Cue Usage in Financial Statement Fraud Risk Assessments: Effects of Technical Knowledge and Decision Aid Use

• Main Author: SEOW, Jean Lin
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2009
• Subjects: Fraud risk assessments; directors; technical; knowledge; decision aids; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/589; https://ink.library.smu.edu.sg/context/soa_research/article/1588/viewcontent/Cue_usage_in_financial_statement_fraud_risk_assessments__effects_of_technical_av.pdf
• Institution: Singapore Management University

This paper investigates the effects of technical knowledge and decision aid use on financial statement fraud risk assessments made by directors and students. More extreme fraud risk assessments are made when participants identify and process larger (smaller) numbers of diagnostic (non-diagnostic) factors, with technical knowledge driving diagnostic factor identification. Significant decision aid-technical knowledge effects are also found; decision aid use has a detrimental effect on high-knowledge directors while improving performance in inexperienced, low-knowledge students. These results suggest that although decision aids can afford gains in performance in inexperienced users, they can have unintended and/or paradoxical behavioural effects on experienced users.