Effect of Trust between the Time Pressure and Complexity in Judging and Decision-Making in Auditing
Peer Review Report
Main Article Content
Cleston Alexandre dos Santos
Paulo Roberto da Cunha
Abstract
Objective: the study aimed to assess the moderating effect of confidence in the joint influence of time pressure and complexity in judgment and decision-making (JDM) in auditing. The behavioral decision theory (BDT) was used from the perspective of the anchoring heuristic. Methods: as a method, the 2x2x2 experiment was used with a final sample of 126 independent auditors. For analysis, the t-test and multiple linear regressions were used. Results: the findings allow us to infer that factors such as trust, time pressure, and complexity, individually and jointly, influence JDM. The study showed that trust moderates the joint influence of time pressure and complexity on JDM. Time pressure and task complexity negatively influence JDM, but when including trust as a moderating factor, the effect of time pressure and complexity is mitigated, reducing the auditor’s difficulties and uncertainties in JDM. Conclusion: the study contributes to BDT, moving academic research toward understanding the interrelationships between personal, environmental, and task factors. It also contributes by presenting evidence that there is a need for considering and observing the effects generated by the factors altogether, in order to contribute to improving the quality of the audit.
Downloads
Download data is not yet available.
Download data is not yet available.
Article Details
How to Cite
Santos, C. A. dos, & Cunha, P. R. da. (2021). Effect of Trust between the Time Pressure and Complexity in Judging and Decision-Making in Auditing. Journal of Contemporary Administration, 25(5), e200037. https://doi.org/10.1590/1982-7849rac2021200037.en
Section
Articles
This work is licensed under a Creative Commons Attribution 4.0 International License.
Since mid-February of 2023, the authors retain the copyright relating to their article and grant the journal RAC, from ANPAD, the right of first publication, with the work simultaneously licensed under the Creative Commons Attribution 4.0 International license (CC BY 4.0), as stated in the article’s PDF document. This license provides that the article published can be shared (allows you to copy and redistribute the material in any medium or format) and adapted (allows you to remix, transform, and create from the material for any purpose, even commercial) by anyone.
After article acceptance, the authors must sign a Term of Authorization for Publication, which is sent to the authors by e-mail for electronic signature before publication.
References
Aguiar, A. B. (2017). Pesquisa experimental em contabilidade: Propósito, desenho e execução. Advances in Scientific and Applied Accounting, 10(2), 224-244. https://doi.org/10.14392/ASAA.2017100206
Alissa, W., Capkun, V., Jeanjean, T., & Suca, N. (2014). An empirical investigation of the impact of audit and auditor characteristics on auditor performance. Accounting, Organizations and Society, 39(7), 495-510. https://doi.org/10.1016/j.aos.2014.06.003
Anderson, J. C., & Narus, J. A. (1990). A model of distributor firm and manufacturer firm working partnerships. Journal of Marketing, 54(1), 42-58. Retrieved from https://www.jstor.org/stable/1252172?seq=1
Bamber, E. M., & Bylinski, J. H. (1987). The effects of the planning memorandum, time pressure and individual auditor characteristics on audit managers’ review time judgments. Contemporary Accounting Research, 4(1), 127-143. https://doi.org/10.1111/j.1911-3846.1987.tb00659.x
Bedard, J. C., & Wright, A. M. (1994). The functionality of decision heuristics: Reliance on prior audit adjustments in evidential planning. Behavioral Research in Accounting, 6(Supplement), 62-89.
