The Effects of Decision Aid Orientation on Risk Factor Identification and Audit Test Planning

In auditing, risk management involves identifying client facts or issues that may affect engagement risk, and planning evidence‐gathering strategies accordingly. The purpose of this paper is to examine whether auditors' identification of risk factors and planning of audit tests is affected by decision aid orientation, i.e., a “negative” focus wherein client risk and its consequences are emphasized, or a “positive” focus where such factors are not emphasized. Specifically, we expect that auditors will identify more risk factors using a negatively oriented risk identification decision aid, but only when engagement risk is relatively high. We address this issue in the context of auditors' knowledge of actual clients, manipulating decision aid orientation as negative or positive in a matched‐pair design. Results show that auditors using the negative decision aid orientation identify more risk factors than do those using a positive orientation, for their higher‐risk clients. We also find that decisions to appl...

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