Auditors' judgments and decisions under time pressure: an illustration and agenda for research;

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Auditors' Judgments and Decisions Under Time Pressure: An Illustration and Agenda For Research1 Ira Solomon Clifton Brown University of Illinois-Urbana Time limitation when acquiring and processing information (i.e., time pres-sure) is a structural feature of many judgments and decision contexts. In emer-gency situations, for example, physicians must process a variety of information within critically small time spans to make diagnoses and identify appropriate courses of treatment. Similarly, after leaving a huddle, a football quarterback must appraise the formation of the defensive team within no more than thirty seconds to determine if a change in the planned offensive play is warranted. Likewise, traders working within investment banking houses often must decide within a highly constrained period of time whether to buy, sell or hold specific securities based on a variety of data about economic and political events. Various types of time constraints are present in auditing contexts [AICPA, 1978]. For example, auditors are required to perform audit procedures within prescribed time limits (e.g., vouch a specified number of transactions to sup-porting documents within a given period of time). Consistently, auditors must meet various client-imposed (e.g., allow earnings to be released within six weeks of the client's year end) and non-client-imposed deadlines (e.g., file a 10-K with the SEC by a specified date). Although such time constraints have always been present within the audit context, it has been argued that recently they have increased as competition in the market for audit services has increased [National Commission on Fraudulent Financial Reporting, 1987]. While often identified as deleterious [AICPA, 1978; Alderman and Deitrick, 1982; Kelly and Margheim, 1990], very little actually is known about the judg-ment and decision effects of time pressure in audit and other applied contexts. Interestingly, in non-audit contexts, time constraints in the form of time budgets sometimes have been found to enhance efficiency [Pachella, 1974]. Although it has been argued that some time pressure may stimulate auditors to work harder and otherwise strive for efficiencies [Kelly and Seiler, 1982; Kermis and Mahapatra, 1985], no systematic evidence exists on functional consequences of time pressure in auditing. Rather extant audit studies almost exclusively have 1 The study described herein was funded by KPMG Peat Marwick through a Research Opportunities in Auditing Grant. The authors also acknowledge the assistance of John Naughton and personnel in the Chicago office of KPMG who have generously shared their insights on the issues upon which this paper is focused. An earlier version of this paper was presented in an accounting workshop at the University of Florida.
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