Bonner, S. E. (1994). A model of the effects of audit task complexity. Accounting, Organizations and Society, 19(3), 213-234. https://doi.org/10.1016/0361-3682(94)90033-7
Bonner, S. E. (1999). Judgment and decision-making research in accounting. Accounting Horizons, 13(4), 385-398. Retrieved from https://www.marshall.usc.edu/sites/default/files/sbonner/intellcont/BonnerJDM1999-1.pdf
Campbell, D. J. (1988). Task complexity: A review and analysis. Academy of Management Review, 13(1), 40-52. https://doi.org/10.5465/AMR.1988.4306775
Chung, J., & Monroe, G. S. (2001). A research note on the effects of gender and task complexity on an audit judgment. Behavioral Research in Accounting, 13(1), 111-125. https://doi.org/10.2308/bria.2001.13.1.111
Cohen, M., & Avila, M. G. (2018). O excesso de correspondência: um experimento com auditores no contexto brasileiro. Contabilidade Vista & Revista, 29(2), 1-17. https://doi.org/10.22561/cvr.v29i2.3063
Dalal, R. S., & Bonaccio, S. (2010). What types of advice do decision-makers prefer? Organizational Behavior and Human Decision Processes, 112(1), 11-23. https://doi.org/10.1016/j.obhdp.2009.11.007
DeZoort, F. T., Hermanson, D. R., & Houston, R. W. (2003). Audit committee support for auditors: The effects of materiality justification and accounting precision. Journal of Accounting and Public Policy, 22(2), 175-199. https://doi.org/10.1016/S0278-4254(03)00007-3
DeZoort, T., Harrison, P., & Taylor, M. (2006). Accountability and auditors’ materiality judgments: The effects of differential pressure strength on conservatism, variability, and effort. Accounting, Organizations and Society, 31(4-5), 373-390. https://doi.org/10.1016/j.aos.2005.09.001
Greene, W. H. (2012). Econometric analysis (7th ed). New Jersey: Prentice Hall.
Grenier, J. H., Reffett, A., Simon, C. A., & Warne, R. C. (2018). Researching juror judgment and decision making in cases of alleged auditor negligence: A toolkit for new scholars. Behavioral Research in Accounting, 30(1), 99-110. https://doi.org/10.2308/bria-51878
Gundry, L. C., & Liyanarachchi, G. A. (2007). Time budget pressure, auditors’ personality type, and the incidence of reduced audit quality practices. Pacific Accounting Review, 19(2), 125-152. https://doi.org/10.1108/01140580710819898
Hair, J. F. Jr., Black, W. C., Babin, B. J., Anderson, R.E., & Tatham, R.L. (2009). Análise multivariada de dados (6th ed). Porto Alegre: Bookman.
Han, J., Jamal, K., & Tan, H. T. (2011). Auditors’ overconfidence in predicting the technical knowledge of superiors and subordinates. Auditing: A Journal of Practice & Theory, 30(1), 101-119. https://doi.org/10.2308/aud.2011.30.1.101
Harvey, N., & Fischer, I. (1997). Taking advice: Accepting help, improving judgment, and sharing responsibility. Organizational Behavior and Human Decision Processes, 70(2), 117-133. https://doi.org/10.1006/obhd.1997.2697
Hastie, R. (2001). Problems for judgment and decision making. Review of Psychology, 52(1), 653-683. https://doi.org/10.1146/annurev.psych.52.1.653
Houston, R. W., Peters, M. F., & Pratt, J. H. (1999). The audit risk model, business risk and audit-planning decisions. The Accounting Review, 74(3), 281-298. Retrieved from https://www.jstor.org/stable/248489?seq=1
Kadous, K., Leiby, J., & Peecher, M. E. (2013). How do auditors weight informal contrary advice? The joint influence of advisor social bond and advice justifiability. The Accounting Review, 88(6), 2061-2087. https://doi.org/10.2308/accr-50529
Kahneman, D. (1973). Attention and effort. Englewood Cliffs, NJ: Prentice-Hall.
Kennedy, J., Kleinmuntz, D. N., & Peecher, M. E. (1997). Determinants of the justifiability of performance in ill-structured audit tasks. Journal of Accounting Research, 35, 105-123. Retrieved from https://www.jstor.org/stable/2491456?seq=1
Kennedy, P. (1998). A guide to econometrics (4th ed). Oxford: MIT Press.
KPMG, Glover, S. M., & Prawitt, D. F. (2012). Enhancing board oversight: Avoiding judgment traps and biases. New York, NY: COSO.
