Download or read book The Influence of Documentation Specificity and Priming on Auditors Fraud Risk Assessments and Evidence Evaluation Decisions written by Jacqueline S. Hammersley and published by . This book was released on 2009 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Public Company Accounting Oversight Board (PCAOB) recently suggested that auditors' lack of specific fraud planning documentation has led auditors to devote insufficient attention to fraud risks in subsequent audit work. Guided by Support Theory, we experimentally investigate how the specificity of fraud risk documentation during audit planning influences auditors' subsequent audit work. We also examine the effect of priming auditors about the fraud risks identified during planning before they begin subsequent evidence evaluation. We find that auditors' planning stage efforts do affect subsequent fraud risk assessments and evidence evaluation decisions. Unprimed auditors who receive more specific documentation increase their fraud risk assessments and evidence requests. Priming's effects are more complex. Priming auditors who receive summary documentation also increases fraud risk assessments and evidence requests; however, priming auditors who receive specific documentation reduces these judgments because the priming makes the client-specific risks seem less typical. Accordingly, the PCAOB's call for more documentation can have the unintended consequence of reducing auditors' sensitivity to fraud.

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 504 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 The Effect of Fraud Assessment Documentation Structure on Auditors Ability to Identify Control Weaknesses written by Christopher P. Agoglia and published by . This book was released on 2007 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: The current regulatory environment, brought on by recent high-profile audit failures, expands the auditor's role in detecting fraud. For example, auditors must now provide an opinion on clients' internal controls, addressing their effectiveness at preventing or detecting fraud. While the structure of workpaper documentation has been shown to affect audit workpaper preparers' assessments of overall fraud risk, prior research has not addressed the role their reviewers' experience plays in mitigating documentation structure effects. Our study matches audit workpaper preparers with reviewers to investigate whether reviewer task-specific experience moderates the effect of fraud assessment documentation structure on the audit review team's ability to identify the presence of significant control weaknesses. Consistent with expectations, we find that preparers who are required to document components of their fraud assessments inappropriately provided more favorable (and lower quality) assessments of significant control weaknesses than those using either a supporting or balanced documentation structure. More importantly, results indicate that reviewer task-specific experience moderated the effect of documentation structure on reviewers' identification of control weaknesses such that experienced reviewers compensated more for the effect of component documentation than reviewers with less experience. These results suggest that reviewer task-specific experience may help reduce the previously observed quot;flow-throughquot; effect of preparer workpaper deficiencies on reviewer judgments and provide support for new regulations emphasizing the role of experience during the control assessment process.

Download or read book Fraud Risk Assessment written by Leonard W. Vona and published by John Wiley & Sons. This book was released on 2012-06-29 with total page 164 pages. Available in PDF, EPUB and Kindle. Book excerpt: Providing a comprehensive framework for building an effective fraud prevention model, Fraud Risk Assessment: Building a Fraud Audit Program presents a readable overview for developing fraud audit procedures and building controls that successfully minimize fraud. An invaluable reference for auditors, fraud examiners, investigators, CFOs, controllers, corporate attorneys, and accountants, this book helps business leaders respond to the risk of asset misappropriation fraud and uncover fraud in core business systems.

Download or read book The Effects of Contrasts in Account level Fraud Risk Assessments on Auditors Evidence Evaluation written by Grace Ngonidzashe Mubako and published by . This book was released on 2012 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: Evidence from research in psychology and auditor judgment has shown that perceptions that form early in a sequential judgment process can influence subsequent judgments. Auditing Standard 12 requires auditors to identify fraud risk factors and assess the risk of fraud as part of the process of assessing overall misstatement risk. While it is expected that fraud risk assessments should have a bearing on overall risk assessments, it is possible that perceptions formed from assessments of fraud risk can negatively affect the evaluation of any evidence reviewed thereafter. Because different classes of transactions may be affected by fraud risk factors in different ways, fraud risk assessments may differ across classes of transactions. These differences may make subsequent auditor judgments susceptible to the contrast effects bias, where subjects overreact to the differences such that the fraud risk assessments influence auditor judgment more than they should. This study examines whether auditors who learn that fraud risk is low for one class of transactions immediately after examining a class of transactions that has high fraud risk, can overreact to the contrast such that they reduce their sensitivity to evidence that suggests increased misstatement risk. The study also examines whether these contrast effects can be mitigated by acquiring information about fraud risk assessments later in the sequence of evidence, after auditors have reviewed and assimilated evidence related to other risks. The study finds that, as predicted, auditor judgments are influenced by contrast effects. Auditors who examined classes of accounts for which fraud risk assessments were different were less sensitive to evidence suggesting increased risk in accounts that had been identified as having low fraud risk. However, contrary to predictions, these contrast effects were not mitigated by evidence order.

