Download or read book Can Professional Skepticism be Taught to Undergraduate Auditing Students written by Dominic Mertz and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Professional skepticism is a combination of an auditor's innate abilities, personal characteristics, professional experiences, education, and training (Nelson, 2009; Hurtt, 2010; Liu, 2018). A key question is whether professional skepticism can be enhanced by classroom assignments. This study attempts to measure professional skepticism in audit students before and after a classroom assignment designed to enhance skepticism. The assignment is an intervention or simulated audit, which gives students the opportunity to exercise skepticism. Using Hurtt's (2010) survey instrument, I examine a questioning mind, the suspension of judgement, search for knowledge, interpersonal understanding, self-determination, and self-confidence. The findings show that students do not exercise a questioning mind, and instead, put too much trust in authority figures (e.g., clients). The students do suspend judgement, search for knowledge, seek interpersonal understanding, and have self-confidence during audits. The findings also show that rather than exercising self-determination, the students engage in groupthink. These results suggest that classroom assignments that simulate real-life audits may be able to improve certain aspects professional skepticism.

Download or read book A Study of Professional Skepticism written by Carmen Olsen and published by Springer. This book was released on 2017-01-31 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book describes how auditors exercise different levels of professional skepticism and how they are exposed to different types of affective information on clients’ behavior. Based on the author’s empirical study of 56 auditors, it shows that auditors’ skepticism and affective reactions towards a client interact to influence their appraisal of valuation problems. It also suggests that the effects of auditors’ affective reactions on their skeptical judgments depend on the level of risk in the audit engagement.

Download or read book Professional Skepticism of Students written by Seth E. Sikkema and published by . This book was released on 2014 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt: The value of an audit is in part based on the degree of professional skepticism exercised by an auditor. Indeed, the importance of professional skepticism has been stressed by regulators and practitioners since the earliest stages of the auditing profession. Recent scrutiny of the audit profession, however, indicates that auditors occasionally lack the ability to exercise an appropriate level of professional skepticism. The concern over the issue suggests a need for greater research and understanding of the determinants and dimensionality of professional skepticism. This research examined the individual trait component of professional skepticism and also introduced a new antecedent, personal values, into a revised model of professional skepticism. Understanding antecedents to skeptical behavior is important because the ability to measure individual differences in trait skepticism improves the precision of predictive models of skeptical behavior. The primary objective of this study was to determine whether differences in students exist among the level of trait skepticism, major choice, and personal values. As a result, the primary goal is not to study the factors causing trait professional skepticism, but rather whether the result of skeptical personality trait is associated with different combinations of specific characteristics among a set of students. The methodology used in the research employs independent t-tests, ANOVAs, and Chi-square tests to identify whether significant differences were present. The data used in the study comes from student participants at two universities located in Western Oregon. Each participant provided demographic data, completed a trait skepticism survey, and ranked personal values by importance. The results showed that the level of trait skepticism is associated with different categories of GPA, class standing, and age. Furthermore, high trait skeptics tended to choose different majors than low trait skeptics, more skeptical students opting for liberal arts majors. The results also showed that high and low trait skeptics placed different preferences among ten personal value sets. As a result, this study was able to show that skeptical personality trait is associated with different combinations of specific characteristics among a set of students.

Download or read book The Influence of Information Order Effects and Trait Professional Skepticism on Auditors Belief Revisions written by Kristina Yankova and published by Springer. This book was released on 2015-02-10 with total page 321 pages. Available in PDF, EPUB and Kindle. Book excerpt: Kristina Yankova addresses the question of what role professional skepticism plays in the context of cognitive biases (the so-called information order effects) in auditor judgment. Professional skepticism is a fundamental concept in auditing. Despite its immense importance to audit practice and the voluminous literature on this issue, professional skepticism is a topic which still involves more questions than answers. The work provides important theoretical and empirical insights into the behavioral implications of professional skepticism in auditing.