Libby, R., & Lipe, M. (1992). Incentive effects and the cognitive processes involved in accounting judgments. Journal of Accounting Research, 30(2), 249-273. Retrieved from https://www.jstor.org/stable/2491126?seq=1
Libby, R., & Luft, J. (1993). Determinants of judgment performance in accounting settings: Ability, knowledge, motivation, and environment. Accounting, Organizations and Society, 18(5), 425-450. https://doi.org/10.1016/0361-3682(93)90040-D
Mala, R., & Chand, P. (2015). Judgment and decision‐making research in auditing and accounting: future research implications of person, task, and environment perspective. Accounting Perspectives, 14(1), 1-50. https://doi.org/10.1111/1911-3838.12040
Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of Management Review, 20(3), 709-734. https://doi.org/10.2307/258792
Mohd-Sanusi, Z., & Mohd-Iskandar, T. (2006). Audit judgment performance: Assessing the effect of performance incentives, effort and task complexity. Managerial Auditing Journal, 22(1), 34-52. https://doi.org/10.1108/02686900710715639
Nalda, A. L., Guillen, M., & Pechuan, I. G. (2016). The influence of ability, benevolence, and integrity in trust between managers and subordinates: The role of ethical reasoning. Business Ethics: A European Review, 25(4), 556-576. https://doi.org/10.1111/beer.12117
Nelson, M., & Tan, H. T. (2005). Judgment and decision making research in auditing: A task, person, and interpersonal interaction perspective. Auditing: A Journal of Practice & Theory, 24(s-1), 41-71. https://doi.org/10.2308/aud.2005.24.s-1.41
Newman, D. P., Patterson, E. R., & Smith, J. R. (2005). The role of auditing in investor protection. The Accounting Review, 80(1), 289-313. Retrieved from https://www.jstor.org/stable/4093170?seq=1
Ojo, M. (2008). The role of the external auditor in the regulation and supervision of the UK banking system. Journal of Corporate Ownership and Control, 5(4), 1-20. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1408612
Payne, J. W., Bettman, J. R., & Johnson, E. J. (1992). Behavioral decision research: A constructive processing perspective. Annual Review of Psychology, 43(1), 87-131. https://doi.org/10.1146/annurev.ps.43.020192.000511
Pierce, B., & Sweeney, B. (2004). Cost–quality conflict in audit firms: An empirical investigation. European Accounting Review, 13(3), 415-441. https://doi.org/10.1080/0963818042000216794
Plous, S. (1993). The Psychology of judgment and decision-making. New York: Mcgraw-Hill Book Company.
Smith, M. (2003). Research methods in accounting. London: Sage.
Soll, J. B., & Larrick, R. P. (2009). Strategies for revising judgment: How (and how well) people use others’ opinions. Journal of Experimental Psychology: Learning, Memory, and Cognition, 35(3), 780-805. https://doi.org/10.1037/a0015145
Svanström, T. (2016). Time pressure, training activities and dysfunctional auditor behaviour: evidence from small audit firms. International Journal of Auditing, 20(1), 42-51. https://doi.org/10.1111/ijau.12054
Tan, H.T, & Kao, A (1999). Accountability effects on auditors’ performance: The influence of knowledge, problem-solving ability, and task complexity. Accounting Research, 37(1), 209-223. https://doi.org/10.2307/2491404
Trotman, K. T., Tan, H. C., & Ang, N. (2011). Fifty‐year overview of judgment and decision‐making research in accounting. Accounting & Finance, 51(1), 278-360. https://doi.org/10.1111/j.1467-629X.2010.00398.x
Trotman, K. T., Bauer, T. D., & Humphreys, K. A. (2015). Group judgment and decision making in auditing: Past and future research. Accounting, Organizations and Society, 47, 56-72. https://doi.org/10.1016/j.aos.2015.09.004
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124-1131. https://doi.org/10.1126/science.185.4157.1124
Yankova, K. (2015). The influence of information order effects and trait professional skepticism on auditors’ belief revisions: A Theoretical and empirical analysis. Auditing and Accounting Studies. Duisburg: Springer.
Yeo, G., & Neal, A. (2008). Subjective cognitive effort: A model of states, traits, and time. Journal of Applied Psychology, 93(3), 617-631. https://doi.org/10.1037/0021-9010.93.3.617
Alissa, W., Capkun, V., Jeanjean, T., & Suca, N. (2014). An empirical investigation of the impact of audit and auditor characteristics on auditor performance. Accounting, Organizations and Society, 39(7), 495-510. https://doi.org/10.1016/j.aos.2014.06.003
Anderson, J. C., & Narus, J. A. (1990). A model of distributor firm and manufacturer firm working partnerships. Journal of Marketing, 54(1), 42-58. Retrieved from https://www.jstor.org/stable/1252172?seq=1
Bamber, E. M., & Bylinski, J. H. (1987). The effects of the planning memorandum, time pressure and individual auditor characteristics on audit managers’ review time judgments. Contemporary Accounting Research, 4(1), 127-143. https://doi.org/10.1111/j.1911-3846.1987.tb00659.x
Bedard, J. C., & Wright, A. M. (1994). The functionality of decision heuristics: Reliance on prior audit adjustments in evidential planning. Behavioral Research in Accounting, 6(Supplement), 62-89.
