protectiveness instrument developed by Uecker and Kinney. To ascertain the effect of audit technology on probabilistic judgement in auditing, 78 employees of ten offices of national Certified Public Accountant (CPA) firms ‐ 40 from unstructured firms and 38 from structured ones ‐ were surveyed. Findings indicate that public accountants’ probabilistic judgements were influenced by their firms’ audit technology structure and that the imposition of structure caused auditors to rely more on provided cues than on the use of judgement. These results help support Mintzberg’s suggestion that CPA firms modify their audit approaches to fit specific situations. For example, they should use structured approaches for clients with continuing good earnings announcements and less‐structured approaches for poorly performing clients.