Determinants of
Judgment Performance
By:
Lea Sulaiman Saputra
D1555
Auditor’s Ability
Whenever we seek to make a judgment
about the level of asset safeguarding or
data integrity maintained, we need to
recognize that as humans we have various
inheren cognitive strengths and limitations.
Our cognitive abilities affect the quality of
the judgments we will make.
Unfortunately, research has also shown that
we use heuristics that sometimes do not
lead to high quality judgment. On the one
hand, these heuristics play a useful role in
reducing the costs associated with
decision making. On the other hand, they
can also lead to decision making biases
that undermine the quality of our audit
judgment.
Auditor’s Knowledge
Although the knowledge acquired from both
sources overlaps to some extent,
important differences also arise.
Probably, however, you need to have direct
experience of these institutions to have
well developed knowledge of the inherent
risks associated with them.
The education and training and the
experience received can also be general
or specific.
You might also have carried out a large
number of audits of these types of
financial institution.
As we might expect, both general and specific knowledge
play a part in determining the quality of audit judgments.
For many audits, the level of general knowledge could
be an important determinant of the decision quality when
making asset safeguarding and data integrity judgments.
For example, the organization we are auditing might not
be complex and it might also be representative of many
other types of organizations we are auditing increases,
however, the complexity associated with the judgments
we must make also increases. As a result, we need to
have more specialized knowledge if we are to make high
quality judgments.
Whenever auditors make the asset safeguarding and data integrity
evaluation judgment, therefore, they should evaluate whether their
knowledge is appropriate for the judgments they must make. They
will require some level of general knowledge to e competent to make
a judgment. In some cases, however, auditors might also require a
high level of specialized knowledge to be able to make a competent
judgment. Moreover, auditors must recognize that the knowledge
they need has to be specialized in terms of the particular audit they
are undertaking. Many research studies have shown that human
are often expert only in a fairly narrow domain.
If auditors conclude they do not seek to find someone who is
competent to make the judgment.
Audit Environment
The audit environment describes the context
in which auditors must make their
evaluation judgment. Potentially, many
characteristics of the environment might
bear on auditor judgment processes.
The firs is the audit technology that auditors can use to
guide and support their audit judgment. We are using the
term here in a broad sense. It includes elements like the
internal control questionnaires used to structure the
evaluation of internal controls, the audit standards and
policies used to guide the conduct of audits, the expert
systems used to help in evaluations, the way we
structure audit teams to try to improve the quality of the
audit and the ways we document our findings to try to
facilitate our making a final judgment. Auditors use this
technology to try to overcome some of the deficiencies in
their judgment processes and to extend their cognitive
abilities.
The second environmental characteristic is group
processes. One of the interesting features of the audit
profession in that is uses groups extensively during the
conduct of an audit; it does not rely on individual persons
to make judgments. Unfortunately, research in auditing
is only just beginning to provide us with some
understanding of why group processes in auditing might
be useful and why, therefore, auditors are likely to have
incorporated group processes into their work. For
example, interactions within a group might enable the
members of the group to recall better the audit evidence
that has been collected and to better evaluate the
importance of this evidence.
Third environmental characteristic is prior
involvement in an audit.
The fourth environmental characteristic is
accountability. Auditors are accountable for their
work in many different ways. For example, they
are accountable to their supervisors and their
clients and they will also be held accountable for
their work under the law. The positive aspect of
accountability is that it should motivate auditors
to try to make high quality judgments whenever
they evaluate asset safeguarding and data
integrity.
Auditor’s Motivation
Auditors need to be mindful of how their
level of motivation can affect the quality of
their decision making processes.