Bonner, S. E. (1994). A model of the effects of audit task complexity. Accounting, Organizations and Society, 19(3), 213-234. https://doi.org/10.1016/0361-3682(94)90033-7
Bonner, S. E. (1999). Judgment and decision-making research in accounting. Accounting Horizons, 13(4), 385-398. Retrieved from https://www.marshall.usc.edu/sites/default/files/sbonner/intellcont/BonnerJDM1999-1.pdf
Campbell, D. J. (1988). Task complexity: A review and analysis. Academy of Management Review, 13(1), 40-52. https://doi.org/10.5465/AMR.1988.4306775
Chung, J., & Monroe, G. S. (2001). A research note on the effects of gender and task complexity on an audit judgment. Behavioral Research in Accounting, 13(1), 111-125. https://doi.org/10.2308/bria.2001.13.1.111
Cohen, M., & Avila, M. G. (2018). O excesso de correspondência: um experimento com auditores no contexto brasileiro. Contabilidade Vista & Revista, 29(2), 1-17. https://doi.org/10.22561/cvr.v29i2.3063
Dalal, R. S., & Bonaccio, S. (2010). What types of advice do decision-makers prefer? Organizational Behavior and Human Decision Processes, 112(1), 11-23. https://doi.org/10.1016/j.obhdp.2009.11.007
DeZoort, F. T., Hermanson, D. R., & Houston, R. W. (2003). Audit committee support for auditors: The effects of materiality justification and accounting precision. Journal of Accounting and Public Policy, 22(2), 175-199. https://doi.org/10.1016/S0278-4254(03)00007-3
DeZoort, T., Harrison, P., & Taylor, M. (2006). Accountability and auditors’ materiality judgments: The effects of differential pressure strength on conservatism, variability, and effort. Accounting, Organizations and Society, 31(4-5), 373-390. https://doi.org/10.1016/j.aos.2005.09.001
Greene, W. H. (2012). Econometric analysis (7th ed). New Jersey: Prentice Hall.
Grenier, J. H., Reffett, A., Simon, C. A., & Warne, R. C. (2018). Researching juror judgment and decision making in cases of alleged auditor negligence: A toolkit for new scholars. Behavioral Research in Accounting, 30(1), 99-110. https://doi.org/10.2308/bria-51878
Gundry, L. C., & Liyanarachchi, G. A. (2007). Time budget pressure, auditors’ personality type, and the incidence of reduced audit quality practices. Pacific Accounting Review, 19(2), 125-152. https://doi.org/10.1108/01140580710819898
Hair, J. F. Jr., Black, W. C., Babin, B. J., Anderson, R.E., & Tatham, R.L. (2009). Análise multivariada de dados (6th ed). Porto Alegre: Bookman.
Han, J., Jamal, K., & Tan, H. T. (2011). Auditors’ overconfidence in predicting the technical knowledge of superiors and subordinates. Auditing: A Journal of Practice & Theory, 30(1), 101-119. https://doi.org/10.2308/aud.2011.30.1.101
Harvey, N., & Fischer, I. (1997). Taking advice: Accepting help, improving judgment, and sharing responsibility. Organizational Behavior and Human Decision Processes, 70(2), 117-133. https://doi.org/10.1006/obhd.1997.2697
Hastie, R. (2001). Problems for judgment and decision making. Review of Psychology, 52(1), 653-683. https://doi.org/10.1146/annurev.psych.52.1.653
Houston, R. W., Peters, M. F., & Pratt, J. H. (1999). The audit risk model, business risk and audit-planning decisions. The Accounting Review, 74(3), 281-298. Retrieved from https://www.jstor.org/stable/248489?seq=1
Kadous, K., Leiby, J., & Peecher, M. E. (2013). How do auditors weight informal contrary advice? The joint influence of advisor social bond and advice justifiability. The Accounting Review, 88(6), 2061-2087. https://doi.org/10.2308/accr-50529
Kahneman, D. (1973). Attention and effort. Englewood Cliffs, NJ: Prentice-Hall.
Kennedy, J., Kleinmuntz, D. N., & Peecher, M. E. (1997). Determinants of the justifiability of performance in ill-structured audit tasks. Journal of Accounting Research, 35, 105-123. Retrieved from https://www.jstor.org/stable/2491456?seq=1
Kennedy, P. (1998). A guide to econometrics (4th ed). Oxford: MIT Press.
