Configural information processing in auditing: The role of domain-specific knowledge.

Abstract A prominent stream of audit judgment research employs the policy-capturing paradigm and uses analysis of variance (ANOVA) to construct mathematical models of individual auditors' evaluations of internal control. Based on these "as if" representations, it may appear that auditors evaluate control systems by independently processing individual controls as opposed to the pattern (or configuration) of control features. indeed, with a few noteworthy exceptions, virtually no evidence has been reported of auditors configurally processing information while evaluating controls or assessing control risk. One such exception is a recent paper by Brown and Solomon (1990). Therein, it was suggested that judicious usage of context- and task-specific knowledge is necessary to guide the development of experiments capable of detecting configural information processing. The present study generalizes the concept that auditors will exhibit configural information processing in situations in which domain-specific knowledge implies that it is appropriate. Two experiments using auditor- subjects and investigating configural information processing are described. The task of the first experiment is assessment of account misstatement risk given evidence produced by specified substantive audit procedures; and the task of the second experiment is such assessment given the results of specified analytical audit planning procedures. Domain-specific knowledge suggests configural information processing strategies that will be manifest (within ANOVA) as a compensatory-form ordinal interaction for the former task and as a disordinal interaction for the later, task. Experimental results are consistent with expectations and are especially striking for the second experiment. Twenty of the second experiment's 22 auditor-subjects apparently used the predicted configural strategy, and ANOVA models of these auditors' risk assessments attributed on average about 40 percent of total judgment variation to the single predicted interaction of analytical procedure results (trial balance figure comparisons). `An implication of these results, in' concert with Brown and Solomon (1990), is that auditor information processing is more' complex than has' been reported by prior studies. That is, across a wide variety of tasks, many auditors apparently are able to configurally process information. The results also Imply considerable between-task and between-auditor con- figural processing differences (magnitude and prevalence), which anecdotal evidence suggests is due to domain-specific factors. Two factors, the rate-of-substitution between information cues (substitutable audit procedures or controls) and when auditors learn the domain-specific knowledge requisite for configural information processing, seem particularly important and could be worthwhile foci for future research.