[Home ] [Archive]   [ فارسی ]  
:: Main :: About :: Current Issue :: Archive :: Search :: Submit :: Contact ::
Main Menu
Home::
Journal Information::
About the Journal
Aims& Scopes
Editorial Board ::
Articles archive::
All Issues
Current Issue
Publication Ethics::
For Authors::
Guide for Authors
Submission Form
Peer Review Process::
Reviewers Section
Registration::
Registration Form
Site Facilities::
Site map
Search contents
FAQ
Top 10 contents
Inform to friends
Contact us::
Contact Information
Contact us
::
Search in website

Advanced Search
..
Receive site information
Enter your Email in the following box to receive the site news and information.
..
:: ::
Back to the articles list Back to browse issues page
The effect of Partner Communications of Fraud Likelihood and Skeptical Orientation on Auditors’ Professional Skepticism
Mahboobe Jafari Mrs1 , Omid Pourheidari 2, Ahmad Khodamipour3
1- Ph.D.Student of Accounting, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran. M.jafari@aem.uk.ac.ir
2- Professor of Accounting, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran. (Corresponding Auther). , opourheidari@uk.ac.ir
3- Professor of Accounting, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran. khodamipour@uk.ac.ir
Abstract:   (161 Views)
Professional skepticism is an attitude that includes a questioning mind that makes to be alert to conditions indicating fraud, management bias, and inconsistencies across evidence. An appropriate level of professional skepticism is essential to a high-quality audit, for this purpose, this paper aims to investigate the effect of partner communication of fraud likelihood and skeptical orientation on the level of professional skepticism in auditor judgments. This study examines the effect on professional skepticism of the partner’s communication on the likelihood of fraud (making their own view known, making management’s view known or not making any view known) and the skeptical orientation being encouraged (outward orientation towards the veracity of management representations and/or inward towards the fallibility of the auditor’s judgment processes). The statistical sample consisted of 185 auditors working in trusted audit institutions of Tehran Securities & Exchange Organization in 2023 who were selected by convenience sampling. To investigate hypotheses and analyze data, an analysis of variance and the SPSS software were used. Results indicate that auditors exhibit higher levels of professional skepticism when the partner expresses management’s view, rather than their own view or no view, that there is a low likelihood of fraud. Also finding indicates emphasizing an inward skeptical orientation was not found to be more effective in encouraging professional skepticism in audit judgments than emphasizing an outward skeptical orientation.
Keywords: Professional skepticism, Partner communication of fraud likelihood, Inward and outward orientation.
     
