Can Simple Metaphors Be Used as Decision Aids to Promote Professional Skepticism?

2019 ◽  
Vol 34 (1) ◽  
pp. 47-60
Author(s):  
Mary P. Durkin ◽  
Jacob M. Rose ◽  
Jay C. Thibodeau
Keyword(s):  
Decision Aids ◽  
Sources Of Information ◽  
High Quality ◽  
Efficient Tool ◽  
Professional Skepticism ◽  
Fraud Risk ◽  
Big 4 ◽  
Audit Firms ◽  
Audit Evidence

ABSTRACT This study examines the potential for metaphorical priming to promote professional skepticism. Results of an experiment with 99 senior auditors from two Big 4 audit firms indicate that reading metaphors that are entirely unrelated to audit evidence can promote professional skepticism and influence auditors' judgments. Relative to auditor participants who did not read a metaphor, participants who read a metaphor related to concerns about the honesty of the sources of information (client-skeptical metaphor) or concerns about one's own ability to detect problems (self-skeptical metaphor) assessed higher levels of fraud risk. These auditors also perceived that fraud-based explanations were more likely to cause fluctuations in client ratios. Importantly, metaphorical primes improved auditors' fraud-related actions and caused them to focus on issues that were the most likely explanations for the audit evidence. Results suggest that metaphorical priming may represent a powerful and efficient tool for promoting high-quality and professionally skeptical judgments.

scholarly journals Descriptive Evidence from Audit Practice on SAS No. 99 Brainstorming Activities

2007 ◽  
Vol 1 (1) ◽  
pp. A1-A11 ◽  
Author(s):  
Jodi L. Bellovary ◽  
Karla M. Johnstone
Keyword(s):  
Risk Assessments ◽  
Group Interactions ◽  
Professional Skepticism ◽  
Fraud Risk ◽  
Big 4 ◽  
Audit Firms ◽  
Fraud Risk Assessments

SUMMARY: This paper describes how auditors conduct brainstorming sessions to comply with the requirements of SAS No. 99. We gather evidence by interviewing 22 auditors at all personnel levels across seven audit firms (including all of the Big 4 firms) and by observing actual brainstorming sessions. The results reveal how auditors prepare for brainstorming sessions and allow us to describe a typical four-step brainstorming session process. We describe brainstorming group interactions and provide evidence on brainstorming session outcomes in terms of fraud risk assessments, audit plan modifications, and budget modifications. Finally, we report how audit firms encourage professional skepticism during brainstorming.

scholarly journals Assessing Management Integrity: Insights from Big 4 Auditors in Egypt

2018 ◽  
Vol 12 (1) ◽  
pp. A29-A39
Author(s):  
Rasha Kassem
Keyword(s):  
Best Practices ◽  
Training Programs ◽  
Risk Assessments ◽  
External Auditors ◽  
Corporate Scandals ◽  
Fraud Risk ◽  
Big 4 ◽  
Audit Firms ◽  
Fraud Risk Assessments ◽  
Audit Standards

SUMMARY Recent corporate scandals have raised concerns about the quality and value of the audit profession and have generated demands for improving auditors' evaluation of management integrity. The literature lacks evidence regarding methods of assessing management integrity, while audit standards provide little if any guidance on this matter. This raises questions about how external auditors can comply with the audit standards in this area and what best practices and deficiencies exist in the assessment of management integrity. This study examines methods of assessing management integrity by providing insights from the Big 4 auditors in Egypt. The findings of this study will benefit audit firms in their professional audit training programs, as well as auditors conducting fraud risk assessments.

When Should Audit Firms Introduce Analyses of Big Data Into the Audit Process?

2017 ◽  
Vol 31 (3) ◽  
pp. 81-99 ◽  
Author(s):  
Anna M. Rose ◽  
Jacob M. Rose ◽  
Kerri-Ann Sanderson ◽  
Jay C. Thibodeau
Keyword(s):  
Big Data ◽  
Audit Process ◽  
Processing Mode ◽  
Big 4 ◽  
Audit Firms ◽  
Audit Evidence ◽  
Evaluation Of Evidence ◽  
Data Visualizations ◽  
Professional Judgments

