Auditor Inability to Use Professional Skepticism

Auditor Inability to Use Professional Skepticism PDF Author: Tiffany D. Schuster
Publisher:
ISBN:
Category : Auditors
Languages : en
Pages : 204

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Book Description
This qualitative study sought to understand challenges to Louisville, Kentucky Certified Public Accounting firms and the development of auditor professional skepticism. The research considered the problem of the lack of professional skepticism and the importance of the skill in the auditor's role. The study focused on three levels of auditing roles, their experience in auditing, education levels, and overall experience in their current role. The research methodology was a single case study design and interviewed participants through gaining insight from their experiences in the auditing field, and the challenges faced. The research deepened the understanding of problems and contributing factors for professional skepticism development and identified potential solutions.

Auditor Inability to Use Professional Skepticism

Auditor Inability to Use Professional Skepticism PDF Author: Tiffany D. Schuster
Publisher:
ISBN:
Category : Auditors
Languages : en
Pages : 204

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Book Description
This qualitative study sought to understand challenges to Louisville, Kentucky Certified Public Accounting firms and the development of auditor professional skepticism. The research considered the problem of the lack of professional skepticism and the importance of the skill in the auditor's role. The study focused on three levels of auditing roles, their experience in auditing, education levels, and overall experience in their current role. The research methodology was a single case study design and interviewed participants through gaining insight from their experiences in the auditing field, and the challenges faced. The research deepened the understanding of problems and contributing factors for professional skepticism development and identified potential solutions.

An Examination of Issues Related to Professional Skepticism in Auditing

An Examination of Issues Related to Professional Skepticism in Auditing PDF Author: Erin Burrell Nickell
Publisher:
ISBN:
Category :
Languages : en
Pages : 75

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Book Description
The third general standard of fieldwork requires auditors to maintain a skeptical mindset with regards to the collection and critical assessment of audit evidence. While professional skepticism is frequently referenced by professional standards, a lack of precision in defining the concept presumably leads to variation in how skepticism is exercised in practice. Drawing on theories from the fields of psychology, economics and organizational justice, this dissertation considers different perspectives of what constitutes sufficient professional skepticism and examines how those perspectives differ between audit practitioners and regulators. First, I consider competing perspectives of professional skepticism--neutral versus presumptive doubt--and whether asking auditors to adopt alternative perspectives of skepticism may have implications for audit efficiency and effectiveness. While, too little skepticism may endanger audit effectiveness and lead to audit failure or enforcement action, too much skepticism may arguably lead to unnecessary costs and inefficiency. Second, I consider whether the nature of the auditor-client relationship threatens an auditor's ability to maintain an attitude of professional skepticism. For example, theoretical perspectives from the fields of psychology and economics suggest that auditors may, consciously or unconsciously, be less skeptical of clients with whom they have developed close, positive working relationships or financial dependencies. More specifically, I consider whether skeptical behavior is impeded by management who display low-risk attitudes towards fraud or by client's who are considered to be highly important to the profitability of the local office. Finally, I examine how professional skepticism is defined from a regulator's perspective. When a public company is accused of fraudulent financial reporting, regulators may determine that the audit performed on the fraudulent financial statements was deficient. Prior research has suggested that in such cases, insufficient skepticism is often a leading cause of alleged audit failure. Within a fairness theory framework, this study examines enforcement actions against auditors between 1999 and 2009, and identifies certain factors that are associated with a citation for a lack of professional skepticism. Overall, results suggest that regulators approach the issue by determining whether auditors should have been more skeptical. Factors found to affect this determination include whether the auditor was perceived as having been aware of an elevated risk of fraud or whether the client was accused of having provided the auditor with false or misleading information during the course of their investigation.

A Study of Professional Skepticism

A Study of Professional Skepticism PDF Author: Carmen Olsen
Publisher: Springer
ISBN: 3319498967
Category : Business & Economics
Languages : en
Pages : 62

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Book Description
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.

The Influence of Information Order Effects and Trait Professional Skepticism on Auditors’ Belief Revisions

The Influence of Information Order Effects and Trait Professional Skepticism on Auditors’ Belief Revisions PDF Author: Kristina Yankova
Publisher: Springer
ISBN: 3658088710
Category : Business & Economics
Languages : en
Pages : 321

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Book Description
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.

The Influence of Information Order Effects and Trait Professional Skepticism on Auditors' Belief Revisions

The Influence of Information Order Effects and Trait Professional Skepticism on Auditors' Belief Revisions PDF Author: Kristina Yankova
Publisher:
ISBN: 9783658088729
Category :
Languages : en
Pages :

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Book Description
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.

A Model and Literature Review of Professional Skepticism in Auditing

A Model and Literature Review of Professional Skepticism in Auditing PDF Author: Mark W. Nelson
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
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.

Promoting Professional Skepticism in the Audit Environment

Promoting Professional Skepticism in the Audit Environment PDF Author: Mary C. Parlee
Publisher:
ISBN:
Category : Auditing
Languages : en
Pages : 152

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Book Description
"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.

Auditors' Professional Skepticism

Auditors' Professional Skepticism PDF Author: Luc Quadackers
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
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.

Cognitive Dissonance and Auditor Professional Skepticism

Cognitive Dissonance and Auditor Professional Skepticism PDF Author: Ruwan K.B. Adikaram
Publisher:
ISBN:
Category : Accountants
Languages : en
Pages : 130

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Book Description
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.

Government Auditing Standards - 2018 Revision

Government Auditing Standards - 2018 Revision PDF Author: United States Government Accountability Office
Publisher: Lulu.com
ISBN: 0359536395
Category : Reference
Languages : en
Pages : 234

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Book Description
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.