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Memory-induced misperceptions of going concern risk by experienced auditors in a multi-client environment

Memory-induced misperceptions of going concern risk by experienced auditors in a multi-client... This study examines whether an audit evaluation of contextually similar evidence pertaining to a second client affects memory-induced perceptions of the initially evaluated client. Prior research suggests that the experienced auditors’ use of task-specific knowledge to process contextually similar evidence sets for two clients makes them susceptible to fragile memory associations between the evidence set and its source client. Fragile associations increase the auditors’ susceptibility to misattributing evidence to a client potentially resulting in improper audit assessments of the client. Auditors evaluated evidence for two similarly positioned companies with dissimilar operational weaknesses and then provided going concern risk perceptions of the client evaluated first. Risk perceptions related to the threat posed by negative trends that were either strongly or weakly connected with the first client’s condition. Strongly connected trends were perceived as less threatening after the evaluation of the second company, while weakly connected trends were perceived as more threatening. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting, Auditing and Performance Evaluation Inderscience Publishers

Memory-induced misperceptions of going concern risk by experienced auditors in a multi-client environment

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1740-8008
eISSN
1740-8016
DOI
10.1504/IJAAPE.2012.047808
Publisher site
See Article on Publisher Site

Abstract

This study examines whether an audit evaluation of contextually similar evidence pertaining to a second client affects memory-induced perceptions of the initially evaluated client. Prior research suggests that the experienced auditors’ use of task-specific knowledge to process contextually similar evidence sets for two clients makes them susceptible to fragile memory associations between the evidence set and its source client. Fragile associations increase the auditors’ susceptibility to misattributing evidence to a client potentially resulting in improper audit assessments of the client. Auditors evaluated evidence for two similarly positioned companies with dissimilar operational weaknesses and then provided going concern risk perceptions of the client evaluated first. Risk perceptions related to the threat posed by negative trends that were either strongly or weakly connected with the first client’s condition. Strongly connected trends were perceived as less threatening after the evaluation of the second company, while weakly connected trends were perceived as more threatening.

Journal

International Journal of Accounting, Auditing and Performance EvaluationInderscience Publishers

Published: Jan 1, 2012

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