Download or read book The Influence of Information Order Effects and Trait Professional Skepticism on Auditors Belief Revisions written by Kristina Yankova and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Kristina Yankova addresses the question of what role professional skepticism plays in the context of cognitive biases (the so-called information order effects) in auditor judgment. Professional skepticism is a fundamental concept in auditing. Despite its immense importance to audit practice and the voluminous literature on this issue, professional skepticism is a topic which still involves more questions than answers. The work provides important theoretical and empirical insights into the behavioral implications of professional skepticism in auditing. Contents Belief Revision and Information Order Effects Professional Skepticism Empirical Analysis Target Groups Researchers and students in the fields of accounting and auditing Practitioners in these areas The Author Dr. Kristina Yankova completed her doctoral studies under the guidance of Prof. Dr. Annette Köhler at the Chair of Accounting and Auditing at the Mercator School of Management, University of Duisburg-Essen.

Download or read book Auditor Inability to Use Professional Skepticism written by Tiffany D. Schuster and published by . This book was released on 2021 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: This qualitative study sought to understand challenges to Louisville, Kentucky Certified Public Accounting firms and the development of auditor professional skepticism. The research considered the problem of the lack of professional skepticism and the importance of the skill in the auditor's role. The study focused on three levels of auditing roles, their experience in auditing, education levels, and overall experience in their current role. The research methodology was a single case study design and interviewed participants through gaining insight from their experiences in the auditing field, and the challenges faced. The research deepened the understanding of problems and contributing factors for professional skepticism development and identified potential solutions.

Download or read book What Personality Traits Make Auditors Professionally Skeptical Opportunities for Future Research on Trait Professional Skepticism written by Carmen Olsen and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is unclear what personality traits determine the enduring trait of professional skepticism among auditors. Examining determinants of professional skepticism may be important to the profession in recruitment, evaluation and team-building activities and ultimately as an element in the documentation of professional skepticism in audit firms' methodologies. This paper examines what personality traits are associated with an auditors' trait professional skepticism. Eighty-three Norwegian master-level accounting students with an average of one year of audit experience responded to items in two instruments; one instrument assesses trait professional skepticism using the multidimensional Hurtt Professional Skepticism Scale. The other instrument, the Revised NEO Personality Inventory, measures all traits associated with the personality of participants. We gathered rich data comprising 42 measurements of our participants' personalities; seven scores measuring various dimensions of trait professional skepticism and 35 scores measuring general personality traits including that of trust. We expect the trait of trust to be associated with the trait of professional skepticism. Surprisingly, the results suggest that personality traits that make auditors professionally skeptical comprise far more complex and diverse personality traits (e.g., being both extroverted and reserved, both sympathetic and distrustful, and a tendency to experience emotional reactions) than initially thought (i.e., in addition to curiosity, conscientiousness, extraversion and trust). More surprisingly, the “questioning mind” dimension of trait professional skepticism was associated not with the opposite of trust, as initially conceptualized, but rather with frankness, no reluctance to express anger, and competence to deal with any situation. We extend professional skepticism theory by mapping the determinants of trait professional skepticism dimensions which audit firms can use for recruitment and team-building purposes. Finally, we suggest opportunities for future research on professional skepticism.

Download or read book Competency Based Accounting Education Training and Certification written by Alfred Borgonovo and published by World Bank Publications. This book was released on 2019-06-06 with total page 137 pages. Available in PDF, EPUB and Kindle. Book excerpt: This guide is designed to assist all those who are responsible for providing or overseeing formal education or practical experience that forms part of the initial professional development of aspiring professional accountants, or the continuing professional development of professional accountants. It is particularly relevant to professional accountancy organizations. It is also intended for policy makers and regulators who determine which organizations are licensed to certify professional accountants and related specializations, for example, audit professionals. The purpose of the guide is to • increase understanding of the gap between the current skills of many accountants in some regions and the skills that are relevant in increasingly digitized and globalized economies; • convey the essential features of Competency-Based Accounting Education, Training, and Certification (CBAETC); • provide a common reference framework for organizations pursuing CBAETC and the consultants working with them; • assist countries in developing in-country plans and implementing in-country processes that produce accountants with higher-order skills relevant to their economy’s rapidly evolving needs; and • improve financial reporting, auditing, and regulation. This guide complements and builds on International Education Standards (IES™) of the International Accounting Education Standards Board™ (IAESB™).