ABSTRACT This study investigates how the timing of the consideration of Big Data visualizations affects an auditor's evaluation of evidence and professional judgments. In addition, we examine whether the use of an intuitive processing mode, as compared to a deliberative processing mode, influences an auditor's use and evaluation of Big Data visualizations. We conduct an experiment with 127 senior auditors from two Big 4 firms and find that auditors have difficulty recognizing patterns in Big Data visualizations when viewed before more traditional audit evidence. Our findings also indicate that auditors who view Big Data visualizations containing patterns that are contrary to management assertions after they view traditional audit evidence have greater concerns about potential misstatements and increase budgeted hours more. Overall, our results suggest that Big Data visualizations used as evidential matter have fewer benefits when they are viewed before auditors examine more traditional audit evidence.

scholarly journals PENGARUH FAKTOR-FAKTOR PERSONAL TERHADAP SKEPTISISME PROFESIONAL AUDITOR

2017 ◽  
Vol 17 (1) ◽  
pp. 89
Author(s):  
Dessy Larimbi ◽  
Bambang Subroto ◽  
Rosidi Rosidi
Keyword(s):  
Personality Type ◽  
Sampling Technique ◽  
Personal Factors ◽  
Myers Briggs Type Indicator ◽  
Professional Skepticism ◽  
Auditor Tenure ◽  
Big 4 ◽  
Audit Firms ◽  
Type Indicator ◽  
The Impact

The purpose of this study was to test the impact of personal factors to auditor’s professional skepticism at Non Big 4 audit firms in East Java. Personal factors which tested in this study were personality type, auditor’s sex, and audit experience. Auditor’s personality types were classified based on Myers-Briggs Type Indicator (MBTI), audit experience was measured by auditor tenure, and auditor’s professional skepticism was measured by Hurtt (2010) professional skepticism scale. Sample used in this study were auditors at Non Big 4 audit firms in East Java, which selected by easy sampling technique (convenience sampling). Questionnaire was used as research instrument. Datas in this study were analyzed by multiple regression analysis. The results of this study indicate that INFP (introvert, intuition, feeling, perceiving) and ENFJ (extrovert, intuition, feeling, judging) personality type affects auditor’s professional skepticism. This study also found that audit experience affects auditor’s professional skepticism. The more experience an auditor, the higher the professional skepticism. On the other hand, sex differences of auditors at Non Big 4 audit firms in East Java turned out to have no effect on professional skepticism.

How could external auditors assess the rationalization of fraud?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rasha Kassem
Keyword(s):  
Design Methodology ◽  
Regulatory Environment ◽  
Online Questionnaire ◽  
Content Type ◽  
External Auditors ◽  
Fraud Risk ◽  
Big 4 ◽  
Audit Firms ◽  
The Board Of Directors ◽  
Practical Implications

Purpose This study aims to explore methods that external auditors can use to assess the rationalization of fraud in fraud risk assessment in auditing. Design/methodology/approach An online questionnaire was used to collect data from 150 Big 4 auditors. Findings The results reveal a total of 18 methods that auditors can use to assess the rationalization of fraud. However, some methods were recommended more than others by the auditors in this study. These methods include incorporating the assessment of rationalization into the assessment of motives for fraud and integrity, understanding the client’s business and regulatory environment, inquiring management and the board of directors about past fraud cases and observing management responses and reactions during auditors’ inquiry about fraud-related matters. Practical implications The guidance provided by this study could help enhance auditors’ skills in assessing fraud risks, which, in turn, may increase the likelihood of detecting fraud. The guide could also be helpful for audit firms in their fraud training programs. Originality/value This study is the first to explore methods for assessing the rationalization of fraud by drawing on the experience and insights of Big 4 auditors.

Analytical Procedures: Are More Good Ideas Always Better for Audit Quality?

2019 ◽  
Vol 32 (1) ◽  
pp. 37-49 ◽  
Author(s):  
Anna M. Rose ◽  
Jacob M. Rose ◽  
Ikseon Suh ◽  
Jay C. Thibodeau
Keyword(s):  
Audit Quality ◽  
Assessment Process ◽  
Financial Statement ◽  
Professional Skepticism ◽  
Risk Assessment Process ◽  
Fraud Risk ◽  
Big 4 ◽  
Judgment Biases ◽  
Perceived Difficulty ◽  
Analytical Procedures

