Closing review notes: The effect of reviewer delay and review note frame on audit workpaper preparers' effort and performance.

摘要

Audit review is a sequential, hierarchical process utilized by public accounting firms to detect and correct errors in the workpapers. In this process, workpaper preparers submit their work to more experienced auditors who, in turn, provide comments on the workpapers through written review notes designed to ensure the appropriateness of procedures performed and conclusions drawn. For the review process to succeed as a quality control mechanism, any issues or questions identified by the reviewer must be resolved and documented in the workpapers. Prior research has examined a number of important aspects of the review process. However, it has not addressed whether an issue or error identified through review ultimately gets corrected, and there may be certain contextual factors that enhance or interfere with this process. My study extends the audit review literature by examining this critical phase of the process, the review note closing phase. Through the use of an experiment, I examine the effect on this phase of two contextual factors within the reviewer's control: the focus, or frame, of the rationale provided in the review note and the timeliness of the review. I find that both the timeliness of the review and the frame of the review note significantly impact the number of evidence items examined by preparers. A timely review also significantly increases the amount of time spent by the preparer. Importantly, the frame of the review note and review timeliness interact to affect the number of errors detected by the preparer in such a way that the combination of a timely review and conclusion-framed review notes lead to superior performance. In addition, I find that reviewer delay leads to proportionally greater dysfunctional behavior by the preparer (e.g., documentation of work not performed). This study contributes to psychology research by examining the impact of emphasis framing and time delays in a time sensitive, organizational setting. Further, audit firms should be able to use the results of this research in their training to make reviewers aware of the impact of their choices on preparer performance, the underlying workpapers, and ultimately, the quality of the audit.