An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Christopher P. Agoglia
Drexel University

Cathy Beaudoin
Drexel University

George T Tsakumis
Drexel University

Abstract: While the structure of a documentation memo has been shown to affect overall assessments of fraud risk, prior research has not addressed its effect on auditors’ ability to identify significant control weaknesses. We investigate whether documentation structure can impact auditors’ ability to identify significant control weaknesses and whether reviewer experience moderates this effect. Results indicate reviewed auditors who are required to document components of their fraud assessments provided more favorable (and lower quality) assessments of control weaknesses than those using either supporting or balanced documentation. Further, reviewer task specific experience moderated the effect of documentation structure on reviewers’ identification of control weaknesses (experienced reviewers are better able to overcome lower quality documentation than less experienced reviewers). These results provide support for new regulations emphasizing the role of experience during control assessment.

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