Process explanations for performance differences in paper and electronic workpaper review environments

Date of Completion

January 1999


Business Administration, Accounting




The purpose of this dissertation is to investigate the underlying process explanations for observed performance differences across workpaper review environments (paper and electronic) in a due diligence review task. Verbal process traces associated with both accurate and inaccurate judgments in each environment are analyzed to determine what, if any process differences exist across and within environments. ^ In addition to describing the due diligence review task, there are four principal findings. The first two findings help to identify the effect of the electronic environment on accurate performance of this task. Reviewers accurately performing the task in the electronic environment rely more on their short-term memory and elaborate more than reviewers accurately performing the task in the paper environment. Relying on memory and the task of elaboration are cognitively demanding processes. Thus, achieving accuracy is more cognitively demanding in the electronic environment than in the paper environment. ^ Third, the degree to which the reviewers stated goals affected performance only in the paper environment. Stating goals as a greater percentage of total activity was associated with better performance. Fourth, reviewers tended to tie amounts and information between workpapers more in the paper environment. ^ These findings have important practical implications. First, the profession needs to be aware of the increased cognitive demands placed on reviewers in the electronic environment and consider ways to help mitigate the potential negative effect of the electronic environment on performance. Second, the structure of the electronic workpaper environment may provide implicit goals or directions for reviewers to follow that reduces the effort expended in the planning stage. This and other decision supports and aids in the electronic environment (e.g., prompts that provide advice or that help develop audit plans) clearly benefit practice. Finally, an important review task is to tie amounts and information between workpapers; however, to ensure that important totals and balances are consistently reflected throughout the various workpapers, this task is less likely to be performed in an electronic environment. Unless software is written to ensure proper tieing between workpapers, this important task may be underperformed. ^