The Effects of Domain Experience and Task Presentation Format on Accountants’ Information Relevanc...
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By: Vera-Munoz, Kinney, and Bonner Presenter: Sara Aliabadi September, 08 PowerPoint PPT Presentation


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The Effects of Domain Experience and Task Presentation Format on Accountants’ Information Relevance Assurance. By: Vera-Munoz, Kinney, and Bonner Presenter: Sara Aliabadi September, 08.

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By: Vera-Munoz, Kinney, and Bonner Presenter: Sara Aliabadi September, 08

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By vera munoz kinney and bonner presenter sara aliabadi september 08

The Effects of Domain Experience and Task Presentation Format on Accountants’ Information Relevance Assurance

By: Vera-Munoz, Kinney, and Bonner

Presenter: Sara Aliabadi

September, 08


In 2007 ibm paid pwc 30 1 millions for auditing and 39 5 millions for other services

AICPA identifies information assurance as a core service that will enable accountants to add value for decision makers over the coming decades.

In 2007 IBM paid PWC 30.1 millions for auditing and 39.5 millions for other services.


Example of services provided by cpa firms

Example of services provided by CPA firms

Design of information system

Advising clients about particular transactions

Estimating cash flows from alternative future strategic action,

And many others.


What is the main idea in this paper

What is the main idea in this paper?

We examine how experience-both in broad and specialized domains – and task presentation format affect accountants’ problem representations and information development in a relevance assurance task.


Why should we care

Why should we care?

Accountants face varying client objectives across relevance assurance engagement,

Accountants need to provide high-quality information

Inappropriate information may result in high opportunity costs.


Prior studies

Prior studies

Domain experience helps acquiring knowledge(Libby 1995).

Experience in a domain leads to well-developed knowledge (Bonner, chi, Tubbs)

Presentation format affects analysts’ problem representations (Hopkins 1996).


Prior studies continue

Prior studies continue

Task presentation format affects performance (Shanteau 1992).

Person experienced with a particular format may be affected adversely by deviation in format(Fischhoff 1982).

Task presentation format affects the quality of decision making (Mains 1995).


Hypotheses

Hypotheses

H1a: Management accounting experience will be positively related to the choice of a future cash flow problem representation when task information is presented in an historical earnings format.

H1b: Management accounting experience will not be related to the choice of a future cash flow problem representation when task information is presented in an historical cash flow format.


Hypotheses continue

Hypotheses Continue

H3a: Management accounting experience will be positively related to the number of relevant opportunity costs identified when an accountant chooses a future cash flow problem representation.

H3b: Management accounting experience will not be related to the number of relevant opportunity costs identified when as accountant chooses a future accounting earnings problem representation.


Hypotheses continue1

Hypotheses Continue

H4a: Public accounting experience will not be related to the number of relevant opportunity costs identified when an accountant chooses a future cash flow problem representation.

H4b: Public accounting experience will nor be related to the number of relevant opportunity costs identified when an accountant chooses a future accounting earnings problem representation.


Method

Method

The participants are asked to develop information to support a recommendation for a disinvestment timing decision faced by a client.

Scenario: The state government has condemned a shopping mall.

Question: When should client close the store?


Method1

Method

Relevant opportunity costs:

return on disposal proceeds of the store’s fixed assets

sublease revenue

Return on the differential compensation award

Return on differential advertising outlays

Return on early retirement of bonds

The opportunity cost of capital


Participants

Participants

At least two years of public or management accounting experience.

Participants are from several groups of accounting professionals.

110 usable responses


Variables

Variables

CHOICE: participants explanation and calculations used to classify their analysis method

OPPCOSTS: number of opportunity cost

TESTSCORE: knowledge about opportunity costs

MA : management accounting

PA : public accounting

FORMAT


Table 2

Table 2

Panel A :

Shows number of opportunity costs identified

Method of analysis used

Task presentation format

Panel B:

Divide the participants based on experience


Table 3

Table 3

Panel A:

Shows that task presentation format affects choice of analysis method.

level of knowledge on opportunity costs also is

important.

Panel B:

Shows our predictions and the related regression estimates.


Table 4

Table 4

Show that the effect of MA experience on performance is beneficial when participants choose the proper analysis.


Discussion

Discussion

We used two-stage task.

We examine the separate and combined effects of

two factors that may affect accountants’ performance;

Experience (broad and specialized domain)

Task presentation format


Discussion continue

Discussion continue

Facing less appropriate task

More MA or PA experience

Choose a better analysis method


Discussion continue1

Discussion continue

Experience in the specialized domain of MA

&

Choosing appropriate analysis

Better information development task performance


Future research

Future research

How can we help accountants in selection of appropriate analysis methods?

How can accountants obtain the proper knowledge?

What kind of knowledge accountants should obtain?

Can we generalize our result to other kinds of experience?


Limitation

Limitation

Problem with measuring knowledge

Problem with measuring other differences in individual such as ability.


Question

Question?

Thank you


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