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.
The Effects of Domain Experience and Task Presentation Format on Accountants’ Information Relevance Assurance
By: Vera-Munoz, Kinney, and Bonner
Presenter: Sara Aliabadi
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
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?
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?
Accountants face varying client objectives across relevance assurance engagement,
Accountants need to provide high-quality information
Inappropriate information may result in high opportunity costs.
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
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).
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.
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.
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.
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?
Relevant opportunity costs:
return on disposal proceeds of the store’s fixed assets
Return on the differential compensation award
Return on differential advertising outlays
Return on early retirement of bonds
The opportunity cost of capital
At least two years of public or management accounting experience.
Participants are from several groups of accounting professionals.
110 usable responses
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
Panel A :
Shows number of opportunity costs identified
Method of analysis used
Task presentation format
Divide the participants based on experience
Shows that task presentation format affects choice of analysis method.
level of knowledge on opportunity costs also is
Shows our predictions and the related regression estimates.
Show that the effect of MA experience on performance is beneficial when participants choose the proper analysis.
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
Facing less appropriate task
More MA or PA experience
Choose a better analysis method
Experience in the specialized domain of MA
Choosing appropriate analysis
Better information development task performance
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?
Problem with measuring knowledge
Problem with measuring other differences in individual such as ability.