Assessing Risk with Analytical Procedures: Do Systems-Thinking Tools Help Auditors Focus on Diagnostic Patterns?

2011 ◽  
Vol 30 (4) ◽  
pp. 273-283 ◽  
Author(s):  
Ed O'Donnell ◽  
Jon D. Perkins
Keyword(s):  
Laboratory Experiment ◽  
Systems Thinking ◽  
Business Process ◽  
Data Availability ◽  
Analytical Procedures ◽  
Thinking Tools ◽  
Equivalent Diagram

SUMMARY This study investigated whether auditors who used a diagram designed around systems-thinking principles to acquire information for analytical procedures would focus more on patterns of changes in accounts and assess misstatement risk differently than auditors who used an informationally equivalent diagram organized by business-process categories. During a laboratory experiment, experienced auditors performed analytical procedures using one of two alternative diagrams. Participants documented their concerns about misstatement risk and rated the diagnostic relevance of information about patterns of changes in accounts. Auditors who used the systems-thinking tool focused more on diagnostic patterns of fluctuations in accounts and came to different conclusions about risk. Data Availability: Data will be made available by the authors upon request.

Two Decades of Behavioral Research on Analytical Procedures: What Have We Learned?

2012 ◽  
Vol 32 (1) ◽  
pp. 139-181 ◽  
Author(s):  
William F. Messier ◽  
Chad A. Simon ◽  
Jason L. Smith
Keyword(s):  
Analytical Procedure ◽  
Behavioral Research ◽  
Data Availability ◽  
Comprehensive Review ◽  
External Auditors ◽  
The Past ◽  
Considerable Research ◽  
Research Questions ◽  
Analytical Procedures ◽  
Corroborative Evidence

SUMMARY This paper presents a comprehensive review of behavioral research on external auditors' use of analytical procedures published over the past two decades. We frame our review around four phases of the analytical procedures process: develop an expectation, establish a tolerable difference, compare the expectation to the recorded amount and investigate significant differences, and evaluate explanations and corroborative evidence. We find that while considerable research has focused on auditors' performance of the latter phases of the analytical procedures process (i.e., investigate significant differences and evaluate explanations and evidence), relatively less research has focused on the initial phases of the process (i.e., setting expectations and establishing thresholds). We also find that prior research has primarily focused on the preliminary and substantive analytical procedure settings with little research examining auditors' judgments and decisions when using analytical procedures at the overall review stage of the audit engagement. Finally, we summarize the significant findings from research in each phase and provide a number of research questions whose answers could improve our understanding and the performance of analytical procedures. Data Availability: All articles are publicly available.

Systems thinking and business process redesign: An application to the beer game

1993 ◽  
Vol 11 (4) ◽  
pp. 412-423 ◽  
Author(s):  
Ann Van Ackere ◽  
Erik Reimer Larsen ◽  
John D.W. Morecroft
Keyword(s):  
Systems Thinking ◽  
Business Process ◽  
Business Process Redesign ◽  
Process Redesign ◽  
Beer Game

Systems Thinking Tools as Applied to Community-Based Participatory Research

2012 ◽  
Vol 39 (6) ◽  
pp. 745-751 ◽  
Author(s):  
Rhonda BeLue ◽  
Chakema Carmack ◽  
Kyle R. Myers ◽  
Laurie Weinreb-Welch ◽  
Eugene J. Lengerich
Keyword(s):  
Participatory Research ◽  
Systems Thinking ◽  
Community Based Participatory Research ◽  
Community Based ◽  
Thinking Tools

The Effect of Client Lies on Auditor Memory Resistance and False Memory Acceptance

2016 ◽  
Vol 35 (3) ◽  
pp. 33-50 ◽  
Author(s):  
Billy E. Brewster
Keyword(s):  
Laboratory Experiment ◽  
False Memory ◽  
False Memories ◽  
Data Availability ◽  
Misinformation Effect ◽  
Delayed Effect ◽  
Memory Error ◽  
Related Information

SUMMARY In this study, I examine the conditions that moderate auditor resistance toward and susceptibility to believing client-provided lies. In particular, I predict that auditors who cannot directly refute incorrect management explanations with their own evidence-related memories are susceptible to the misinformation effect. This effect describes a phenomenon where an individual recalls false memories, based on client lies, instead of his/her own real memories. I use a laboratory experiment involving professional auditors who must compile industry-related evidence to corroborate an invalid management explanation. As expected, I find that auditors with better-developed evidence memories provide lower evaluations of management credibility and explanation sufficiency when presented with a blatantly incorrect explanation. When subsequently prompted to access the related information, auditors with poorly developed evidence memories give responses that are consistent with management-provided false memories instead of their own previously gathered evidence memories. Auditors identifying the incorrect explanation did not succumb to the misinformation effect and exhibited recall more consistent with their own evidence memories. Overall, results show that client discussion can produce a delayed effect by inducing a form of memory error when the auditors subsequently retrieve evidence stored in their memory. Data Availability: Contact the author for data availability.