ABSTRACT Analytical procedures are critical to the financial statement auditing process and involve the auditor generating and considering multiple explanations for account fluctuations. We examine whether generating more or fewer explanations during analytical procedures improves audit quality. Research from fields outside of accounting suggests that generating many explanations can exacerbate judgment biases. We conduct an experiment with 92 senior auditors from two Big 4 firms to investigate whether the generation of more plausible explanations about potential misstatements hinders professional skepticism by increasing auditors' tendencies to anchor on client-provided explanations. We find that the generation of more plausible explanations increases the perceived difficulty of the task, which leads to anchoring on client explanations. Increased anchoring results in reduced assessments of fraud risk, an important component of the risk assessment process. These findings suggest that generating more explanations during analytics procedures can be counterproductive.

scholarly journals PENGARUH FAKTOR-FAKTOR PERSONAL TERHADAP SKEPTISISME PROFESIONAL AUDITOR

2018 ◽  
Vol 17 (1) ◽  
Author(s):  
Dessy Larimbi ◽  
Bambang Subroto ◽  
Rosidi Rosidi
Keyword(s):  
Personality Type ◽  
Sampling Technique ◽  
Personal Factors ◽  
Myers Briggs Type Indicator ◽  
Professional Skepticism ◽  
Auditor Tenure ◽  
Big 4 ◽  
Audit Firms ◽  
Type Indicator ◽  
The Impact

The purpose of this study was to test the impact of personal factors to auditor’s professional skepticism at Non Big 4 audit firms in East Java. Personal factors which tested in this study were personality type, auditor’s sex, and audit experience. Auditor’s personality types were classified based on Myers-Briggs Type Indicator (MBTI), audit experience was measured by auditor tenure, and auditor’s professional skepticism was measured by Hurtt (2010) professional skepticism scale. Sample used in this study were auditors at Non Big 4 audit firms in East Java, which selected by easy sampling technique (convenience sampling). Questionnaire was used as research instrument. Datas in this study were analyzed by multiple regression analysis. The results of this study indicate that INFP (introvert, intuition, feeling, perceiving) and ENFJ (extrovert, intuition, feeling, judging) personality type affects auditor’s professional skepticism. This study also found that audit experience affects auditor’s professional skepticism. The more experience an auditor, the higher the professional skepticism. On the other hand, sex differences of auditors at Non Big 4 audit firms in East Java turned out to have no effect on professional skepticism.

Financial Reform and the Big 4 Audit Firms

2010 ◽  
Author(s):  
American Antitrust Institute
Keyword(s):  
Financial Reform ◽  
Big 4 ◽  
Audit Firms

The Effects of Judgments of New Clients' Integrity upon Risk Judgments, Audit Evidence, and Fees

2001 ◽  
Vol 20 (2) ◽  
pp. 85-99 ◽  
Author(s):  
Philip R. Beaulieu
Keyword(s):  
Source Credibility ◽  
Prospective Audit ◽  
Fraud Risk ◽  
Audit Evidence ◽  
Risk Judgments

Client integrity concerns auditors when they plan new audit engagements because it is related to both fraud risk and the source credibility of clients. Auditors may increase audit work and fees when they judge integrity to be below normal. In an experiment, a sample of 63 Canadian audit partners read information about a prospective audit client, including information about the client's CFO. This information was manipulated to support a judgment of either high or low integrity. As hypothesized, judgments of client integrity were negatively related to risk judgments, audit evidence extent recommendations (indirectly through risk judgments), and fee recommendations (indirectly through risk judgments and extent recommendations).

Audit Firms as Networks of Offices

2017 ◽  
Vol 37 (3) ◽  
pp. 211-242 ◽  
Author(s):  
Scott E. Seavey ◽  
Michael J Imhof ◽  
Tiffany J. Westfall
Keyword(s):  
Knowledge Management ◽  
Knowledge Sharing ◽  
Network Effects ◽  
Audit Quality ◽  
Discretionary Accruals ◽  
Big 4 ◽  
Audit Firms ◽  
Network Connectedness ◽  
Partner Knowledge ◽  
Office Level

SUMMARY Prior audit research suggests that most, if not all, audit quality can be explained at the office level. However, the question remains of whether office-level audit quality is contingent on how individual offices relate to the firm as a whole. Motivated by theories of knowledge management, organizational learning, and networks, we posit that individual offices are connected to their audit network through partner knowledge sharing and oversight, which impact office-level audit quality. We interview Big 4 audit partners and learn that knowledge sharing between partners in different offices is common and intended to aid in the provision of audit services. Using network connectedness to proxy for knowledge sharing and oversight between offices of the same firm, we document that more connected offices are associated with fewer client restatements and lower discretionary accruals. We additionally find that network effects are magnified when accounting treatments are more complex and require greater auditor judgement.

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