Download or read book Promoting Professional Skepticism in the Audit Environment written by Mary C. Parlee and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Role of Behavioral Mindsets on Auditors Professional Skepticism written by J. Owen Brown and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditing standards require auditors to maintain a skeptical mindset throughout an audit. However, research indicates that mindsets are flexible such that cognitive procedures (e.g., bolstering or providing counterarguments) activated when performing a particular task can carryover and influence subsequent task performance. We examine whether natural features within the audit environment, such as routine planning tasks, can create a mindset that influences evidence evaluation and skeptical judgments in a second, unrelated audit task. In an experiment, auditors who developed a counterarguing mindset during a planning meeting and subsequently evaluated internal control evidence potentially indicative of a significant deficiency (moderate severity) were more skeptical of management's explanation for the control deficiency and rated the deficiency more severe than auditors who initially developed a bolstering mindset. This effect diminished when the severity rose to potentially indicate a material weakness (high severity), as there were no differences in ICFR assessments between auditors who developed a counterarguing or a bolstering mindset. Path analyses confirm that the moderate severity condition processed client persuasive communications by utilizing a strategy consistent with previously developed mindsets which, in turn, influenced ICFR assessments. The high severity condition, instead, followed a content-focused processing strategy that focused on items indicative of increased risk which was invariant to the mindset condition. Thus, the flexibility of auditor mindsets can impact professional skepticism and have efficiency and effectiveness consequences under certain conditions. These results have implications for audit training and for improving regulators' understanding of why auditors do not always exhibit adequate skepticism.

Download or read book Professional Skepticism and Auditor Cognitive Performance in a Hypothesis Testing Task written by Marietta Peytcheva and published by . This book was released on 2013 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study examines the joint effects of two different types of state skepticism prompts, as well as the effect of the personality trait of professional skepticism, on auditor cognitive performance in a hypothesis-testing task. Seventy-eight audit students and 85 practicing auditors examine an audit case and determine the evidence needed to test the validity of a management's assertion in a Wason selection task (Wason 1966, 1968, 1969; Cosmides 1989). The 2x2 between-participants experiment manipulates the presence of a professional skepticism prompt and the presence of a cheater-detection prompt (Cosmides 1989; Cosmides and Tooby 2008a). The personality trait of professional skepticism is measured with Hurtt's (2010) scale. The presence of a professional skepticism prompt is found to improve cognitive performance in the sample of students, but not in the sample of auditors. The presence of a cheater-detection prompt has no significant effect on performance in the student or auditor sample. The personality trait of professional skepticism is a significant predictor of cognitive performance in the sample of students but not in the sample of auditors. These findings suggest that increasing the states of skepticism or suspicion toward the client firm's management may have no incremental effect on the normative hypothesis testing performance of experienced auditors, who are consistently exposed to the importance of being skeptical in the course of their work. However, actively encouraging skeptical mindsets in novice auditors is likely to improve their cognitive performance in hypothesis testing tasks.

Download or read book An Examination of Issues Related to Professional Skepticism in Auditing written by Erin Burrell Nickell and published by . This book was released on 2012 with total page 75 pages. Available in PDF, EPUB and Kindle. Book excerpt: The third general standard of fieldwork requires auditors to maintain a skeptical mindset with regards to the collection and critical assessment of audit evidence. While professional skepticism is frequently referenced by professional standards, a lack of precision in defining the concept presumably leads to variation in how skepticism is exercised in practice. Drawing on theories from the fields of psychology, economics and organizational justice, this dissertation considers different perspectives of what constitutes sufficient professional skepticism and examines how those perspectives differ between audit practitioners and regulators. First, I consider competing perspectives of professional skepticism--neutral versus presumptive doubt--and whether asking auditors to adopt alternative perspectives of skepticism may have implications for audit efficiency and effectiveness. While, too little skepticism may endanger audit effectiveness and lead to audit failure or enforcement action, too much skepticism may arguably lead to unnecessary costs and inefficiency. Second, I consider whether the nature of the auditor-client relationship threatens an auditor's ability to maintain an attitude of professional skepticism. For example, theoretical perspectives from the fields of psychology and economics suggest that auditors may, consciously or unconsciously, be less skeptical of clients with whom they have developed close, positive working relationships or financial dependencies. More specifically, I consider whether skeptical behavior is impeded by management who display low-risk attitudes towards fraud or by client's who are considered to be highly important to the profitability of the local office. Finally, I examine how professional skepticism is defined from a regulator's perspective. When a public company is accused of fraudulent financial reporting, regulators may determine that the audit performed on the fraudulent financial statements was deficient. Prior research has suggested that in such cases, insufficient skepticism is often a leading cause of alleged audit failure. Within a fairness theory framework, this study examines enforcement actions against auditors between 1999 and 2009, and identifies certain factors that are associated with a citation for a lack of professional skepticism. Overall, results suggest that regulators approach the issue by determining whether auditors should have been more skeptical. Factors found to affect this determination include whether the auditor was perceived as having been aware of an elevated risk of fraud or whether the client was accused of having provided the auditor with false or misleading information during the course of their investigation.

