The Effects of Client and Preparer Risk Factors on Workpaper Review Effectiveness

Abstract

Both client risk and workpaper preparer risk are important contextual factors that reviewers must manage. In this study, we experimentally investigate how combined client risk and preparer risk impact workpaper review effort and accuracy. We found that reviewers allocated more effort when reviewing workpapers of a high-risk client, relative to a low-risk client, but preparer risk did not drive effort. With respect to review accuracy, we found that in a high client risk environment, reviewers were more accurate when preparer risk was high than when preparer risk was low. However, when client risk was low, review accuracy was invariant to preparer risk. These results suggest that although preparer risk is not a driver of review effort, it nevertheless can affect accuracy when client risk is high. Together, the results suggest that review effort does not appear to be the sole determinant of review accuracy.