Using Decision Aids to Improve Auditors' Conditional Probability Judgments

Prior research provides evidence that auditors encounter difficulty in applying the error frequencies they have experienced to judgments of the probability that an audit objective is violated given a particular transaction cycle. This may occur because of a mismatch between the organization of the judgment task (in which transaction cycle is the more important organizing dimension) and the organization of auditors' knowledge (in which audit objective is the more important organizing dimension). We performed an experiment to test the effectiveness of two decision aids in counteracting this difficulty: (1) a checklist-style decision aid which facilitates knowledge retrieval and (2) a decomposition-and-mechanical-aggregation decision aid which facilitates both knowledge retrieval and aggregation. Our results indicate that the checklist aid improved the degree to which auditors' judgments reflected their experienced frequencies to a small degree, but that the mechanical-aggregation aid improved auditors' judgments to a great extent, completely counteracting the effect of the mismatch in dimension importance between task organization and knowledge organization