Download or read book Behavioural Aspects of Auditors Evidence Evaluation written by Magda Abou-Seada and published by Routledge. This book was released on 2017-11-22 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt: This title was first published in 2003. Based on psychological research, auditing studies have focused on 'belief revision' as a way of understanding how auditors evaluate evidence. Moreover a belief revision process is consistent with US auditing standards. UK standards on the other hand do not appear to give guidance on the process to follow when evaluating evidence. Research in the US indicates that auditors do in fact follow a belief revision process in accordance with US standards. Employing survey research (based on personal interviews with a number of experienced UK auditors) this book demonstrates how auditors prefer to be described as following the open mind approach. Building on the findings of the interviews the book then describes an experimental study to investigate the differences between the belief revision and open mind approaches in terms of their effect on the efficiency and effectiveness of the audit process. The book concludes that the belief revision approach would improve the efficiency of the audit process without affecting its effectiveness or outcomes.

Download or read book Assessing Fraud Risk Trustworthiness Reliability and Truthfulness written by Meghann Cefaratti and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: As directed by SAS 99 (AICPA, 2002), fraud risk assessment is an iterative process that begins with the recognition of initial fraud risk factors and then involves interviewing senior financial personnel (e.g., CFO) to explain the financial results and nonfinancial operating personnel to corroborate information obtained from the financial personnel. Prior research has not examined if auditors can combine evidence from workpaper documentation with interviews with multiple entity personnel to appropriately update their truthfulness and fraud risk assessments in a situation where management seeks to conceal fraud. In this study, 67 auditors, across professional ranks, completed a case based on an actual fraud. The presence or absence of fraud was manipulated. Auditors received and evaluated audit evidence in three stages -- after receiving client background information, client inquiry evidence from senior financial personnel, and inquiry evidence from operating personnel. The results show that auditors were not able to appropriately differentiate between the fraud and no fraud conditions after the initial review of financial statements and fraud risk factors and after the review of the information provided by the senior financial personnel, even when the financial personnel were being deceptive. However, when auditors received inconsistent (consistent) audit evidence from operating personnel, they appropriately increased (decreased) their fraud risk assessments and decreased (increased) their trustworthiness, reliability, and truthfulness judgments of financial personnel. Further analysis indicates that auditors with prior experience with fraud had heightened awareness of fraud early in the process based only on fraud risk factors and client deception. We extend research on deception detection by demonstrating auditors' ability to appropriately detect fraud and assess client truthfulness when presented with evidence from a corroborating source. These findings also provide evidence on SAS 99's recommendation for the use of client inquiry, but only when integrated with other audit evidence.

Download or read book The Influence of Decision Aid Use on Auditors Processing of Irrelevant Information in Fraud Risk Assessment written by Lynette Ingrid Wood and published by . This book was released on 2003 with total page 160 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Documentation Requirements and Quantified Versus Qualitative Audit Risk Assessments written by M. David Piercey and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The “not documented, not done” requirements of PCAOB Auditing Standard 3 substantially increased auditors' obligations to document their risk assessments. This study examines a potentially unintended consequence of such a requirement on auditors who have pressure to reach lenient, client-preferred risk assessments. Because documentation requirements potentially expose auditors' lenient judgments to more ex post scrutiny (e.g., regulator inspection, litigation), one would ordinarily not expect that adding them would cause auditors with client pressures to become more lenient. However, I expect that adding documentation requirements leads auditors who assess risk in qualitative (rather than quantified) terms to engage more in a specific word-smithing strategy that is shown by prior research to help rationalize reaching more lenient audit conclusions. Thus, even though documentation potentially exposes more lenient judgments to scrutiny, I show that auditors assessing risk in qualitative terms respond to this pressure by rationalizing their lenient assessments even more vigilantly. This leads to more lenient judgments, ironically as a result of adding the documentation requirement. Adding documentation requirements does not have this effect on quantified risk assessments. Prior research also suggests that auditors typically assess risk in words. Thus, under common conditions, the PCAOB's documentation requirements may have unintended effects with adverse implications for audit effectiveness, contrary to their regulatory intent.

