The external auditor's reliance decision on the internal audit function: A test of cognitive style and its role in the reliance decision

Prior research of auditors' reliance on the internal audit function (IAF) provided conflicting evidence on the factors important to auditors' decisions and on the degree of consensus. The primary purposes of this study were to use an objective data gathering technique to determine the important IAF factors in auditors' reliance decisions and to determine the effect of auditors' cognitive styles on their reliance decisions and on the degree of consensus. A secondary objective was to determine if auditors used IAF factors presented in SAS No. 65 that had not been previously researched.;A computer tracing program was developed and used in conjunction with cases to determine the IAF factors that auditors considered in their decisions. The program recorded the information viewed, the order in which the information was viewed, and the length of time that auditors spent viewing the information without their knowledge of its existence. This information was compiled and tested for differences between auditors with different cognitive styles.;Based on their Group Embedded Figures Test and Figural Intersections Test scores, auditors were divided into four cognitive style groups. These groups' reliance decisions were tested for differences, and the degree of consensus among the groups was determined.;This study found that auditors with different cognitive styles made significantly different reliance decisions and that consensus was greater among auditors with similar cognitive styles. This study also showed that auditors with different cognitive styles used different IAF factors in their reliance decisions.;Interestingly, factors used by auditors in this study with one particular cognitive style were consistent with some prior studies, and factors used by auditors with another cognitive style were consistent with other prior studies. These findings suggest that perhaps prior research provided conflicting evidence because the auditors tested in prior studies had different cognitive styles, which were not accounted for in the analysis of their decisions.;This research also found that auditors used several IAF factors mentioned in SAS No. 65, suggesting that the Auditing Standards Board correctly identified factors important to an auditor's reliance decision but that had not been identified in prior research.