AN EMPIRICAL INVESTIGATION OF THE EFFECTS ON INTERNAL AUDITORS' AUDIT PLANNING DECISIONS ATTRIBUTABLE TO THE AVAILABILITY OF REGRESSION ANALYSIS DATA AS ANALYTICAL REVIEW EVIDENC

Previous literature suggests that regression analysis is capable by providing superior analytical review information to those techniques currently employed in practice. It is further suggested that this superior information can be used to produce more effective and/or efficient audits through its impact on audit planning decisions. However, since auditing is a complex task requiring auditors to use many sources of evidence, it is not readily apparant that the superior analytical review information generated by using regression analysis would alter planning decision significantly enough to justify its cost.;This thesis examined how the data provided by using regression analysis for analytical reviews impacts in internal auditors' planning decision. The study consisted of a role playing experiment using 36 practicing internal auditors. Each subject was asked to make various planning decisions for six different audit cases. Three hypotheses were examined: (1) Whether there is a main effect attributable to the level of the analytical review information. (2) Whether there is an interaction effect between the level of analytical review information and the availability of regression analysis findings. (3) Whether there is a main effect attributable to only the availability of regression analysis findings. ANOVA, rank transformed ANOVA, and categorical analysis using GSK methodology were used to test the data.;The level of the analytical review information was found to have a significant effect on all of the decisions examined. The interaction between the level of the information and the availability of regression analysis findings had a significant impact on two of the four decisions. These findings support the arguments favoring the use of regression analysis for analytical reviews. The availability of regression analysis findings alone, versus ratio analysis findings, did not have a significant effect on any of the decisions. This finding is consistent with the arguments favoring the use of regression analysis since a main effect would indicate that, regardless of the information content, regression analysis type findings always cause auditors to increase (decrease) the planned audit scope.