Type of Study: Research | Subject: Special
Received: 2023/11/9 | Accepted: 2024/04/8
References
1. Accounting and Corporate Regulatory Authority (ACRA). 2013. Practice Monitoring Program: Seventh Public Report. Available at: https://www.acra.gov.sg/training-and resources/publications/reports/practice-monitoring-programme public-reports.
2. American Institute of Certified Public Accountants (AICPA). 2003. AICPA Practice Aid Series, Fraud Detection in a GAAS Audit: SAS No. 99 Implementation Guide. New York, NY: AICPA.
3. Australian Securities and Investments Commission (ASIC). 2016. REP 534 audit inspection program report for 2015–16. Available at: http://download. asic.gov.au/media/4331127/rep534‐published‐29‐june‐2017.pdf.
4. Bell, T. B., M. E. Peecher, and I. Solomon. 2005. The 21st Century Public Company Audit. New York, NY: KPMG LLP.
5. Bierstaker, J. and A. Wright. 2001. The Effects of Fee Pressure and Partner Pressure on Audit Planning Decisions. Advances in Accounting 18: 25-46.
6. Blix, L. H., L.C. Chui, B. J. Pike, and S. N. Robinson. 2021. Improving auditor performance evaluations: The impact on self‐esteem, professional skepticism, and audit quality. Journal of Corporate Accounting & Finance, 32(4), 84-98.
7. Brazel, J. F., J. Leiby, and T. J. Schaefer. 2022. Do Rewards Encourage Professional Skepticism? It Depends. The Acconting Review 97(4): 131-154.
8. Carpenter, T. D., and J. L. Reimers. 2013. Professional skepticism: The effects of a partner’s influence and the level of fraud indicators on auditor’s fraud judgments and actions. Behavioral Research in Accounting 25 (2): 45-69.
9. Center for Audit Quality (CAQ). 2010. Report on Deterring and Detecting Financial Reporting Fraud. A Platform for Action Available at: http://www.thecaq.org/docs/reports-andpublications/deterring and-detecting-financial-reporting-fraud-a-platform-foraction. pdf.
10. Chen, C. X., K. T. Trotman, and F. Zhou. 2015. Nominal versus interacting electronic fraud brainstorming in hierarchical audit teams. The Accounting Review 90 (1): 175-198.
11. Dennis, S., and K. M. Johnstone. 2015. Audit partner leadership tone and professional skepticism in fraud brainstorming. Working Paper, University of Wisconsin.
12. Doty, J. R. 2011. What the PCAOB Expects for the Coming Year and Beyond. December, 5, 2011. Washington D.C.: PCAOB.
13. Dougherty, M. P. R., C. F. Gettys, and R. P. Thomas. 1997. The role of mental simulation in judgments of likelihood. Organizational Behavior and Human Decision Processes 70 (2): 135-148.
14. Financial Reporting Council (FRC). 2013. Audit Quality Inspections Annual Report 2012/2013. Available at: https://www.frc.org.uk/news-and-events/news/2013/05/frc-publishes-audit-quality-inspections-annual-report-201213/.
15. Harding, N., and K. T. Trotman. 2017. The effect of partner communications of fraud likelihood and skeptical orientation on auditors' professional skepticism. Auditing: A Journal of Practice & Theory, 36 (2), 111-131.
16. Hirst, D. E. 1994. Auditors' sensitivity to source reliability. Journal of Accounting Research 32 (1): 113-126.
17. Hoffman, V. B., and M. F. Zimbelman. 2009. Do strategic reasoning and brainstorming help auditors change their standard audit procedures in response to fraud risk? The Accounting Review 84 (3): 811-837.
18. Hurtt, R. K., H. L. Brown-Liburd, C. E. Earley, and G. Krishnamoorthy. 2013. Research on auditor professional skepticism: Literature synthesis and opportunities for future research. Auditing: A Journal of Practice and Theory 32 (Supplement 1): 45-97.
19. International Auditing and Assurance Standards Board (IAASB). 2012. “Overall objectives of the independt auditor and the conduct of an audit in accordance with international standards on auditing”.
20. International Auditing and Assurance Standards Board (IAASB). 2015. Enhancing Audit Quality in the Public Interest – A Focus on Professional Skepticism, Quality Control and Group Audits. New York.
21. International Auditing and Assurance Standards Board (IAASB). 2018. International standard on auditing 540 (revised): auditing accounting estimates and related disclosures.
22. International Forum of Independent Audit Regulators (IFIAR). 2015. International Forum of Independent Audit Regulators: Report on 2015 Survey of Inspection Findings. Available at: https://www.ifiar.org/activities/annual-inspection-findings-survey.
