Electronic vs. Face-to-Face Review: The Effects of Alternative Forms of Review on Auditors' Performance

Abstract

Due to recent technological advancements such as online workpapers and e-mail, audit firms have alternative methods of workpaper review that they did not have in the past. While audit workpaper preparers typically know they will be reviewed, and the form their review will take, prior research has focused on comparing the judgments of auditors who expect to be reviewed and auditors who expect to remain anonymous. This study examines the effects on preparers of using two different methods of review: face-to-face and electronic review. The study also compares both review groups to a no-review control group. Consistent with the Heuristic-Systematic Model, we find that the method of review affects preparer effectiveness and efficiency. Specifically, preparers anticipating a face-to-face review were more concerned with audit effectiveness, were less efficient at their task, were less likely to be inappropriately influenced by prior year workpapers, and felt more accountable than preparers in both the electronic review and no-review conditions. Interestingly, electronic review preparers generally did not differ from the no-review group. These results may suggest that it is how a review is to be conducted, and not merely the expectation that a review will occur, that affects the decision maker's judgments and perceptions.