| This dissertation tested whether the audit review process for working papers can help reduce the risk of Type II errors by offsetting the decision making biases encountered when performing analytical procedures. A Type II error occurs when an auditor incorrectly accepts a client explanation indicating that no error or irregularity has occurred, when, in fact, one or the other has happened. The impact of two external cues, the instruction to write review notes and the provision of a cognitive decision aid to enhance memory retrieval, is examined between groups of audit reviewers with specialized knowledge in the financial services industry.;The results indicate that the decision aid reduces the risk of Type II errors; however, the instruction to provide review notes increases the risk of Type II errors. Using Shiffren and Schneider's (1977) information processing model and Kahneman's (1977) capacity model of attention, these effects might have occurred because of the the reviewers' limited attentional capacity, which is needed in order to consider the different aspects of the review process. Reviewers who performed the review note process might have experienced an excessive strain on capacity that increased the risk of committing Type II errors. Reviewers who were provided a decision aid might have experienced capacity relief that decreased the risk of committing Type II errors. These effects were offset when reviewers are exposed to both a cognitive decision aid and instruction to provide written review notes.;Also, the manipulations had a stronger impact on reviewers when their responses indicated that they were more likely to commit Type II errors a priori. These reviewers were more concerned with performing costly, additional procedures and other aspects of the review besides Type II errors (documentation issues, cohesiveness of working papers, etc.). |
