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Professional Skepticism And Auditor Judgment
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Book Synopsis The Influence of Information Order Effects and Trait Professional Skepticism on Auditors’ Belief Revisions by : Kristina Yankova
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.
Book Synopsis A Study of Professional Skepticism by : Carmen Olsen
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.
Book Synopsis Professional Skepticism and Auditor Judgment by : Christopher Koch
Download or read book Professional Skepticism and Auditor Judgment written by Christopher Koch and published by . This book was released on 2016 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: In two experiments with experienced auditors, we examine whether and how trait skepticism mitigates the tendency to place a greater emphasis on the most recently presented information, the so-called recency bias. We measure trait skepticism using the Hurtt scale (Hurtt 2010), manipulate information order, and vary presentation mode across two experiments. When information is presented sequentially (experiment 1), we find that auditors who score higher on the subconstructs of trait skepticism related to evidence examination are less likely to overweight contrasting evidence and thus are less prone to the recency bias. When information is presented simultaneously and the task is complex (experiment 2), we observe that auditors with higher trait skepticism exhibit higher cognitive effort which mitigates the recency bias. Our main contribution is the identification and detailed investigation of trait skepticism as a factor mitigating the recency bias, thereby providing evidence for its behavioral manifestation.
Book Synopsis The Influence of Information Order Effects and Trait Professional Skepticism on Auditors' Belief Revisions by : Kristina Yankova
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.
Book Synopsis Promoting Professional Skepticism in the Audit Environment by : Mary C. Parlee
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.
Author :United States Government Accountability Office Publisher :Lulu.com ISBN 13 :0359536395 Total Pages :234 pages Book Rating :4.3/5 (595 download)
Book Synopsis Government Auditing Standards - 2018 Revision by : United States Government Accountability Office
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.
Book Synopsis Cognitive Dissonance and Auditor Professional Skepticism by : Ruwan K.B. Adikaram
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.
Book Synopsis The Role of Professional Skepticism, Attitudes and Emotions on Auditor's Judgments by : Christine J. Nolder
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:
Book Synopsis Encouraging Professional Skepticism in the Industry Specialization Era: a Dual-process Model and an Experimental Test by : Jonathan H. Grenier
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).
Book Synopsis Auditors' Skeptical Characteristics and Their Relationship to Skeptical Judgments and Decisions by : Luc Quadackers
Download or read book Auditors' Skeptical Characteristics and Their Relationship to Skeptical Judgments and Decisions written by Luc Quadackers and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this exploratory study is to examine the relationship between auditors' skeptical characteristics and skeptical judgments and decisions. Despite the importance of auditor skepticism, as recognized by auditing standards, regulators, and practice, there is a lack of consensus and empirical data on the identification of auditor's skeptical characteristics, how they are measured and the extent to which skeptical characteristics map with auditors' skeptical judgments and decisions. Gaining insight on these issues has important implications for auditor recruitment and training, guidance to provide in audit tools, and future research. Three widely recognized skeptical characteristics from the psychology and auditing literatures are examined: (1) interpersonal trust; (2) suspension of judgment; and (3) locus of control. Furthermore, a comprehensive professional skepticism scale developed for the field of auditing is also considered. Finally, to examine the effect of client risks, the influence of control environment strength on the relationship between skeptical characteristics and auditors' judgments and decisions is examined. An experimental study is conducted to address these issues involving a sample of 376 auditors from offices of the Big Four auditing firms in the Netherlands with experience ranging from staff to partner. The results show that the strength of the relationship between the alternative skeptical characteristics and skeptical judgments and decisions varies significantly. Overall, interpersonal trust displays the highest significance in predicting skeptical judgments and decisions. However, the relationship between auditors' skeptical characteristics and skeptical judgments and decisions appears to be dependent on the strength of the control environment.
Book Synopsis Auditors' Professional Skepticism by : Luc Quadackers
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.
Book Synopsis An Investigation of the Relationship Between Mindsets and Tasks in an Audit Environment by : Emily Blum
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.
