Download or read book The Effect of Industry Experience on Hypothesis Generation and Audit Planning Decisions written by Arnold Wright and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: A significant concern in behavioral research in accounting has been the effect of experience on judgment and decision-making. As widely recognized, there are, however, several dimensions to experience, including general domain experience and task-specific experience. One important dimension that has received limited attention is industry experience. For instance, in an audit context, greater industry experience is expected to lead to greater effectiveness and efficiency as auditors develop a knowledge-base of the unique risks and audit approaches for a particular industry. The purpose of this study is to investigate the impact of industry experience on the generation of hypotheses of likely errors in conducting analytical procedures. Other audit planning tasks are also examined (e.g., risk assessment and extent of testing). Seventy-two auditors, 34 with significant retailing experience and 38 without such experience (both groups ranging in rank from senior to partner), completed a comprehensive, realistic case for a retailing client. Four material errors, three relating to a retailing environment, were present in the case. The findings indicate that industry experience significantly enhanced hypotheses generation in identifying errors but did not result in expected risk assessments or revisions to planned extent. Proportionately greater audit hours were, however, assigned to more experienced audit staff for misstated accounts.