By: Vera-Munoz, Kinney, and Bonner Presenter: Sara Aliabadi September, 08

1. The Effects of Domain Experience and Task Presentation Format on Accountants’ Information Relevance Assurance By: Vera-Munoz, Kinney, and Bonner Presenter: Sara Aliabadi September, 08

2. AICPA identifies information assurance as a core service that will enable accountants to add value for decision makers over the coming decades. In 2007 IBM paid PWC 30.1 millions for auditing and 39.5 millions for other services.

3. Example of services provided by CPA firms Design of information system Advising clients about particular transactions Estimating cash flows from alternative future strategic action, And many others.

4. What is the main idea in this paper? We examine how experience-both in broad and specialized domains – and task presentation format affect accountants’ problem representations and information development in a relevance assurance task.

5. Why should we care? Accountants face varying client objectives across relevance assurance engagement, Accountants need to provide high-quality information Inappropriate information may result in high opportunity costs.

6. Prior studies Domain experience helps acquiring knowledge(Libby 1995). Experience in a domain leads to well-developed knowledge (Bonner, chi, Tubbs) Presentation format affects analysts’ problem representations (Hopkins 1996).

7. Prior studies continue Task presentation format affects performance (Shanteau 1992). Person experienced with a particular format may be affected adversely by deviation in format(Fischhoff 1982). Task presentation format affects the quality of decision making (Mains 1995).

8. Hypotheses H1a: Management accounting experience will be positively related to the choice of a future cash flow problem representation when task information is presented in an historical earnings format. H1b: Management accounting experience will not be related to the choice of a future cash flow problem representation when task information is presented in an historical cash flow format.

9. Hypotheses Continue H3a: Management accounting experience will be positively related to the number of relevant opportunity costs identified when an accountant chooses a future cash flow problem representation. H3b: Management accounting experience will not be related to the number of relevant opportunity costs identified when as accountant chooses a future accounting earnings problem representation.

10. Hypotheses Continue H4a: Public accounting experience will not be related to the number of relevant opportunity costs identified when an accountant chooses a future cash flow problem representation. H4b: Public accounting experience will nor be related to the number of relevant opportunity costs identified when an accountant chooses a future accounting earnings problem representation.

11. Method The participants are asked to develop information to support a recommendation for a disinvestment timing decision faced by a client. Scenario: The state government has condemned a shopping mall. Question: When should client close the store?

12. Method Relevant opportunity costs: return on disposal proceeds of the store’s fixed assets sublease revenue Return on the differential compensation award Return on differential advertising outlays Return on early retirement of bonds The opportunity cost of capital

13. Participants At least two years of public or management accounting experience. Participants are from several groups of accounting professionals. 110 usable responses

14. Variables CHOICE: participants explanation and calculations used to classify their analysis method OPPCOSTS: number of opportunity cost TESTSCORE: knowledge about opportunity costs MA : management accounting PA : public accounting FORMAT

15. Table 2 Panel A : Shows number of opportunity costs identified Method of analysis used Task presentation format Panel B: Divide the participants based on experience

16. Table 3 Panel A: Shows that task presentation format affects choice of analysis method. level of knowledge on opportunity costs also is important. Panel B: Shows our predictions and the related regression estimates.

17. Table 4 Show that the effect of MA experience on performance is beneficial when participants choose the proper analysis.

18. Discussion We used two-stage task. We examine the separate and combined effects of two factors that may affect accountants’ performance; Experience (broad and specialized domain) Task presentation format

19. Discussion continue Facing less appropriate task More MA or PA experience Choose a better analysis method

20. Discussion continue Experience in the specialized domain of MA & Choosing appropriate analysis Better information development task performance

21. Future research How can we help accountants in selection of appropriate analysis methods? How can accountants obtain the proper knowledge? What kind of knowledge accountants should obtain? Can we generalize our result to other kinds of experience?

22. Limitation Problem with measuring knowledge Problem with measuring other differences in individual such as ability.

23. Question? Thank you