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    The Impact of Initial Information Ambiguity on the Accuracy...
    research summary posted September 10, 2013 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent, 08.01 Substantive Analytical Review – Effectiveness 
    The Impact of Initial Information Ambiguity on the Accuracy of Analytical Review Judgments
    Practical Implications:

    The practical implication of this research for auditors is that it is best to avoid making initial hypotheses until after they obtain a comprehensive perspective of the data. Auditors should instead treat early stages of the decision process as a fact-finding exercise.


    Luippold, B.L. and T.E. Kida. 2012.  The Impact of Initial Information Ambiguity on the Accuracy of Analytical Review Judgments.  Auditing: A Journal of Practice and Theory. (31) 2:113–129.

    analytical review, hypothesis testing, initial information ambiguity, auditing
    Purpose of the Study:

    This study seeks to determine the extent to which initial information ambiguity affects analytical review judgments. That is, this paper examines whether the impact of initial information ambiguity persist even after the ambiguity is gone.

    Design/Method/ Approach:

    Around 2010 94 participants, who were mainly staff level auditors, participated in an experiment with a seeded error wherein they were required to perform preliminary analytical procedures. The participants were separated by condition into different levels of information ambiguity to perform preliminary analytical procedures and all were then given the full data to make a final judgment.


    The main finding of this paper is that initial information ambiguity affects an auditor's ability to detect financial statement errors at the end of the analytical review process. Specifically, if auditors develop initial hypotheses using ambiguous information sets, they are less likely to identify errors causing fluctuations in financial data even after they search through all of the client's relevant information

    Auditing Procedures - Nature - Timing and Extent
    Substantive Analytical Review – Effectiveness