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.