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 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 Professional Scepticism of Auditors written by Medhat Endrawes and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effect of culture, the risk of fraud and errors, accountability and audit knowledge on auditors' professional scepticism, which is necessary to assess the risk of material misstatements due to fraud and error. Information from a sample of 269 junior and senior auditors from three accounting firms from Egypt and Australia were collected. The subjects evaluated the risk of fraud and error at the planning stage. The results provide evidence as to whether auditors from different cultural backgrounds react differently to audit evidence. The results show that there are significant differences between the two countries with respect to some audit decisions but not in others.

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 Auditors Professional Skepticism written by Luc Quadackers and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although skepticism is widely viewed as essential to audit quality, there is a debate about what form is optimal. The two prevailing perspectives that have surfaced are 'neutrality' and 'presumptive doubt'. With neutrality, auditors neither believe nor disbelieve client management. With presumptive doubt, auditors assume some level of dishonesty by management, unless evidence indicates otherwise. The purpose of this study is to examine which of these perspectives is most descriptive of auditors' skeptical judgments and decisions, in higher and lower control environment risk settings. This issue is important, since there is a lack of empirical evidence as to which perspective is optimal in addressing client risks. An experimental study is conducted involving a sample of 96 auditors from one of the Big 4 auditing firms in the Netherlands, with experience ranging from senior to partner. One of the skepticism measures is reflective of neutrality (the Hurtt Professional Skepticism Scale - HPSS) whereas the other reflects presumptive doubt (the inverse of the Rotter Interpersonal Trust scale - RIT). The findings suggest that the presumptive doubt perspective of professional skepticism is more predictive of auditor skeptical judgments and decisions than neutrality, particularly in higher risk settings. Since auditing standards prescribe greater skepticism in higher risk settings, the findings support the appropriateness of a presumptive doubt perspective and have important implications for auditor recruitment and training, guidance in audit tools, and future research.

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.

Download or read book Interpretation and Application of International Standards on Auditing written by Steven Collings and published by John Wiley & Sons. This book was released on 2011-06-01 with total page 707 pages. Available in PDF, EPUB and Kindle. Book excerpt: Written by Steven Collings, winner of Accounting Technician of the Year at the British Accountancy Awards 2011, this book deals with the significant changes auditing has undergone in recent years, due in large part to well-publicised corporate disasters such as Enron and Parmalat, which have shaken the profession. In response, many countries have replaced pre-existing domestic standards with International Standards on Auditing (ISAs) in an attempt to ensure that auditors throughout the world apply the same level of standards during all audit assignments, and that audit quality remains consistent on a global basis. International Standards on Auditing are frequently updated to improve and clarify their application throughout the audit and accounting profession. They can be extremely complex and difficult to apply in real life situations. It is essential to apply the standards with sufficient rigor to enable an efficient audit to take place, to satisfy the regulators and ensure that the client receives and audit which is beneficial, cost effective, and which conforms to the prescribed framework; however, auditors are often criticised for failing to do so. Recognising that auditing is not always an exact science, and that in many cases the auditor is called upon to make a judgement in situations open to differing opinions, this book takes a practical and pragmatic approach to following International Standards on Auditing. Steve Collings looks at the full ISAs in their final form, as reissued following the IAASB 'Clarity Project', and give auditors guidance on how to interpret and apply them in real life situations. Each redrafted or rewritten ISA is dealt with in a separate chapter, containing case studies and illustrative examples. The book also covers the regulatory framework of auditing and gives a summary of the five ethical standards applicable to auditors, as mapped by the IAASB. Detailed appendices provide an overview of IFRS and IAS, illustrative audit tests and illustrative financial statements.

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 The Jurisdiction of Comfort written by François Lherm and published by . This book was released on 2016 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulators all over the world have observed a puzzling failure of the practitioners to audit estimates, and castigated auditors for their lack of professional scepticism.This article suggests that this difficulty is caused by a paradox in the very attempt to assure estimates based on evidence: if auditors could obtain sufficient appropriate evidence to assess estimates reasonableness, then estimates would not be inherently uncertain in the first place. Contrary to existing research which tends to ignore or avoid this paradox, this empirical interpretive study investigates into how highly experienced auditors manage, in spite of this paradox, to justify their opinion as to the reasonableness of the most challenging estimates. Auditing failure appears to be caused more by the inadequacy of evidence-based audit to assure estimates, rather than by auditors' lack of professional consciousness. Analysis further unveils that auditors best address the most uncertain cases in a practice that extends auditability beyond conformity, called the “Jurisdiction of Comfort”, i.e., the area in which comfort has alone the authority to tell reasonableness. These insights clarify the current failure in assuring estimates and point to a plausible alternative. To practice, they indicate venues to redefine scepticism and redesign the auditing standards. To theory, the “Jurisdiction of Comfort” suggests an understanding of audit that differs from both realism and constructivism and may complement Boltanski and Thévenot's pragmatics of reflexion.However, to unleash auditors' actual ability to address uncertainty, we still need to find a way to make the use of comfort legitimate in the making of an audit opinion.

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 Auditors Professional Scepticism and Moral Reasoning written by Khalsa Alakhzami and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financial Reporting for Unlisted Companies in the UK and Republic of Ireland written by Steve Collings and published by Bloomsbury Professional. This book was released on 2018-11-29 with total page 856 pages. Available in PDF, EPUB and Kindle. Book excerpt: Based on 4 years' worth of understanding, this new edition of Financial Reporting for Unlisted Companies in the UK and the Republic of Ireland details how the standard should be applied in different circumstances. This is conveyed using many real-life examples from practice. The content has also been restructured so it is more in line with the structure of FRS 102. This edition of the title also incorporates the micro-entities regime, which had not been transposed into company law at the time the 1st edition was written. The book has also been revised with the changes brought in through the FRC's Triennial Review which was published in December 2017. The principal amendments to the standard are as follows: - The simplification of the measurement of directors' loans to small entities - A requirement for fewer intangible assets to be separated from goodwill in a business combination - Permit investment property rented to another group entity is to be measured by reference to cost, rather than fair value - There is expansion of the circumstances in which a financial instrument may be measured at amortised cost, rather than fair value - The definition of a financial institution has been simplified. New case law covered includes: - Companies Act 2006 and related SIs - FRS 102 The Financial Reporting Standard Applicable in the UK and the Republic of Ireland (March 2018) - FRS 105 The Financial Reporting Standard Applicable to the Micro-entities Regime (March 2018)

Download or read book IFRS For Dummies written by Steven Collings and published by John Wiley & Sons. This book was released on 2012-03-15 with total page 423 pages. Available in PDF, EPUB and Kindle. Book excerpt: The easy way to get a grip on International Reporting Standards IFRS For Dummies is your complete introduction to IFRS and international accounting and balancing standards. Combining all the facts needed to understand this complex subject with useful examples, this easy-to-read guide will have you on top of IFRS in no time. In plain English, it helps you make sense of IFRS and your understanding of: what they are and where they apply; how to adopt IFRS for the first time; how IFRS affects the key components of your financial statements; how to disclose information in financial statements; and much more. Covers what to do if you're applying IFRS for the first time Explains complicated material in plain English Helps you make sense of this principles-based set of standards that establish broad rules for financial reporting If you're an accountant, student, or trainee in need of accessible information on IFRS, this hands-on, friendly guide has you covered.

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 152 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The objective of this dissertation is to examine professional skepticism in the audit environment and identify methods to promote professional skepticism in an overall effort to improve auditor judgment and decision making. This dissertation is made up of three studies, and each study’s purpose, methodology, and findings are summarized below.

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: