Lizabeth A. Austen
(), Aasmund Eilifsen
() and William F. Messier Jr.
Lizabeth A. Austen: Department of Accounting, College of Business, East Carolina University, Postal: Department of Accounting, College of Business, East Carolina University, 332 Slay Hall, Greenville, North Carolina 27858-4353, USA
Aasmund Eilifsen: Dept. of Accounting, Auditing and Law, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Accounting, Auditing and Law, Helleveien 30, N-5045 Bergen, Norway
William F. Messier Jr.: School of Accountancy, J. Mack Robinson College of Business, Georgia State University, Postal: School of Accountancy , J. Mack Robinson College of Business, Georgia State University , 35 Broad Street, 5th Floor, Atlanta, GA 30302-4050 , USA
Abstract: This paper presents information on the causes and detection of misstatements by auditors and the relationship of those misstatements with information technology (IT). The last major study of misstatements and IT used data that was gathered in 1988. In the intervening period, there have been significant changes in IT, possibly altering the error generation and detection process. Two research questions related to detected misstatements and the effect of IT are examined. The six largest public accounting firms in Norway provided data from 58 engagements. We find that (1) the major causes of misstatements were missing, poorly designed, and improperly applied controls; inadequate methods used to select, train and supervise accounting personnel; and an excessive workload for accounting personnel, (2) missing and poorly designed controls, and excessive workload for accounting personnel were more likely to be causes of misstatements in computerized business processes than those that were not computerized, and (3) the increased use of tests of details over attention directing procedures on audits appears to result from auditors deciding that it is more effective or efficient to conduct such tests than rely upon IT controls. These findings have important implications for both audit practitioners and researchers.
26 pages, March 12, 2004
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