Abstract
In this paper we report results of an experiment that addresses several issues related to the effectiveness and efficiency of analytical procedures guidance for reviews of interim financial statements. Using materials developed from a public company which issued materially misstated interim financial statements, practicing auditors are asked to perform analytical procedures and to indicate which accounts warrant investigation. Based on professional standards and recent research, auditors receive one of three combinations of expectation-formation instructions and current book values. To mirror audit practice, one group of auditors receives no instruction about expectation formation and is provided current-quarter book values. A second group receives explicit instructions to form expectations along with current book values, and a third group receives the same expectation-formation instructions as the second
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