Fred Phillips

Auditor Attention to and Judgments of Aggressive Financial Reporting

This study identifies conditions that affect how auditors attend to and judge the possibility of aggressive financial reporting in their client?s financial statements. An experiment was conducted with 100 audit seniors and managers to determine whether the risk of misstatement and corroboration of that risk influence attention and judgment. Results indicate that auditors devote more attention to aggressive reporting in a financial statement account when it is assessed as having a high, rather than low, risk of misstatement. Moreover, attention to potential aggressive reporting in low-risk accounts is heightened only when auditors have previously examined evidence that corroborates misstatement risk for a high-risk account. If this corroborating evidence for the high-risk account is considered after the low-risk accounts are examined, auditors are less likely to note the possibility of aggressive reporting in low-risk accounts. Follow-up analyses suggest that different cognitive processes are responsible for these behaviors. Specifically, when assessments of high risk are available to guide processing of aggressive reporting evidence, judgments appear to be based on the risk assessment more than the evidence itself. In contrast, when such assessments are not available, the amount of attention given to evidence of aggressive reporting determines auditors? judgements.

The distortion of criteria after decision-making

The results of two experiments indicate that decision-makers separately distort their interpretations of decision criteria and evaluations of information in a manner that justifies their decisions. In Study 1, participants reported a yes/no decision either before or after they rated the applicable decision criterion and problem information. Participants distorted their criterion and information ratings more when they reported their decisions before, rather than after, they rated the decision criterion and problem information. Study 2 demonstrated that distortion of decision criterion ratings occurred after a decision had been made whereas distortion of information evaluations occurred during the process of reaching a decision. These results are consistent with a two-stage model of decision-making in which the distortion of decision criteria is distinct from the distortion of decision information.

Online Homework versus Intelligent Tutoring Systems: Pedagogical Support for Transaction Analysis and Recording

This paper describes a quasi-experiment conducted to evaluate the relative impact of an online homework management system and an artificially intelligent (AI) tutoring system on the learning that students derive from homework practice. Empirical findings show that when one group of students completed a homework assignment using the AI tutor, their subsequent test performance was greater than a comparable group of students who completed the same homework problems using a textbook publishers online homework management system. When the AI tutor was removed from the first group of students and given to the other group, the pattern of performance differences was reversed. Implications for accounting instructors and future research opportunities are discussed.

Business Students' Learning Preferences and Associated Task Performance.

Abstract Undergraduate business students were surveyed to identify their general preferences for learning and testing environments. A factor analysis of survey responses suggested three preference dimensions. Students held varying preferences for learning involving (a) discrete facts, (b) quick and easy problems, and (c) new and ambiguous situations. A preference for quick and easy problems distinguished between poor and good performers on an unstructured case. However, students preferences did not differentiate performance on structured multiple-choice exams.

Deriving Four Lessons for Accounting Educators: A Commentary on ‘A Role for the Compulsory Study of Literature in Accounting Education’

1. Teach with passion. If nothing else, I have been refreshed by the passion with which Lister expresses his views. Here is a writer whose enthusiasm is undeniable. One may not be excited by the ideas themselves, but the level of energy with which they are expressed is sure to engage an audience. 2. Connect with your audience. My initial engagement in Lister’s (2010) paper faded quickly. I became struck by the irony that, although Lister was first trained in literature and is most familiar with that field, he has failed to apply a basic principle of communication: recognize the audience for your work. Few accounting educators possess the background needed to derive meaning from brief references to the works of Stoppard or Molière, yet Lister (2010) persists in referencing such works with seemingly little regard for the audience’s comprehension of their points. Through the disengaging list of unfamiliar artistic works, I was reminded that an effective educator should first assess his students’ level of understanding and then seek to build structures and deliver ideas in ways that connect with and extend their knowledge, interests, and abilities. Lister (2010) further distances himself from the reader by characterizing our field as a box-ticking vocation in which we pay lip service to chasms of ambiguity. With little evidence to support such bold claims, Lister goes on to imply that accounting educators Accounting Education: an international journal Vol. 19, No. 4, 369–371, August 2010

Using Design Thinking to Write and Publish Novel Teaching Cases: Tips from Experienced Case Authors.

With increasing calls for a greater connection between management education and practice, teaching cases play a vital role in the business curriculum. Cases not only allow instructors to expose students to practical problems but also let educators contribute to the scholarship of teaching and learning. An important reason why faculty members may refrain from writing cases is they perceive it is difficult to develop publishable cases that are also novel. Reviewers of the journals that publish teaching cases are increasingly asking authors to place the case in the extant literature and explain what makes their case unique. To overcome some of the challenges encountered when attempting to write and publish novel teaching cases, this article presents a useful framework—Design Thinking—for tackling the “wicked problem” of developing novel cases and provides experience-based tips to implement the framework. By introducing the concepts and language of design thinking, we provide case writers with an iterative approach that leads to the development of novel cases by identifying and innovatively addressing instructors’, students’, and editors’ demands. We argue that by applying a design-thinking approach, case writers can produce novel and publishable instructional cases.

