Sources of Process Gain and Loss From Group Interaction in Performance of Analytical Procedures

Many business tasks are performed by people interacting in groups. While research on the effects of group interaction on task performance has been called for, few such studies have been done. Most studies conducted in audit settings stress that group interaction should result in performance gain. However, psychology literature also indicates that group interaction could result in reduced performance as a result of process loss. This paper explores decision processes of interacting audit groups and individual auditors when conducting analytical procedures. A model of group performance adapted from Steiner (1972) (Steiner's model) helps frame group process gain and loss issues. Decision process data are gathered from groups of auditors using think-aloud verbal protocols. Group decision processes and performance are compared to those of individual auditors from a prior study. Results indicate that groups exhibited some process gain (e.g., from knowledge pooling), which contributed to improved performance. However, process loss caused several groups to fail to select a correct hypothesis that had been considered, thereby preventing them from achieving their full potential. Specific sources of process gain and loss contributing to differential group performance are discussed, along with implications for audit practice regarding maximizing process gain and reducing process loss. [PUBLICATION ABSTRACT]