The Efficacy of a Decision Support System in Enhancing Risk Assessment Performance

A pervasive challenge for decision‐makers is evaluating data of varying form (e.g., quantitative vs. qualitative) and credibility in arriving at an overall risk assessment judgment. The current study tests the efficacy of a Decision Support System (DSS) for facilitating auditors’ evaluation and assimilation of financial and nonfinancial information in accurately assessing the risk of material misstatements (RMM) in financial information. Utilizing the proximity compatibility principle, the DSS manipulates the display of cues either in an integral (where pieces of information are displayed on one computer screen) or separable (where pieces of information are displayed on different computer screens) format. Based on cognitive fit theory, we expect that the integral (separable) display best supports financial (nonfinancial) information processing, leading to enhanced risk assessment performance. In addition, we predict that consistent DSS display of financial and nonfinancial information facilitates risk assessment performance. Further, this study accentuates the importance of auditors’ preference for presentation of financial and nonfinancial information and consistent presentation of all the information in strengthening the effect of DSS display format on risk assessment performance. We design a case which includes a seeded high fraud risk. A total of 112 audit seniors participated in the experiment where the DSS display format was manipulated and the auditors’ RMM assessments and display preferences were measured. The results support the hypotheses and highlight the value of the DSS in enhancing risk assessment performance.