The effects of control risk and litigation risk on decision aid reliance

Decision aids hold the potential to improve audit quality; yet, immense legal and regulatory pressures on audit firms to improve audit quality could lead to a check list mentality where auditors subordinate their audit judgements for the sake of compliance. Based on an experiment involving 118 audit practitioners, we find that auditors rely more on decision aid recommendations when either litigation risk or internal control risk is high relative to low. When both risks are simultaneously high, we find that litigation risk amplifies the auditors awareness of legal defensibility, which in turn increases decision aid reliance, even as their confidence in the quality of their judgements deteriorates.