23. International Standards of Auditing (ISA) 220. Quality Control For an Audit of Financial Statements. Available at: https://www.studeersnel.nl/nl/document/universiteit-van-amsterdam/ais-ic-cases/isa-220-isa/8528545.
24. International Standards of Auditing (ISA) 240. The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements. Available at: https://www.studeersnel.nl/nl/document/dai-hoc-kinh-te-quoc-dan/acca-sbr-book-2019/isa-240-aaccaca/66934412.
25. Kim, S., and K. T. Trotman. 2015. The comparative effect of process and outcome accountability in enhancing professional skepticism. Accounting and Finance, 55 (4), 1015–1040.
26. Kim, S., and N. Harding. 2017. The effect of a superior’s perceived expertise on the predecisional distortion of evidence by auditors. Auditing: A Journal of Practice & Theory 36 (1), 109-127.
27. Lewicki, R. J., E. C. Tomlinson, and N. Gillespie. 2006. Models of interpersonal trust development: Theoretical approaches, empirical evidence and future directions. Journal of Management 32 (6): 991-1022.
28. Libby, R., and K. T. Trotman. 1993. The review process as a control for differential recall of evidence in auditor judgments. Accounting, Organizations and Society 18 (6): 559-574.
29. Nelson, M. W. 2009. A model and literature review of professional skepticism in auditing. Auditing: Journal of Practice & Theory 28 (2): 1-34.
30. Nolder, C.J. and K. Kadous. 2018. Grounding the professional skepticism construct in mindset and attitude theory: a way forward, Accounting, Organizations and Society 67: 1-14.
31. Peecher, M. E. 1996. The influence of auditors’ justification processes on their decisions: A cognitive model and experimental evidence. Journal of Accounting Research 34 (1): 125-140.
32. Peecher, M. E., I. Solomon, and K. T. Trotman. 2013. An accountability framework for financial statement auditors and related research questions. Accounting, Organizations and Society 38 (8): 596-620.
33. Public Company Accounting Oversight Board (PCAOB). 2012. Maintaining and applying professional skepticism in audits. Staff Audit Practice Alert No. 10.
34. Public Company Accounting Oversight Board (PCAOB). 2013. Report on 2007-2010 Inspections of Domestic Firms that Audit 100 or Fewer Public Companies.
35. Rich, J. S., I. Solomon, and K. T. Trotman. 1997. The audit review process: A characterization from the persuasion perspective. Accounting, Organizations and Society 22 (5): 481-505.
36. Sorensen, K., and M. Ortegren. 2021. The next best thing: Social presence and accountability's impact on auditor professional skepticism. Journal of Corporate Accounting & Finance 32 (2), 39-51.
37. Stevens, E., R. Moroney, and J. Webster. 2019. Professional skepticism: The combined effect of partner style and team identity salience. International Journal of Auditing 23 (2), 279-291.
38. Tetlock, P. E., and J. S. Lerner. 1999. The social contingency model: Identifying empirical and normative boundary conditions on the error-and-bias portrait of human nature. Dual-process theories in social psychology, 571-585.
39. Trotman, K. T., R. Simnett, and A. Khalifa. 2009. Impact of the type of audit team discussions on auditors’ generation of material frauds. Contemporary Accounting Research 26 (4): 1115-1142.
40. Turner, C. W. 2001. Accountability demands and the auditors evidence search strategy: The influence of reviewer preferences and the nature of the response (belief vs. action). Journal of Accounting Research 39 (3): 683-706.
41. Uy, K. J. D., T. E. B. Bongcales., A. A. Balunan., L. O. Igot., J. M. L. Laude., and J. J. D. Mojados. 2023. Auditor’s Professional Skepticism and its Relationship with their Thinking Styles. Recoletos Multidisciplinary Research Journal 10(2), 1-10.
42. Wilks, T. J. 2002. Predecisional distortion of evidence as a consequence of real-time audit review. The Accounting Review 77 (1): 51-71.
43. Ying Ho, Sh., S.Y. Phang, and R. Moroney. 2021. The combined effect of perspective-taking and incentives on professional skepticism, Managerial Auditing Journal 37 (1), 129-150.
Add your comments about this article
Your username or Email:

CAPTCHA

XML   Persian Abstract   Print

Rights and permissions
Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Back to the articles list Back to browse issues page
دوفصلنامه علمی حسابداری ارزشی و رفتاری journal of Value & Behavioral Accounting
Persian site map - English site map - Created in 0.08 seconds with 37 queries by YEKTAWEB 4645