Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    Two Decades of Behavioral Research on Analytical Procedures:...
    research summary posted May 28, 2014 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent, 08.07 Interim Testing Procedures – Nature, Timing and Extent 
    Two Decades of Behavioral Research on Analytical Procedures: What Have We Learned?
    Practical Implications:

    The previous two decades of APs research have provided a number of important findings regarding the generation and evaluation of hypotheses for significant differences between the auditor’s expectations and the client’s reported results. The authors note that a vast majority of the research focused on performing preliminary and substantive APs. Therefore, this review emphasizes the need for more research on the use of APs during the final stages of the audit. The authors intend for this paper to lead to an increased recognition of the important of performing research on APs with the intent of improving audit practice. 


    Messier, W. F., C. A. Simon, and J. L. Smith. 2013. Two Decades of Behavioral Research on Analytical Procedures: What Have We Learned? Auditing 32 (1).

    analytical procedures; auditing standards; risk assessment procedures
    Purpose of the Study:

    Audit researchers have conducted a substantial amount of behavioral research examining various aspects of the analytical procedures process. A comprehensive review of behavioral research on external auditors’ use of analytical procedures (APs) published over the last two decades is presented in this paper. With audit regulators recently revising AP standards and PCAOB inspections identifying more deficiencies related to firms’ performance of APs, this review comes at an important time. A review of this research will help identify areas where research has cited deficiencies and suggest ways to overcome those problems. 

    Design/Method/ Approach:

    This review was framed around four phases of the analytical procedures process: develop an expectation, establish a tolerable difference, compare the expectation to the recorded amount and investigate significant differences, and evaluate explanations and corroborative evidence. This approach allows the authors to discuss the phases of the analytical procedure process as outlined in practice. It also allows them to highlight what prior research has found and where future research is needed to improve the understanding and performance of APs. 

    • While the PCAOB’s inspections have repeatedly raised concerns with auditors forming insufficiently precise expectations and setting an appropriate tolerable difference, relatively little research has been conducted in these phases of the framework. 
    • The PCAOB has asserted that audit teams do not always investigate significant differences, a considerable amount of research has examined this phase, mainly testing issues related to the generation of hypotheses.
    • Auditors’ ability to generate hypotheses can be affected by numerous source factors, contextual factors, and auditor characteristics. 
    • The PCAOB has expressed concerns regarding auditors’ lack of obtaining corroborative evidence for client expectations during the fourth phase. 
    Auditing Procedures - Nature - Timing and Extent
    Interim Testing Procedures – Nature - Timing & Extent

    home button