scholarly journals Challenges when Auditing Cryptocurrencies

2019 ◽  
Vol 14 (1) ◽  
pp. A46-A58 ◽  
Author(s):  
Nishani Edirisinghe Vincent ◽  
Anne M. Wilkins
Keyword(s):  
Audit Planning ◽  
Audit Evidence ◽  
Evidence Gathering ◽  
Client Acceptance ◽  
Four Quadrant

SUMMARY The novelty, ambiguity, and the lack of official guidance surrounding cryptocurrency transactions impose additional audit risks that should be considered during client acceptance and retention and planning audit procedures. We develop a four-quadrant model to assist auditors in client acceptance and continuance decisions and identify cryptocurrency risks that should be considered during audit planning and audit evidence gathering.

Challenges when Auditing Cryptocurrencies

2019 ◽  
pp. 0000-0000
Author(s):  
Nishani Edirisinghe Vincent ◽  
Anne M. Wilkins
Keyword(s):  
Audit Planning ◽  
Audit Evidence ◽  
Evidence Gathering ◽  
Client Acceptance ◽  
Four Quadrant

The novelty, ambiguity, and the lack of official guidance surrounding cryptocurrency transactions impose additional audit risks that should be considered during client-acceptance and retention and planning audit procedures. We develop a four-quadrant model to assist auditors in client-acceptance and continuance decisions and identify cryptocurrency risks that should be considered during audit planning and audit evidence gathering.

Client-Acceptance Decisions: Simultaneous Effects of Client Business Risk, Audit Risk, Auditor Business Risk, and Risk Adaptation

2000 ◽  
Vol 19 (1) ◽  
pp. 1-25 ◽  
Author(s):  
Karla M. Johnstone
Keyword(s):  
Internal Control ◽  
Risk Evaluation ◽  
Business Risk ◽  
Audit Risk ◽  
Audit Firm ◽  
Risk Characteristics ◽  
Audit Fee ◽  
Audit Evidence ◽  
Client Acceptance ◽  
Client Acceptance Decision

Little is known about how audit partners make the client-acceptance decision. In this paper, a model is developed and tested that characterizes the client-acceptance decision as a process of risk evaluation and risk adaptation. The model proposes that auditors will evaluate client-related risks (e.g., financial viability, and internal control) and use that evaluation to determine if the audit firm will suffer a loss on the engagement via a lack of engagement profitability or future litigation. The model proposes that auditors will adapt to the client-acceptance risks by using three strategies: (1) screening clients based on their risk characteristics; (2) screening clients based on the audit firm's risk of loss on the engagement; and (3) more proactively adapting using strategies including adjusting the audit fee, making plans about necessary audit evidence, making plans about personnel assignment, and/or adjusting the amount of data collected during the client-acceptance process. To test the model, an experiment was conducted using 137 highly experienced audit partners as participants. The results show that the partners considered the relationships between client-related risks and used their evaluation of those risks to evaluate the audit firm's risk of loss on the engagement. In terms of risk adaptation, partners screened clients based on the clients' risk characteristics and based on the audit firm's risk of loss on the engagement. Contrary to prediction, the partners did not use more proactive risk-adaptation strategies (e.g., adjusting the audit fee, making plans about necessary audit evidence, etc.) to make less “acceptable” clients more acceptable. It appears that avoiding risk, rather than proactively adapting to risk, is descriptive of how audit partners currently make the client-acceptance decision.

An Examination of Memory Conjunction Errors in Multiple Client Audit Environments

2003 ◽  
Vol 22 (1) ◽  
pp. 127-141 ◽  
Author(s):  
Deborah L. Lindberg ◽  
Mario M. Maletta
Keyword(s):  
Planning Process ◽  
Complex Function ◽  
Audit Process ◽  
Simultaneous Exposure ◽  
Audit Risk ◽  
Reconstruction Process ◽  
Audit Planning ◽  
Conjunction Errors ◽  
Audit Evidence ◽  
Memory Conjunction Errors

This study is the first in an auditing context to examine auditor susceptibility to memory conjunction errors, a type of systematic memory error that is related to the memory reconstruction process. Conjunction errors occur when memory traces associated with one event are incorrectly attributed to another event during memory reconstruction. Auditors may be particularly susceptible to memory conjunction errors due to their simultaneous exposure to multiple audit clients and their use of standardized audit forms and checklists to capture information. Unrecognized, such errors could adversely affect the efficiency and/or effectiveness of the financial statement audit process. We conducted an experiment that employed practicing audit professionals addressing multiple audit clients. Consistent with our hypotheses, the results indicate that memory conjunction errors in an audit environment are a complex function of (1) the consistency between the audit evidence recalled from an unrelated audit and the characteristics of the client that is the target of the memory reconstruction, (2) the consistency between this recalled audit evidence and the characteristics of the client to which the evidence is actually associated, and (3) the level of risk present in the audit environment that is the target of the memory reconstruction. While research has shown that audit risk factors can generally serve to decrease some types of auditors' memory recognition errors in single client situations (e.g., Sprinkle and Tubbs 1998), our results show that increases in audit risk can actually exacerbate memory errors involving multiple audit clients and memory conjunction errors. Finally, the findings of the study suggest that auditors are not only susceptible to memory conjunction errors, but also that such errors may play a significant role in elements of the audit-planning process related to auditors' likelihood of material error assessments.

Sky Scientific, Inc.: An Auditing Minefield

2009 ◽  
Vol 24 (2) ◽  
pp. 219-236 ◽  
Author(s):  
Stephen M. BeMiller ◽  
Randy Wirtz ◽  
Deborah L. Lindberg
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Roles And Responsibilities ◽  
Going Concern ◽  
Audit Planning ◽  
Audit Evidence ◽  
Engagement Process ◽  
Independent Audit

ABSTRACT: In 1994, Sky Scientific, Inc. dramatically overstated assets and understated expenses in its financial statements. A Securities and Exchange Commission (SEC) investigation into those financial statements led to charges being filed against both the company and its auditors. This case takes a detailed look into the independent audit of Sky's financial statements for the purpose of understanding how the auditors failed to see the extent to which Sky's financial reporting was misleading and to adequately challenge the assertions presented in the financial statements before Sky filed them with the SEC. This case provides an opportunity to examine numerous issues related to the audit engagement process, including audit planning, the evaluation of management representations, the audit evidence process, and auditors' going-concern judgments. The roles and responsibilities of the concurring auditor and an outside specialist are also discussed.

Two four-quadrant electronic multipliers

1963 ◽  
Vol 25 (1) ◽  
pp. 5
Author(s):  
A. Kraicer
Keyword(s):  
Four Quadrant

Determination of the weight of audit evidence by the method of point ratings in the information security audit

2020 ◽  
Vol 7 (1) ◽  
pp. 57-62
Author(s):  
Vladislav A. Voevodin ◽  
◽  
Maria S. Markina ◽  
Pavel V. Markin ◽  
◽  
...  
Keyword(s):  
Information Security ◽  
Security Audit ◽  
Audit Evidence
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