Download or read book The Effects of a Supportive Learning Culture and Rank on Professional Skepticism in Information Search written by Therese Grohnert and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditors are required to apply professional skepticism throughout the audit process: when searching for information, when forming a judgment, and when deciding on which actions to take. Consequently, audit firms have a vested interest in fostering professional skepticism. Extant conceptual models propose that knowledge is a central driver of professional skepticism, yet a common measure of knowledge - experience - has proven to be an unreliable proxy: it does not take into account that auditors have to learn from experience to develop knowledge. Insights from psychology and management studies emphasize that this learning does not occur automatically, but that it can be fostered at the firm level through a supportive learning culture. Based on these streams of research, the present study explores whether a firm's learning culture interacts with experience to foster professional skepticism. We observed information search behaviors and recorded intentions to act of 166 auditors across ranks using a representative audit task. Our results show that higher-ranking auditors benefit from working in a more supportive learning culture: they engaged in significantly more skeptical information search and in turn formulated more skeptical intentions to act. A supportive learning culture is therefore essential for enabling the ongoing development of knowledge and exercising professional skepticism, especially at the ranks of manager and partner.

Download or read book The Role of Professional Skepticism Attitudes and Emotions on Auditor s Judgments written by Christine J. Nolder and published by . This book was released on 2012 with total page 280 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Professional Skepticism Experience and Industry Specialization of Auditors written by Robert Sollfrey and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Cognitive Dissonance and Auditor Professional Skepticism written by Ruwan K.B. Adikaram and published by . This book was released on 2016 with total page 130 pages. Available in PDF, EPUB and Kindle. Book excerpt: I show that auditors experience cognitive dissonance when they fail to take appropriate professionally skeptical (hereafter PS) action in line with high PS judgment. I specifically show that cognitive dissonance leads auditors to revise their attitudes on low ranking audit actions upward and lower their risk assessments, consequently, lower overall professional skepticism. I also find that auditor cognitive dissonance leads to exaggerated ex-post auditor self-assessments professional skepticism. Professional skepticism is fundamental to performing an audit according to auditing standards and critical to audit quality. Extant research that investigates treatments to enhance professional skepticism predominantly treats both skeptical judgment and skeptical action as analogous outcomes of professional skepticism. If, however, there is a breakdown between PS judgment and PS action, the overall benefits of these treatments will be trivial. I show that cognitive dissonance due to the incongruence between PS judgments and PS actions leads to an unforeseeable corollary of lower overall professional skepticism. I also demonstrate a specific mechanism of how auditor incentives lead to lower professional skepticism, hence, lower audit quality. Both researchers and practitioners can benefit from this study by better understating the intricacies in the critical link between PS judgment and action. Additionally, I provide an empirical investigation of the components in Nelson's (2009) model of professional skepticism and extend the model to reflect the intricacies between PS judgment and PS action. I test my hypotheses via a three-group research design with attitude change as a proxy measure of cognitive dissonance.

Download or read book A Model and Literature Review of Professional Skepticism in Auditing written by Mark W. Nelson and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews research that examines professional skepticism (hereafter, PS) in auditing. Consistent with much research and with recent regulatory concerns, the paper defines PS as ''indicated by auditor judgments and decisions that reflect a heightened assessment of the risk that an assertion is incorrect, conditional on the information available to the auditor.'' In many circumstances the assertion in question will be a client's assertion that the financial statements are free of material misstatement, but the definition could apply to other assertions as well (e.g., attesting to the effectiveness of a client's internal controls). This definition reflects more of a ''presumptive doubt'' than a ''neutral'' view of PS, implying that auditors who exhibit high PS are auditors who need relatively more persuasive evidence (in terms of quality and or quantity) to be convinced that an assertion is correct. Depending on how an auditor's decisions are evaluated, it is possible under this definition for an auditor to exhibit too much PS, in that they could design overly inefficient and expensive audits.