Research in Cognitive Problem Solving, part 3

A third fascinating research project presented at the American Accounting Association’s Doctoral Consortium was about intuition. Auditors over the years have been asked more and more to use professional skepticism and judgment to make decisions, as opposed to a checklist mentality or just running the same auditing procedures as last year.

A critical piece here is documentation. If a procedure or conclusion is not documented, it may as well have not happened.

With this emphasis on rigorous critical thinking, researchers from Texas A&M and the University of South Carolina were interested in whether we’ve lost anything by placing no value on intuition. So much thinking goes on underneath the surface; is there a role for that in auditing?

In their experiment, they divided people up into two groups to solve an auditing problem. One group they specifically asked to solve the problem quickly, intuitively, not to do too much analysis. He asked the other group specifically to not use their intuition, but instead base their answer on rigorous analytical analysis, even providing a worksheet suggesting ways to analyze the problem.

In the end, the intuition group did significantly better. That’s provocative. As a follow up, they used an instrument (I wish I had written down the name) to measure the inherent orientation of the participants–whether each was inherently intuitive or inherently analytical. What they found was that the inherently intuitive thinkers performed about the same whether they were asked to be intuitive or analytical. The inherently analytical thinkers did well on the task when asked to think intuitively. It was only the analytical thinkers asked to think analytically that performed worse on the task. Interesting!

Someone in the row behind me asked the key question: What about tasks where inherent bias is a problem? In other words, if, say, anchoring bias is a problem when auditors are evaluating management’s estimates, would placing a premium on intuition exacerbate the effect of the bias? The researcher presenting acknowledged this, and noted that their purpose wasn’t to banish analytical thinking from auditing nor to uphold intuition in all situations, but to question whether something is wrong if we are telling experienced auditors to ignore their instincts if the analysis tells them everything is fine but their gut says it is not. This should be an interesting research thread to watch in the coming years.

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