The impact of accountability on the processing of nondiagnostic evidence

Abstract

Previous research on auditors’ processing of nondiagnostic evidence demonstrates the existence of a dilution effect – the tendency to underreact to diagnostic information when accompanied by nondiagnostic information. Prior audit studies find that accountability, a prominent feature in audit settings, does not affect the magnitude of the dilution effect exhibited by auditors. Based on more recent theories about accountability, this line of research is extended by exploring whether (1) the dilution effect previously identified is a robust phenomenon that can be replicated, (2) accountability has an impact on both the frequency and magnitude of dilution effect, and (3) the impact of accountability on both the frequency and magnitude of dilution effect is conditional on the degree of accountability experienced by the participants through various reporting levels. The experimental results from a sample of internal auditors provide evidence supporting the first two propositions; however, the results related to reporting levels are not significant. A discussion of the implications of these findings for audit research and practice follows.

Citation

Favere-Marchesi, M. and Pincus, K.V. (2006), "The impact of accountability on the processing of nondiagnostic evidence", Arnold, V., Clinton, B.D., Luckett, P., Roberts, R., Wolfe, C. and Wright, S. (Ed.) Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 9), Emerald Group Publishing Limited, Leeds, pp. 1-25. https://doi.org/10.1016/S1475-1488(06)09001-6