A Review and Model of Auditor Judgments in Fraud-Related Planning Tasks

2011 ◽  
Vol 30 (4) ◽  
pp. 101-128 ◽  
Author(s):  
Jacqueline S. Hammersley

SUMMARY In this paper, I develop a model that describes auditor and fraud risk factor characteristics that I expect to affect auditor performance in fraud-related planning tasks (i.e., fraud hypothesis generation, risk assessment, and audit program modification). I expect that auditor knowledge, especially fraud knowledge, will significantly affect auditor performance in audit program modification tasks through its effects on fraud risk factor identification and hypothesis generation. Further, due to fraud's rarity, I expect that this knowledge is acquired primarily through indirect experience such as training rather than from direct experience and is enhanced when auditors have better problem solving skills and higher epistemic motivation. This is a significant departure from knowledge acquisition in other audit settings, and there is currently no evidence in the literature examining these relationships. I also propose that the diagnosticity of fraud risk factors and, specifically, the degree to which they support generation of specific testable fraud hypotheses affect auditors' ability to plan effective changes to audit programs. Finally, I review and summarize the extant fraud-related, audit planning literature and identify opportunities for future research. JEL Classifications: M40; M41; M42.

2018 ◽  
Vol 3 (1) ◽  
pp. A52-A79
Author(s):  
Velina K. Popova

ABSTRACT Prior research finds that although auditors assess fraud risk accurately, they generally fail to adjust audit procedures appropriately. The most recent Public Company Accounting Oversight Board (PCAOB) inspections in 2016 still identify response to risks of material misstatement (RMM) as a major area of inspection focus and cite it as a recurring audit deficiency. In this study, participants assess RMM and make audit-planning judgments in a high/low fraud risk environment using either a traditional source-based representation of RMM (i.e., based on inherent, control, and fraud risk) or a newer type-based representation of RMM (i.e., based on error and fraud risk). The results indicate that while auditors in both groups show similar sensitivity to risk, the type-based group of auditors are better able modify their audit plans by using more procedures that are new to a standard audit program and assigning more experienced staff to address high fraud risk. Data Availability: Contact the author.


2014 ◽  
Vol 90 (1) ◽  
pp. 175-198 ◽  
Author(s):  
Clara Xiaoling Chen ◽  
Ken T. Trotman ◽  
Flora (Hailan) Zhou

ABSTRACT In this study, we examine whether interacting hierarchical teams outperform nominal hierarchical teams in electronic brainstorming. Our hierarchical audit teams were composed of 111 managers and seniors from two Big 4 accounting firms. We compare fraud brainstorming outcomes between nominal and interacting teams for two tasks of varying complexity: a simpler task of fraud risk factor identification and a more complex task of fraud hypothesis generation. We find that nominal teams generate a significantly larger number of unique fraud risk factors and fraud hypotheses than interacting teams. Nominal teams also generate higher-quality fraud hypotheses. We provide evidence that social loafing by less experienced auditors in interacting teams drives the differences between nominal and interacting teams in the fraud hypothesis generation task. In addition, less experienced auditors have less developed mental simulations for frauds in interacting teams compared to those in nominal teams. A key contribution of our study is that it identifies the underlying mechanisms of the differential fraud brainstorming outcomes between nominal and interacting teams.


2004 ◽  
Vol 18 (3) ◽  
pp. 173-184 ◽  
Author(s):  
T. Jeffrey Wilks ◽  
Mark F. Zimbelman

This commentary examines academic research that can assist auditors in detecting and preventing fraudulent financial reporting. We review theoretical and empirical research from game theory, social psychology, judgment and decision making, and auditing to identify improvements in audit practice and promising areas for future research. This review focuses on the strategic fraud setting and suggests modifications in auditing standards that should facilitate auditors' use of strategic reasoning in this setting. We emphasize three critical audit tasks—fraud risk assessment, audit planning, and audit plan implementation—and recommend changes to current auditing standards and identify potential research questions for each task.


2008 ◽  
Vol 27 (2) ◽  
pp. 231-252 ◽  
Author(s):  
Chris E. Hogan ◽  
Zabihollah Rezaee ◽  
Richard A. Riley ◽  
Uma K. Velury

SUMMARY: We summarize relevant academic research findings to contribute to the Public Company Accounting Oversight Board (PCAOB) project on financial statement fraud and to offer insights and conclusions relevant to academics, standard setters, and practitioners. We discuss the characteristics of firms committing financial statement fraud, as identified in the literature, and research related to the fraud triangle. We then discuss research related to the procedures and abilities of auditors to detect fraud, and how fraud risk assessments impact audit planning and testing. In addition, we discuss several “high risk” areas and other issues as identified by the PCAOB. Finally, we summarize prior findings and offer conclusions and suggestions for areas where future research is needed.


Author(s):  
Kok Pin Ng ◽  
Hui Jin Chiew ◽  
Shahul Hameed ◽  
Simon Kang Seng Ting ◽  
Adeline Ng ◽  
...  

2018 ◽  
Vol 40 (2) ◽  
pp. 101-116 ◽  
Author(s):  
Andrew J. Dahl ◽  
James W. Peltier ◽  
John A. Schibrowsky

Marketing educators have long espoused the importance of critical thinking as a means of developing students’ higher-order problem-solving skills. In this article, we utilize an historical approach to investigate how educators have defined, operationalized, and empirically evaluated the critical thinking construct. To accomplish this, we review the critical thinking literature from three prominent marketing education journals and the leading management education journal. In doing so, we summarize extant critical thinking research across varied pedagogical topics, review empirical findings, and present a conceptual framework for motivating future research.


