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The effects of alternative justification techniques on judgment accuracy and information communicated in the review process

Christopher P Agoglia, University of Massachusetts Amherst


Auditors are often required to justify their judgments to more senior members of their firms. However, the documentation required to justify a judgment can differ. While it is possible that different justification requirements may produce different effects on judgment processes, little is known about the relative effectiveness of different justification techniques. This study uses a control environment assessment task to examine the effects of alternative justification techniques on auditors' (reviewees') judgments, on the information transferred from the reviewee to the reviewer, and on the resulting judgment of the reviewer. Professional auditors were given a detailed case concerning a client's control environment which was based on an actual audit in which fraud was present. Auditors were assigned to be either a reviewee or reviewer based on their experience level. Reviewees were divided into three justification groups: supporting, balanced, or component. They were asked to make a series of assessments relating to the control environment's ability to prevent fraud, and to justify those assessments using their respective justification requirements. Reviewers were paired with a reviewee and asked to review that individual's work. Reviewers received the reviewee's judgment and justification, along with the information contained in the detailed case, and made the same series of control environment assessments as reviewees. The main variables examined were decision accuracy and the amount and type of evidence documented in the reviewee's justification. The results indicated that reviewees in the component group documented a larger evidence set in their justifications than did reviewees in the balanced and supporting groups, and that the component justification reviewees were the least accurate in their fraud risk assessments. Reviewer results tended to mirror those of reviewees, though comparisons between component and supporting reviewers were not as strong. One potential explanation for the underperformance of component group subjects concerns the dilution, effect. The substantial amount of evidence documented by component reviewees may have diluted the impact of key information that pointed to possible fraud problems. These results suggest that, when performing a reasonably complex evaluative task, the way in which reviewees are required to justify their assessments can affect both the accuracy of their assessments and the information they document as part of their justifications. Given that both the reviewee's assessment and justification are later passed on for review, different justification techniques can affect the accuracy of reviewers' assessments. Implications for audit practice and for decision making research are discussed.

Subject Area

Accounting|Cognitive therapy|Social psychology

Recommended Citation

Agoglia, Christopher P, "The effects of alternative justification techniques on judgment accuracy and information communicated in the review process" (1999). Doctoral Dissertations Available from Proquest. AAI9932281.