The effect of intuitive- versus deliberative-processing and linguistic versus visual information on auditors’ risk assessment

Purpose The purpose of this study is to examine how intuitive versus deliberative information-processing and linguistic versus visual information influences auditors’ judgement and decision-making (JDM) in a risk assessment. The authors focused on: assessing the risk of material misstatement (RoMM), identifying and documenting risks and controls and task completion time. Design/methodology/approach The authors conducted an experiment with 284 practicing auditors, manipulating processing mode and presentation format. Participants reviewed a case which they assessed as “realistic.” Hypotheses were tested using ANCOVA analyses. Findings The authors found that intuitive processing led to higher RoMM estimates than deliberative processing – but only in the linguistic format. No difference appeared in the visual format, contrary to expectations. As expected, auditors using intuitive information-processing completed the task faster than those using deliberative-processing but identified fewer risks and controls. Surprisingly, this effect was not dependent on the presentation format. Originality/value The authors contribute to prior studies (Fuller and Kaplan, 2004; Griffith et al., 2021; Wolfe et al., 2020) by showing that intuitive and deliberative processing have distinct effects not only between tasks but also within a single task. Hamdam et al. (2022) theorized that data visualization might enhance intuitive processing in auditor JDM. To the best of the authors’ knowledge, the current study is among the first to test this premise empirically in the auditing context. Finally, this study informs firms and regulators that while deliberative processing may improve risk identification and documentation, it does not necessarily affect perceived client risk.