2018 ◽  
Vol 25 (4) ◽  
pp. 1062-1076 ◽  
Author(s):  
Rebecca Nicolaides ◽  
Richard Trafford ◽  
Russell Craig

Purpose This paper reviews an array of psycholinguistic techniques that auditors can deploy to explore written and oral language for signs of deception. The review is drawn upon to propose some elements of a forward research agenda. Design/methodology/approach Relevant literature across several disciplines is identified through keyword searches of major bibliographic databases. Findings The techniques highlighted have considerable potential for use by auditors to identify audit contexts which merit closer audit investigation. However, the techniques need further contextual empirical investigation in audit contexts. Seven specific propositions are presented for empirical testing. Originality/value This paper assembles literature on deceptive communication from a wide range of disciplines and relates it to the audit context. Auditors’ attention is directed to potential linguistic signals of fraud risk, and opportunities for future research are suggested. The paper is consciousness-raising, has pedagogic purpose and suggests critical elements for a future research agenda.


Author(s):  
Jenny Root ◽  
Alicia Saunders ◽  
Fred Spooner ◽  
Chelsi Brosh

The ability to solve mathematical problems related to purchasing and personal finance is important in promoting skill generalization and increasing independence for individuals with moderate intellectual disabilities (IDs). Using a multiple probe across participant design, this study investigated the effects of modified schema-based instruction (MSBI) on personal finance problem solving skills, purchasing an item on sale or leaving a tip, and using a calculator or iDevice (i.e., iPhone or iPad) for three middle school students diagnosed with a moderate ID. The results showed a functional relation between MSBI using a calculator on the participant’s ability to solve addition and subtraction personal finance word problems and generalize to iDevices. The findings of this study provide several implications for practice and offer suggestions for future research.


2018 ◽  
Vol 2018 ◽  
pp. 1-9 ◽  
Author(s):  
Esme Fuller-Thomson ◽  
Kaitlyn E. N. Howden ◽  
Lilia R. Fuller-Thomson ◽  
Senyo Agbeyaka

Factors associated with chronic obstructive pulmonary disease (COPD) among never-smokers have received little research attention. One potential risk factor for COPD is obesity, which is of particular importance in light of the global obesity epidemic. The objective of this study was to investigate the association between COPD and levels of obesity in a nationally representative sample of non-Hispanic white never-smokers. Data were drawn from the 2012 Center for Disease Control’s Behavioral Risk Factor Surveillance System (BRFSS). Pearson’s chi-square tests and logistic regression analyses were conducted in a large nationally representative sample of non-Hispanic white respondents aged 50 and over (76,004 women; 37,618 men) who reported that they had never smoked. A dose-response relationship was observed for both men and women: the prevalence of COPD increased from 2.5% in men and 3.5% in women who were of a healthy weight (BMI < 25) to 7.6% in men and 13.4% in women who had a BMI of 40 or higher. Even after adjusting for 7 potential confounds (e.g., age, education, and income), the odds of COPD were 3.21 higher for men (95% CI = 2.46, 4.20) and 4.00 higher for women with class III obesity (95% CI = 3.52, 4.55) in comparison with those of healthy weight. Regular screening for COPD is warranted in never-smoking obese patients who are aged 50 and over. Future research is needed to investigate plausible mechanisms for this association, including (1) the role of chronic inflammation associated with obesity and (2) the impact of central obesity on respiratory system mechanics.


10.28945/4327 ◽  
2019 ◽  

Aim/Purpose: Science is becoming a computational endeavor therefore Computational Thinking (CT) is gradually being accepted as a required skill for the 21st century science student. Students deserve relevant conceptual learning accessible through practical, constructionist approaches in cross-curricular applications therefore it is required for educators to define, practice and assess practical ways of introducing CT to science education starting from elementary school. Background: Computational Thinking is a set of problem-solving skills evolving from the computer science field. This work-in-progress research assesses the CT skills, along with science concepts, of students participating in a science program in school. The program pertains learning science by modeling and simulating real world phenomenon using an agent-based modeling practice. Methodology: This is an intervention research of a science program. It takes place as part of structured learning activities of 4th and 5th grade classes which are teacher-guided and are conducted in school. Both qualitative and quantitative evaluations are parts of the mixed methods research methodology using a variety of evaluation technique, including pretests and posttests, surveys, artifact-based interviews, in class observations and project evaluations. Contribution: CT is an emerging skill in learning science. It is requiring school systems to give increased attention for promoting students with the opportunity to engage in CT activities alongside with ways to promote a deeper understanding of science. Currently there is a lack of practical ways to do so and lack of methods to assess the results therefore it is an educational challenge. This paper presents a response to this challenge by proposing a practical program for school science courses and an assessment method. Findings: This is a research in progress which finding are based on a pilot study. The researches believe that findings may indicate improved degree of students' science understanding and problem-solving skills. Recommendations for Practitioners: Formulating computer simulations by students can have great potential on learning science with embedded CT skills. This approach could enable learners to see and interact with visualized representations of natural phenomena they create. Although most teachers do not learn about CT in their initial education, it is of paramount importance that such programs, as the one described in this research, will assist teachers with the opportunity to introduce CT into science studies. Recommendation for Researchers: Scientific simulation design in primary school is at its dawn. Future research investment and investigation should focus on assessment of aspects of the full Computational Thinking for Science taxonomy. In addition, to help teachers assess CT skills, new tools and criteria are required. Impact on Society: STEM related professions are lacking the man power required therefore the full potential of the economy of developed countries is not fulfilled. Having students acquire computational thinking skills through formal education may prepare the next generation of world class scientists and attract larger populations to these fields. Future Research: The inclusion of computational thinking as a core scientific practice in the Next Generation Science Standards is an important milestone, but there is still much work to do toward addressing the challenge of CT-Science education to grow a generation of technologically and scientifically savvy individuals. New comprehensive approaches are needed to cope with the complexity of cognitive processes related to CT.


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