The Influence of Business-Process-Focused Audit Support Software on Analytical Procedures Judgments

2003 ◽  
Vol 22 (2) ◽  
pp. 265-279 ◽  
Author(s):  
Ed O'Donnell ◽  
Joseph J. Schultz
Keyword(s):  
Business Process ◽  
Value Chain ◽  
Business Processes ◽  
Public Accounting ◽  
Accounting Firms ◽  
Risk Judgment ◽  
Decision Performance ◽  
Planning Phase ◽  
Analytical Procedures ◽  
Support Software

Some large public accounting firms that emphasize the business risk audit methodology revised their audit support software to organize audit evidence around business process rather than transaction cycle. These business-process-focused (BPF) systems present client information grouped by value chain activities, while firms that use traditional transaction-cycle-focused (TCF) audit support software might group client information primarily by account classification. Our study examines whether the presentation differences between BPF and TCF audit support software influence auditors' risk judgment during planning-phase analytical procedures. In a field experiment, experienced audit seniors performed analytical procedures on case materials containing a variety of seeded risk factors. One group completed the exercise using software organized around the BPF while the other group used software organized around the TCF. Participants who used the BPF system identified more of the seeded risk conditions and assessed misstatement risk at higher levels than did their counterparts who used the TCF system. These findings provide the experimental evidence that audit support software organized around business processes can influence decision performance while conducting planning-phase analytical procedures.

A Framework for Using Dynamic Modeling to Support Lean Sustainment in a Complex Setting

2021 ◽  
pp. 91-110
Author(s):  
Marc Haddad ◽  
Rami Otayek
Keyword(s):  
Systems Thinking ◽  
System Performance ◽  
Demand Uncertainty ◽  
Integrated Approach ◽  
Dynamics Modeling ◽  
Work In Process ◽  
Simulation Results ◽  
Thinking Tools

This chapter proposes a framework for integrating lean and systems thinking tools to explore the dynamics of lean implementations in manufacturing. The value of this integrated approach is in supplementing the operational level principles of lean with the strategic outlook of systems thinking to mitigate adverse impacts of operational complexity on system performance. In particular, the focus of the framework is to enable the sustainment of lean gains in the long-term, a major challenge in manufacturing settings. The application of the framework is illustrated with a case study of a lean implementation for reducing work-in-process (WIP) at a clothing manufacturer dealing with a number of operational complexities such as demand uncertainty, a high product mix and inefficient processes. The case study highlights the usefulness of system dynamics modeling in revealing counterintuitive system behaviors that could compromise the success of the lean initiative. The simulation results demonstrate the application of the framework for sustaining lean implementations in practice.

scholarly journals Systems Thinking and indigenous systems: native contributions to obesity prevention

2018 ◽  
Vol 15 (1) ◽  
pp. 22-30 ◽  
Author(s):  
Ihirangi Heke ◽  
David Rees ◽  
Boyd Swinburn ◽  
Rev Tuikaki Waititi ◽  
Albie Stewart
Keyword(s):  
Systems Thinking ◽  
Obesity Prevention ◽  
Chronic Conditions ◽  
Learning Opportunities ◽  
System Thinking ◽  
Indigenous Populations ◽  
Health Statistics ◽  
Post Colonial ◽  
Thinking Tools ◽  
The Impact

Much has been written about the impact of chronic conditions on post-colonial indigenous populations. Much less, however, has been written about indigenous knowledge and how it may help tackle poor health statistics among indigenous populations. This article describes two approaches to obesity prevention that are grounded in Mātauranga Māori (Māori worldview), both of which challenge the “person-centred” approach so prevalent in Western approaches. These approaches were mapped using Systems Thinking tools, specifically causal loop diagrams, to test whether or not these tools could be used to “translate” indigenous approaches in a way that retained the integrity of their particular worldview and provided a tool to help those communities reflect on their practices in a way that led to new insights. Systems Thinking was found to have many overlaps with Mātauranga Māori, and the use of system thinking tools provided mutually beneficial learning opportunities for both the researchers and the communities involved.

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