KPMG, Glover, S. M., & Prawitt, D. F. (2012). Enhancing board oversight: Avoiding judgment traps and biases. New York, NY: COSO.
Libby, R., & Lipe, M. (1992). Incentive effects and the cognitive processes involved in accounting judgments. Journal of Accounting Research, 30(2), 249-273. Retrieved from https://www.jstor.org/stable/2491126?seq=1
Libby, R., & Luft, J. (1993). Determinants of judgment performance in accounting settings: Ability, knowledge, motivation, and environment. Accounting, Organizations and Society, 18(5), 425-450. https://doi.org/10.1016/0361-3682(93)90040-D
Mala, R., & Chand, P. (2015). Judgment and decision‐making research in auditing and accounting: future research implications of person, task, and environment perspective. Accounting Perspectives, 14(1), 1-50. https://doi.org/10.1111/1911-3838.12040
Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of Management Review, 20(3), 709-734. https://doi.org/10.2307/258792
Mohd-Sanusi, Z., & Mohd-Iskandar, T. (2006). Audit judgment performance: Assessing the effect of performance incentives, effort and task complexity. Managerial Auditing Journal, 22(1), 34-52. https://doi.org/10.1108/02686900710715639
Nalda, A. L., Guillen, M., & Pechuan, I. G. (2016). The influence of ability, benevolence, and integrity in trust between managers and subordinates: The role of ethical reasoning. Business Ethics: A European Review, 25(4), 556-576. https://doi.org/10.1111/beer.12117
Nelson, M., & Tan, H. T. (2005). Judgment and decision making research in auditing: A task, person, and interpersonal interaction perspective. Auditing: A Journal of Practice & Theory, 24(s-1), 41-71. https://doi.org/10.2308/aud.2005.24.s-1.41
Newman, D. P., Patterson, E. R., & Smith, J. R. (2005). The role of auditing in investor protection. The Accounting Review, 80(1), 289-313. Retrieved from https://www.jstor.org/stable/4093170?seq=1
Ojo, M. (2008). The role of the external auditor in the regulation and supervision of the UK banking system. Journal of Corporate Ownership and Control, 5(4), 1-20. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1408612
Payne, J. W., Bettman, J. R., & Johnson, E. J. (1992). Behavioral decision research: A constructive processing perspective. Annual Review of Psychology, 43(1), 87-131. https://doi.org/10.1146/annurev.ps.43.020192.000511
Pierce, B., & Sweeney, B. (2004). Cost–quality conflict in audit firms: An empirical investigation. European Accounting Review, 13(3), 415-441. https://doi.org/10.1080/0963818042000216794
Plous, S. (1993). The Psychology of judgment and decision-making. New York: Mcgraw-Hill Book Company.
Smith, M. (2003). Research methods in accounting. London: Sage.
Soll, J. B., & Larrick, R. P. (2009). Strategies for revising judgment: How (and how well) people use others’ opinions. Journal of Experimental Psychology: Learning, Memory, and Cognition, 35(3), 780-805. https://doi.org/10.1037/a0015145
Svanström, T. (2016). Time pressure, training activities and dysfunctional auditor behaviour: evidence from small audit firms. International Journal of Auditing, 20(1), 42-51. https://doi.org/10.1111/ijau.12054
Tan, H.T, & Kao, A (1999). Accountability effects on auditors’ performance: The influence of knowledge, problem-solving ability, and task complexity. Accounting Research, 37(1), 209-223. https://doi.org/10.2307/2491404
Trotman, K. T., Tan, H. C., & Ang, N. (2011). Fifty‐year overview of judgment and decision‐making research in accounting. Accounting & Finance, 51(1), 278-360. https://doi.org/10.1111/j.1467-629X.2010.00398.x
Trotman, K. T., Bauer, T. D., & Humphreys, K. A. (2015). Group judgment and decision making in auditing: Past and future research. Accounting, Organizations and Society, 47, 56-72. https://doi.org/10.1016/j.aos.2015.09.004
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124-1131. https://doi.org/10.1126/science.185.4157.1124
Yankova, K. (2015). The influence of information order effects and trait professional skepticism on auditors’ belief revisions: A Theoretical and empirical analysis. Auditing and Accounting Studies. Duisburg: Springer.
Yeo, G., & Neal, A. (2008). Subjective cognitive effort: A model of states, traits, and time. Journal of Applied Psychology, 93(3), 617-631. https://doi.org/10.1037/0021-9010.93.3.617