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 Government Auditing Standards 2018 Revision written by United States Government Accountability Office and published by Lulu.com. This book was released on 2019-03-24 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.

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 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 Fraud Risk Assessment An Internal Auditing Perspective written by Porschia C. Nkansa and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation focuses on examining the professional skepticism of internal auditors related to fraud risk assessment and environmental characteristics. The dissertation is comprised of three separate studies but the overall research question that is addressed is: How do certain environmental pressures affect the professional judgment (in this case, fraud risk assessment) and skeptical actions of internal auditors? The specific environmental factors examined in this dissertation are: (1) the level of coordination with external auditors, (2) a perceived conflict with legal counsel, and (3) the Chief Audit Executive's emphasis on professional skepticism. Each study consists of case materials (adapted from previous studies) with three parts: a fraud risk assessment, an indication of skeptical action, and personality trait questionnaires (including a professional skepticism scale). The results of this dissertation will be useful to audit committees, boards of directors, chief audit executives, corporate managers, external auditors, and regulators. The purpose of the first study is to investigate how the level of coordination with the external auditor affects internal auditors' fraud-related actions. Planned audit hours are the measure of skeptical action in this study. Prior research suggests that accountability strength influences auditor effort. The effect of external auditor coordination on internal auditors' planned audit hours has important implications for efficiency and perceived accountability to external stakeholders. Regulators and stakeholder organizations have encouraged more collaboration between external and internal auditors to improve efficiency and fraud detection. An experiment is conducted with 112 internal auditors to examine the theorized effects. The study uses a 2 x 2 between-subjects design and manipulates fraud risk (low or high) and external auditor coordination (low or high). Consistent with predictions, I find that internal auditors increase planned audit hours when fraud risk is high and that coordination moderates the relationship between fraud risk and hours. The results illustrate that although high external auditor coordination decreases internal auditors' hours (reflecting efficiency), internal auditors are more sensitive to responding to fraud risk when coordination is high (reflecting accountability).

Download or read book The Routledge Companion to Auditing written by David Hay and published by Routledge. This book was released on 2014-09-15 with total page 387 pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditing has been a subject of some controversy, and there have been repeated attempts at reforming its practice globally. This comprehensive companion surveys the state of the discipline, including emerging and cutting-edge trends. It covers the most important and controversial issues, including auditing ethics, auditor independence, social and environmental accounting as well as the future of the field. This handbook is vital reading for legislators, regulators, professionals, commentators, students and researchers involved with auditing and accounting. The collection will also prove an ideal starting place for researchers from other fields looking to break into this vital subject.

Download or read book Encouraging Professional Skepticism in the Industry Specialization Era a Dual process Model and an Experimental Test written by Jonathan H. Grenier and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I develop a framework that elucidates how the primary target of auditors0́9 professional skepticism 0́3 audit evidence or their own judgment and decision making 0́3 interacts with other factors to affect auditors0́9 professional judgments. As an initial test of the framework, I conduct an experiment that examines how the target of auditors0́9 skepticism and industry specialization jointly affect auditors0́9 judgments. When working inside their specialization, auditors make more automatic, intuitive judgments. Automaticity naturally manifests for industry specialists as a result of industry experience, social norms to appear knowledgeable and decisive, and their own expectations to proficiently interpret audit evidence. Priming industry specialists to be skeptical of audit evidence, therefore, has little influence on their judgments. In contrast, priming such auditors to be skeptical of their otherwise automated, intuitive judgment and decision making substantially alters their decision processing. They begin to question what they do and do not know, in an epistemological sense and, as a result, elevate their overall concern about material misstatements due to well-concealed fraud. This pattern of results is consistent with my framework0́9s predictions and suggests that specialization is more about improving the interpretation and assimilation of domain evidence rather than enhancing reflective, self-critical thinking. It also suggests it would be beneficial to identify other factors that promote industry specialists0́9 skepticism towards their judgment and decision making to make them more circumspect about the possibility of management fraud (cf., Bell, Peecher, and Solomon 2005).

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 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 Government Auditing Standards written by Government Accounting Office and published by www.Militarybookshop.CompanyUK. This book was released on 2012 with total page 242 pages. Available in PDF, EPUB and Kindle. Book excerpt: Newly revised in 2011. Contains the auditing standards promulgated by the Comptroller General of the United States. Known as the Yellow Book. Includes the professional standards and guidance, commonly referred to as generally accepted government auditing standards (GAGAS), which provide a framework for conducting high quality government audits and attestation engagements with competence, integrity, objectivity, and independence. These standards are for use by auditors of government entities and entities that receive government awards and audit organizations performing GAGAS audits and attestation engagements.