Book Synopsis Do "superstar" CEOs Impair Auditors' Independence and Professional Skepticism? by : Oscar Harvin
Download or read book Do "superstar" CEOs Impair Auditors' Independence and Professional Skepticism? written by Oscar Harvin and published by . This book was released on 2016 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study examines the potential threat to an auditor's independence in fact which may result from the extraordinarily favorable personal reputation (superstar status) of an audit client's CEO. This potential threat to an auditors' independence is the result of a halo effect bias which can distort an individual's judgment and behavior. Accounting firms use a business risk audit approach which involves conducting a strategic risk assessment which assesses the overall threats to the business model of an audit client. Prior research has demonstrated that the strategic risk assessment can bias the judgment of auditors pertaining to financial account level risk assessments. For example, the Bernie Madoff Ponzi scheme demonstrated how an extraordinarily well respected individual with superstar status can distort the judgment of knowledgeable and normally skeptical individuals. An experiment was conducted to examine the potential threat of a superstar CEO on an auditor's independence as demonstrated by the ability to distort the judgment of the auditor during the performance of the strategic risk assessment. In addition, the experiment was designed to examine whether the halo cognitive bias can lessen the impact that an auditor's professional skepticism has on his or her judgment and behavior during the audit of a client's financial statement. Unlike other studies which have sought only to demonstrate that a cognitive bias exist which impairs auditor judgment; the study also examined whether the influence of a halo effect bias can be mitigated by the formal rating of audit evidence in a similar manner that was used by Embu and Finley (1977) to successfully mitigate a framing effect. The experiment did not support the main hypothesis of the study that auditors assess the strategic risk at a lower risk level for firms that employ a superstar CEO than for those whom employ a non-superstar CEO. This result may primarily be due to the inability of the scenario used in the experiment to sufficiently differentiate the characteristics of the superstar and non-superstar CEO. Without establishing that the participants' judgment was being distorted by a superstar CEO; the other hypotheses which involved testing a debiasing method to mitigate the halo effect caused by a superstar CEO and investigating whether a halo effect reduces the impact that auditors' trait skepticism level has on their judgment could not be properly tested.
Book Synopsis Linking Skeptical Judgment with Skeptical Action by : Marc Ortegren
Download or read book Linking Skeptical Judgment with Skeptical Action written by Marc Ortegren and published by . This book was released on 2016 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Professional skepticism is of major concern in the auditing profession. This study evaluates how skeptical judgment translates into skeptical action, and assesses the influence of client identification and professional commitment on the link between skeptical judgment and skeptical action. Despite the importance of taking action in demonstrating skepticism, little research has investigated under what circumstances auditors may be more or less likely to act on skeptical judgments. Using 124 senior auditors as participants, we find that skeptical action is indeed less likely overall than skeptical judgment. We also find that higher professional commitment can improve the link between skeptical judgment and skeptical action; contrary to our expectation, we find no evidence that higher client identification reduces the link between skeptical judgment and skeptical action. Our findings have important implications for auditing research and practice.
Book Synopsis Professional Skepticism and Its Effect on the Professional Judgment of Trainee Accountants from the Durban and Midlands Regions of KwaZulu-Natal by : Favourite Mhlongo
Download or read book Professional Skepticism and Its Effect on the Professional Judgment of Trainee Accountants from the Durban and Midlands Regions of KwaZulu-Natal written by Favourite Mhlongo and published by . This book was released on 2015 with total page 378 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis A Model and Literature Review of Professional Skepticism in Auditing by : Mark W. Nelson
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.
Book Synopsis Getting from Skeptical Judgment to Skeptical Action by : Brian Hasson
Download or read book Getting from Skeptical Judgment to Skeptical Action written by Brian Hasson and published by . This book was released on 2019 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: Professional skepticism is clearly an important and timely topic in the practice and regulation of auditing. In this paper, we apply Bandura's self-efficacy construct within Social Cognitive Theory to auditor efficacy and skeptical action in an audit context. This study uses a multiple-interview design to explore the exercise of professional skepticism by experienced auditors. An auditor can be skeptical about the facts and circumstances of a client but may not always manifest that skeptical judgment as skeptical action. We adopt a social constructivist approach applied through a self-efficacy model for auditing to better understand auditors' experience when considering skeptical action. Our evidence suggests that efficacy expectations associated with skeptical actions are increased by the presence of three primary factors: (1) the support/collectivism within the audit team (consensus), (2) the preparation/homework of the auditor (cognizance), and (3) the quality of the relationship with the client counterpart (consonance). These three themes are further illustrated by specific actions that can be taken by an auditor. The study contributes to our understanding of how auditors make decisions that influence skeptical actions during the course of the audit, the resources and strategies employed to do so, and the motivations that underlie skeptical actions.