Effects of Interspersed versus Summary Feedback on the Quality of Students' Case Report Revisions

Abstract This study examines whether students show greater improvement in written case analyses when given feedback that is either interspersed throughout their written case analyses or presented only as a summary, and whether the benefits of these placements vary across differing levels of student performance in the course. Results from an exploratory field experiment conducted with Canadian accounting students who revised and resubmitted case analyses indicate that the effectiveness of feedback depended on an interaction between its placement and the course performance of students to which it was provided. Lowest-performing students increased the quality of their case responses most when provided with interspersed rather than summary feedback, mid-level students improved more when given summary rather than interspersed feedback, and highest-performing students improved significantly regardless of feedback placement. The primary conclusion from this study is that feedback placement influences how well students at different levels respond, suggesting that teachers should consider students relative course performance when determining the most appropriate placement for their feedback. We also present evidence of the factors that affect the initial quality of case analyses and which influence students decisions to revise and resubmit their case analyses.

A Good Story: A Commentary on ‘Contextualizing the Intermediate Financial Accounting Courses in the Global Financial Crisis’

Bloom and Webinger (2011) present an intuitively agreeable proposition: embedding topics within an engaging and meaningful context can promote many desirable learning behaviours and outcomes. As instructors, we have seen this play out many times in our classrooms. For example: our students appear more engaged in learning about joint venture accounting when we discuss it in the context of the fraud at Royal Ahold (Knapp and Knapp, 2007); they perk up when we consider inventory valuation issues in the context of the toy industry (Earley and Phillips, 2008); and they claim that managerial accounting topics are richer when studied in the context of a company’s annual report (Bamber and Bamber, 2006). In a sense, we were already believers when we started to read how Bloom and Webinger (2011) claimed the global financial crisis (GFC) provided an ideal context to use when exploring Intermediate Financial Accounting topics. At the same time, we were sceptical. Teaching is a complex and dynamic endeavour. Students differ. The knowledge and interests of one group are rarely the same as those of the next. Replicating a successful teaching experience requires careful attention to the variables that created the success in the first place. A clear delineation of these variables is especially important when attempting to transfer a teaching innovation from its developers to others who were not intimately involved in its development. The purpose of this Commentary is to consider how clearly Bloom and Webinger (2011) have articulated the processes by which positive outcomes are likely to accrue and to suggest additional guidance that Bloom and Webinger (2011) should provide.

Undetected Deviations in Tests of Controls: Experimental Evidence of Nonsampling Risk*

The objective of the study was to examine the effects of three independent variables - accountability, audit workpaper structure, and type of control deviations - on auditors detection failure rates during control tests in a purchases, payables, and payments cycle. The experimental design used a between-subjects manipulation of accountability and workpaper structure, and a within-subjects manipulation of deviation type. Consistent with prior research, we observed an alarmingly high detection failure rate of 42.3 percent. This failure rate was not affected by levels of accountability or workpaper structure, although postexperiment evidence suggests that these variables were successfully manipulated. Failure rates did depend on the type of seeded control deviation, with nonmonetary deviations being overlooked most frequently. In addition to replicating prior research, our study makes two further contributions. First, we provide empirical evidence that supports Hirsts (1992) speculation that successful manipulations of accountability may not affect auditor performance because auditors may self-induce levels of accountability that create a ceiling effect on auditor performance. Second, we observe that although auditors perceived that highly structured workpapers allowed them to be more effective and efficient when performing tests of controls, their actual audit performance was not more effective and, on average, was less efficient.

An Instructional Case Comparing the Accounting Policies and Financial Results of Online Retailers

In the role of financial analyst for a venture capital firm, you are assigned the responsibility of evaluating two online retailers who have applied for financing to build a distribution center in western Canada. Based on your developing knowledge of Canadian accounting standards for private enterprises (ASPE), you evaluate the financial reporting policies and financial results of the two companies to identify the company that is best suited for your firms support. Through this case, you will refine your understanding of ASPE and you will exercise your reasoning and analytical skills. n nComparaison des politiques comptables et des resultats financiers de societes de vente au detail en ligne: un cas didactique nResume n nLes participants, a qui est attribue le role danalyste financier pour une societe de capital de risque, sont appeles a evaluer deux societes de vente au detail en ligne a la recherche de fonds pour financer la construction dun centre de distribution dans lOuest canadien. Selon le stade devolution de leurs connaissances des normes comptables canadiennes pour les entreprises a capital ferme (NCECF), les participants evaluent les politiques dinformation financiere et les resultats financiers des deux societes afin de determiner a laquelle il convient le mieux pour la societe de capital de risque doctroyer des fonds. Cette etude de cas permettra aux participants de raffiner leur comprehension des NCECF ainsi que dexercer leur jugement et leurs competences analytiques.