Download or read book Staff Auditors Proclivity for Computer Mediated Communication With Clients and Its Effect on Skeptical Behavior written by G. Bradley Bennett and published by . This book was released on 2018 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: A questioning nature and professional skepticism are fundamental requirements for auditors to conduct high quality audits and facilitate appropriate financial reporting. This study considers whether computer-mediated communication (CMC) reduces auditors' questioning during interactions with the client, compared to face-to-face (FTF) communication. We also examine how nonverbal cues commonly associated with deception affect auditors' skeptical behavior. Based on partner interviews and a survey comparing partners/managers with staff, we find that partners are concerned with the increased use of CMC for a variety of reasons, and that staff are more comfortable using CMC in a wider array of audit settings than are managers and partners. Experimental results based on Social Presence Theory (SPT) demonstrate that FTF interactions include more content and follow-up questions (a key aspect of skepticism) than CMC. Additionally, auditors engage in fewer relationship-building statements when communicating electronically. Also consistent with SPT, auditors communicating electronically request more documentation, though they ask fewer questions in general. Finally, using a unique measure of auditor skepticism based on revealed behavior, we find that auditors were more skeptical if the controller displayed nonverbal cues associated with deception, than when these specific cues were not present or not observable (CMC). Our findings suggest that communication mediums with reduced channels (e.g., no audio or visual channels), such as CMC, are less appropriate for complex and unique problem solving tasks. When paired with the concern that younger staff auditors are more likely to engage in CMC, skeptical behavior could be stunted in the modern audit environment, impacting financial statement quality.

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 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 An Investigation of the Relationship Between Mindsets and Tasks in an Audit Environment written by Emily Blum and published by . This book was released on 2020 with total page 192 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two studies that investigate the connection between mindset and task in the audit environment. The first study, presented in Chapter 2, investigates how a creative mindset will influence auditor decision making on two different task types: structured and ill-structured tasks. A creative mindset can contribute to audit quality by helping auditors recognize problems, generate novel solutions, and overcome fixation on irrelevant data. However, creativity may come with costs0́4recent psychology research has found that creative individuals are more likely to engage in ethically questionable behaviors. I leverage regulatory fit theory (Higgins 2000; Higgins 2009) to propose an expanded theoretical model of the link between creativity and unethical behavior that integrates task structure into the existing model. Contrary to my predictions, I find that more creative auditors outperform less creative auditors on both structured and ill-structured tasks. Consistent with my predictions, I find that an ill-structured audit task activates a creative mindset. Although I found no evidence of the costs of creativity that have been found in previous works, future research is necessary to explore whether the {esc}(3z{esc}(Bdark side{esc}(3y{esc}(B of creativity has implications for audit quality. The second study, presented in Chapter 3, investigates whether skeptical judgment and skeptical action are best facilitated by distinct and contrasting mindsets. Professional skepticism is an essential element of a high-quality audit. I present a framework in which the two elements that comprise professional skepticism0́4skeptical judgment and skeptical action0́4differ in that skeptical judgment involves heeding risks whereas skeptical action involves overcoming risks. This distinction suggests that a mindset that facilitates skeptical judgment may impede skeptical action, and vice versa. To test this proposition, I leverage the mindset theory of action phases (Gollwitzer 1990) to align skeptical judgment and skeptical action with two distinct and contrasting mindsets: skeptical judgment with a deliberative mindset, and skeptical action with an implemental mindset. I conduct an experiment in which I manipulate participants' mindset, and then test both their skeptical judgment and skeptical action on an audit task. Consistent with theory, I find that skeptical judgment and skeptical action are facilitated by contrasting mindsets, which has important implications for researchers and practitioners designing interventions to improve auditor skepticism.

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 Internal Auditor at Work written by K. H. Spencer Pickett and published by John Wiley & Sons. This book was released on 2004-02-10 with total page 303 pages. Available in PDF, EPUB and Kindle. Book excerpt: A clear, accessible guide to the roles and responsibilities of today's internal auditor At a time when companies are seeking to reevaluate their practices and add value to their audit processes, The Internal Auditor at Work represents an invaluable, user-friendly, and up-to-date guidebook for the internal auditing professional to refine and rethink both day-to-day methods and the underlying significance of the job. Each chapter of this in-depth, functional analysis contains numerous resources to guide the reader toward greater understanding and performance. Discussion questions promote dialogue among auditing professionals on the various topics covered. Top ten considerations lists recap the important points of each chapter. And end-of-chapter exercises are especially valuable to new internal auditors in that they facilitate self-development and application of principles covered. Written in partnership with the Institute of Internal Auditors with special attention to its revised standards and guidelines, The Internal Auditor at Work includes chapters on: The audit context The strategic dimension Quality and audit competence The audit process The audit proposition And more In a business environment currently undergoing major reevaluation, The Internal Auditor at Work provides an invaluable tool for internal auditing professionals and all others with an interest in adding value to their organizational processes.