Download or read book The Effect of Forensic Expertise and Time Pressure on Fraud Risk Assessment and Responsiveness written by Inez Verwey and published by . This book was released on 2016 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Professional standards direct auditors to consult with forensic specialists to enhance the quality of fraud decisions. However, research underlying this prescription is limited. We address this gap by examining the effect of forensic expertise and time pressure on fraud cue identification and responsiveness in an experiment manipulating forensic expertise (forensic specialist versus auditor) and time pressure (present versus absent). The results show that forensic specialists identify more fraud cues than auditors, although this did not result in differential fraud risk assessment. Further, auditors not only plan less effective audit procedures than forensic specialists but also the performance difference is more substantial in the more realistic time pressure condition. However, as with prior studies, we did not find an association between fraud risk assessment and the planning of audit procedures for both groups. Taken together, the results provide evidence that consulting forensic specialists can enhance fraud decision quality and the performance difference is attributable to fraud cue identification and program planning but not through differential assessment of fraud risk assessment or its linkage to program planning.

Download or read book The Effects of Irrelevant Information and Minor Errors in Client Documents on Assessments of Misstatement Risk and Sample Size written by Edward Lynch and published by . This book was released on 2017 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three studies. The first study conducts a 2 by 2 experiment to examine how auditors are influenced by the presence of irrelevant information and minor errors (i.e., "dirty documents") when reviewing audit evidence produced by the client. This study tasks 97 public accountants to review audit evidence and finds some evidence that dirty documents influence an auditor's assessment of the likelihood of account misstatement and the appropriate sample size. In order to demonstrate the usefulness of eye-tracking and to help generate potential research topics, the second study reviews extant literature in other disciplines where eye-tracking technology is applied to various judgment and decision-making contexts. This study suggests how eye-tracking can enhance extant accounting research. Illustrative examples of promising research opportunities (extending extant research) are provided. In addition, this study identifies how eye-tracking can be applied to more contemporary decision making and educational circumstances. The third study extends the first experiment through the use of eye-tracking technology. This study utilizes the same 2 by 2 experiment as the first study, but in this case records the eye movements of 43 auditing students while they review the audit evidence. The eye-tracking technology provides additional detail as to the specific evidence participants' focus on during their review. This study finds that participants focus their attention differently depending on whether irrelevant information or minor errors were present.

Download or read book The Impact of Inconsistent Evidence Documentation on Third party Perceptions of Audit Quality and Judgements of Auditor Liability written by Casey Joseph McNellis and published by . This book was released on 2011 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Fraud Risk Assessments of Independent Auditors written by Thomas M. Kozloski and published by . This book was released on 2002 with total page 384 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book How the Sleeper Effect Influences Auditors Evaluations of Audit Evidence written by Jennifer McCallen and published by . This book was released on 2020 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditing standards require auditors to consider management sources when evaluating evidence. However, standards are silent on how auditors should identify and incorporate relevant source information into evidence evaluation, despite the source's importance to evidence evaluation. The “sleeper effect of the source,” a psychological phenomenon, occurs when the persuasiveness of a weak message increases over time when delivered by a credible source. Research highlights that credibility is multi-dimensional and, importantly, competence, one dimension of credibility, is context-specific. An expert in one area may lack knowledge in other areas. Using an experiment, we find that when a credible source provides weak evidence, auditors are subject to a sleeper effect. Current audit practices regarding management assessments result in auditors focusing on overall credibility, as opposed to context-specific competence, when evaluating evidence. We propose and test a documentation intervention that aids auditors in incorporating context-specific competence into evidence evaluations and moderates the sleeper effect.

Download or read book The Impact of Assessment Procedures and Need for Cognition on Fraud Risk Assessments written by Pailin Trongmateerut and published by . This book was released on 2011 with total page 173 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Examining the Sleeper Effect in Auditors Evaluations of Audit Evidence written by Jennifer B. McCallen and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Current auditing standards require auditors to consider qualifications of the source (e.g., credibility and competence of management) in assessing the quality (e.g., reliability) of audit evidence, especially in subjective audit areas. However, while auditing standards stress the importance of the evaluation of management, they do not prescribe how auditors should effectively identify and incorporate relevant information about the source into evidence evaluation. Psychology research highlights that credibility is multi-dimensional and, more importantly, competence is context-specific. That is, an expert in one area may lack the necessary knowledge and background in other areas. Recent research in psychology has identified a phenomenon called the "sleeper effect for the source", which explains how even a weak message's persuasiveness can increase over time if it is initially associated with a credible source. Using an experiment, I find that current auditing practices regarding management competence assessments result in auditors ignoring context-specific competence and relying on weak audit evidence when provided by a credible source. Specifically, I find that auditors are subject to a sleeper effect of the source when evaluating audit evidence. This effect results in a reliance on overall source credibility assessments and a dissociation of a source's context-specific competence from the audit evidence. I also identify an audit documentation intervention that assists auditors in identifying and incorporating context-specific competence into evidence evaluations and moderates the sleeper effect.

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.