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    Facilitating Brainstorming: Impact of Task Representation on...
    research summary posted May 31, 2016 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.09 Group Decision-Making, 06.0 Risk and Risk Management, Including Fraud Risk, 06.08 SAS No. 99 Brainstorming – effectiveness, 09.0 Auditor Judgment 
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    Title:
    Facilitating Brainstorming: Impact of Task Representation on Auditors’ Identification of Potential Frauds
    Practical Implications:

    The results of this study are important due to the requirement of members of the audit engagement team to identify potential fraud. The results of this study identify a method of improving auditor performance of identifying potential frauds at both the individual brainstorming stage and the subsequent group brainstorming stage. Because the effectiveness of the group brainstorming session is dependent on the quality and quantity of inputs from the individual auditor brainstorming sessions, the present study suggests a simple intervention regarding task representation to improve the performance of these inputs. Specifically, auditors considering potential fraud categories (e.g., revenue recognition, inventory, etc.) one by one, as opposed to all at once, identify a greater quantity and quality of potential frauds. By improving both the individual and group brainstorming stages, auditors are less likely to overlook potential fraud.

    Citation:

    Chen, W., A. S. Khalifa, and K. T. Trotman. 2015. Facilitating brainstorming: Impact of task representation on auditors’ identification of potential frauds. Auditing: A Journal of Practice & Theory 34 (3): 1-22.

    Keywords:
    Brainstorming; task representation; fraud identification; fraud risk assessments
    Purpose of the Study:

    Members of audit engagement teams are required by auditing standards to discuss the client’s susceptibility to potential frauds, usually referred to as “brainstorming.” The purpose of this study is to examine individual auditor brainstorming prior to the brainstorming session of the group. The specific preparation stage prior to a group brainstorming session is an important input to the group session itself and may alter the effectiveness of the subsequent group brainstorming session. The authors of the study predict that a sequential unpacking approach (consideration of fraud categories one by one) to identifying potential fraud improves the quantity and quality of potential frauds identified at both the individual brainstorming stage and the group brainstorming stage.

    Design/Method/ Approach:

    The experimental evidence was collected prior to 2013 at either the Melbourne or the Sydney office of a Big 4 firm in Australia. The experimental design was a 2 x 1 between-subjects design with task representation manipulated as sequential unpacking (categories considered one by one) or simultaneous unpacking (categories considered at once). Auditor participants included seniors, assistant managers, and managers with an overall average of 4.83 years of audit experience.

    Findings:
    • The authors find that sequential unpacking improves auditor performance at the individual brainstorming stage compared to simultaneous unpacking.
    • The authors find that auditors in the sequential unpacking treatment tend to distribute identified potential frauds across categories more evenly than those in the simultaneous unpacking treatment.
    • The authors find the benefits of sequential unpacking to extend beyond individual brainstorming to the group brainstorming session.
    • The authors find that the perceived likelihood of fraud is lower for auditors in the sequential unpacking treatment than those in the simultaneous unpacking treatment.
    Category:
    Audit Team Composition, Auditor Judgment, Risk & Risk Management - Including Fraud Risk
    Sub-category:
    Group Decision-Making, SAS No. 99 Brainstorming – effectiveness