SUMMARY: Audit workpaper review is a primary means of quality control in auditing firms. While prior research shows that anticipation of a review affects preparers’ judgments, there is little research on the effects of the different review formats that occur in practice. The research that does exist examines the effects of adding discussion after the preparation of written review notes. We compare the effects on preparers of anticipating a real-time interactive review (where review notes are not prepared in advance) to the effects of anticipating receipt of more traditional written review notes. We also examine how these two different types of review affect the actual audit procedures preparers perform. A path analysis reveals that an interactive review leads auditors to focus more on the cognitively demanding, conclusion-oriented audit procedures. This, in turn, leads to better performance in identifying a trend that is indicative of fraud. We find no evidence that dysfunctional behavioral strategies operate under the less structured interactive review to compromise audit performance.
The Effect of Alternative Types of Review on Auditors’ Procedures and Performance
Elizabeth A. Payne, Robert J. Ramsay, E. Michael Bamber; The Effect of Alternative Types of Review on Auditors’ Procedures and Performance. AUDITING: A Journal of Practice & Theory 1 May 2010; 29 (1): 207–220. https://doi.org/10.2308/aud.2010.29.1.207
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