Enhancing auditors' critical thinking in audits of complex estimates
Accounting, Organizations and Society, vol.
Audit practitioners, standards, and regulators continually emphasize the importance of professional
judgment in the audit of complex processes and financial estimates. Despite this increasing call for more
thoughtful analysis, research and inspection reports seem to suggest that auditors tend to make
mechanistic audit decisions in such situations. This experiment evaluates auditor participants' improved
application of professional judgment in the audit of complex estimates when taught a specific critical
thinking methodology from system dynamics. Results indicate that emphasizing the use of professional
judgment is not sufficient to decrease auditors' mechanistic mentality. As expected, however, auditors
primed to take a systems-thinking perspective are better able to evaluate the complexity of the situation
and to more effectively apply professional judgment. These results suggest that the goal of improving
professional judgment can be achieved with an underlying change to the way auditors think.