The Effects of Computer Assurance Specialist Competence and Auditor AIS Expertise on Auditor Planning Judgments

2004 ◽  
Author(s):  
Joseph F. Brazel ◽  
Christopher P. Agoglia
Keyword(s):  
Planning Judgments

Integration of Fraud Risk in the Risk of Material Misstatement and the Effect on Auditors' Planning Decisions

2018 ◽  
Vol 3 (1) ◽  
pp. A52-A79
Author(s):  
Velina K. Popova
Keyword(s):  
Data Availability ◽  
Risk Environment ◽  
Major Area ◽  
Audit Planning ◽  
Fraud Risk ◽  
Planning Decisions ◽  
Public Company ◽  
Study Participants ◽  
Audit Program ◽  
Planning Judgments

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.

A Test of Changes in Auditors' Fraud-Related Planning Judgments since the Issuance of SAS No. 82

2003 ◽  
Vol 22 (2) ◽  
pp. 237-251 ◽  
Author(s):  
Steven M. Glover ◽  
Douglas F. Prawitt ◽  
Joseph J. Schultz ◽  
Mark F. Zimbelman
Keyword(s):  
Risk Factors ◽  
Risk Assessment ◽  
Fraud Risk ◽  
Weak Evidence ◽  
Full Effect ◽  
Implementation Experience ◽  
And Training ◽  
Audit Policy ◽  
Planning Judgments

This study is a post-SAS No. 82 replication of Zimbelman (1997) (hereafter Z97), which examined the effect of a separate and explicit fraud-risk assessment as later required by SAS No. 82. Z97 found weak evidence that this requirement would impact auditors' planning judgments. However, because Z97 was conducted before SAS No. 82 was issued, that study was unable to capture the full effect of SAS No. 82 on the audit environment (e.g., related guidance and training, audit policy, and implementation experience). In this study, we compare pre- and post-SAS No. 82 planning judgments and find that post-SAS No. 82 judgments are more sensitive to fraud risk factors. Specifically, we find that post-SAS No. 82 participants are more aware of the need to modify audit plans and are more likely to increase the extent of their audit tests in response to increased fraud risk when compared with the pre-SAS No. 82 participants in Z97. However, we do not find evidence that auditors modify the nature of their planned tests in response to fraud risk either before or after SAS No. 82.

The Role of Incentives to Manage Earnings and Quantification in Auditors' Evaluations of Management-Provided Information

2004 ◽  
Vol 23 (1) ◽  
pp. 11-27 ◽  
Author(s):  
Urton Anderson ◽  
Kathryn Kadous ◽  
Lisa Koonce
Keyword(s):  
Earnings Management ◽  
Two Factors ◽  
Account Information ◽  
Planning Judgments

We conducted an experiment with 113 experienced auditors to examine the influence of two factors on the persuasiveness of a management-provided nonerror explanation for an unexpected fluctuation in revenue. We expected that auditors' evaluations of a management explanation would depend jointly on whether it is quantified (i.e., put into numbers) and the managers' incentives to manage earnings. Instead, we find that the persuasiveness of managers' explanations is determined solely by their incentives. Focus on managers' incentives is consistent with auditors attending to regulators ‘ recent concerns about earnings management. However, such a focus implies that when the likelihood of earnings management appears low, auditors fail to take into account information about sufficiency that is contained in the quantified explanation when they revise their planning judgments.

scholarly journals How Strategic Reasoning and Brainstorming Can Help Auditors Detect Fraud

2012 ◽  
Vol 6 (2) ◽  
pp. P25-P33 ◽  
Author(s):  
Vicky B. Hoffman ◽  
Mark F. Zimbelman
Keyword(s):  
Fraud Detection ◽  
Strategic Reasoning ◽  
Fraud Risk ◽  
Planning Judgments

SUMMARY Auditors often fail to effectively modify their standard audit procedures in response to fraud risk. Two audit interventions, strategic reasoning (i.e., considering how the audit client may be concealing a fraud from the auditor) and brainstorming in groups, have been suggested to help auditors design better fraud detection procedures. This paper summarizes a recent study (“Do Strategic Reasoning and Brainstorming Help Auditors Change Their Standard Audit Procedures in Response to Fraud Risk?” [Hoffman and Zimbelman 2009], The Accounting Review) in which an experiment was conducted in a high-fraud-risk setting to see whether these interventions helped audit managers design better fraud procedures. The study found that both interventions improved auditors' planning judgments, but that combining them was not more effective than either one alone. That is, once individual audit managers reasoned strategically, adding more audit managers to the process in a brainstorming group did not result in better judgments, and brainstorming groups did not obtain additional benefits from reasoning strategically together.

Sign in / Sign up

Export Citation Format

Share Document