PurposeThis study examines the mediating effect of effort on the relationship between performance incentives and audit judgment performance under different levels of task complexity.Design/methodology/approachUsing an experimental research design, subjects are randomly assigned to three performance incentive groups: control, financial and feedback. Each subject is required to perform two experimental tasks of two complexity levels (low and high).FindingsResults indicate that performance incentive variables are positively related to audit judgment performance. Hierarchical regressions of moderated‐mediation analyses support the hypotheses that the mediation effect of effort on the relationship between performance incentives and audit judgment performance occurs under low task complexity and not under high task complexity. In other words, the positive relationship between effort and audit judgment performance is weakened under high task complexity.Research limitations/implicationsThe external validity of this study is limited since the audit case contains less information than the real audit environment. This study contends that the expectancy theory can in fact be used to generate empirical prediction on audit judgment performance. The reliance on expectancy theory to supply theoretical mechanism by including the moderating variables provides explanation on when effort should and should not have positive effects on audit judgment performance.Practical implicationsAudit firms need to be careful on the performance incentives offered because incentives affect job output quality. Performance incentives may reduce job turnover and job tension among auditors. In addition, audit firms should ensure that the auditors have proper training to increase their skills and knowledge to help auditors to carry out various job complexities.Originality/valueThis paper can enhance knowledge and understanding on how motivational and environment factors influence audit judgment performance.

Abstract-The audit profession has attempted to improve auditors' ability in assessing likelihood of fraud risk so as to enhance audit quality and increase investor confidence. Malaysian Approved Standards on Auditing, AI 240 on "Fraud and Error" and National Audit Department guidelines on fraud requires the auditor to assess the likelihood of fraud based on the internal control and pressure and opportunity. The purpose of this study is to examine which factor most likely use by auditors in assessing the likelihood of fraud risk. An experimental approach is adopted by sending case scenarios to 63 auditors from the National Audit Department of Malaysia and 67 final year accounting students. Both groups have to complete two different case scenarios which level of internal controls and fraud motivation (i.e., pressures and opportunity) are being manipulated into high and low level. The results indicate that there are significant interaction between internal controls and fraud motivation factors. The findings may provide insights into the auditors' judgment in fraud risk assessment which could be beneficial to increase the auditors' awareness and understanding of fraud risk factors and thus, maintain their viability in the auditing profession.

Purpose This paper aims to provide an empirical analysis of the effects of regulatory enforcement and customer risk determinants on money laundering risk judgment. The study further explores the moderating impact of regulatory enforcement on compliance officers in the banking and money service business (MSB) sectors. The analysis is conducted to find the important factors that contribute to the issues of risk judgement among compliance officers to establish effective anti-money laundering (AML) and countering financing of terrorism compliance at the financial institutions, as highlighted in the National Risk Assessment Report 2017 by the Central Bank of Malaysia. Design/methodology/approach An experimental study with four different scenarios of case studies distributed to 124 compliance officers at the banking and MSB sectors was conducted via online platforms. The paper uses a quantitative approach via structural equation modelling. Findings The result shows a significant effect of customer risk determinants and regulatory enforcement on money laundering risk judgement, taking into account competency as the control measure. A further test on the interaction effects of both determinants shows a significant result on the money laundering risk judgement. The empirical evidence indicated that regulatory enforcement influenced compliance officers’ money laundering risk judgement and suspicious transaction report submission. In other words, the banking and MSB sectors’ AML compliance significantly depends on the regulators’ enforcement activity. Research limitations/implications This study is limited to two independent variables: regulatory enforcement and customer risk determinants. Future studies may consider other factors affecting compliance officers’ money laundering risk judgement, such as technical competency, knowledge management, digitalization and technology and ethical issues. Practical implications This study provides several theoretical and practical implications. Emphasizing the excellent quality of judgement and, eventually, good quality of reporting the suspicious transactions will not be achieved merely from enforcing fines and punishment, but comprehensive measures must be taken. Increasing the competency and training, educating the compliance officers, supporting the industry and practitioners with incentives and digitalization, enhancing the campaign and awareness among the public and standardizing the policy shall be the good initiatives for the regulatory enforcement to establish. Originality/value This paper provides a valuable contribution to the body of knowledge and fulfills the significant gaps in the literature on money laundering, not to mention, the integration between behavioural studies and anti-money laundering compliance, which has scarcely been statistically evident from the research studies.

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Purpose-The purpose of this study is to examine the mediating effect of effort on the relationship between both accountability pressure and self-efficacy, and auditors' performance. Design/methodology/approach-The paper uses a between-subjects experimental research design with accountability pressure manipulated randomly to two groups, accountable and non-accountable. Each participant is required to perform internal control tasks. Findings-Based on partial least square (PLS) analysis, results indicate that both variables, i.e. accountability pressure and self-efficacy, are positively related to audit judgment performance through the process of high level of effort. High self-efficacious participants who received accountability pressure would have high levels of effort, which in turn increase audit judgment performance. Research implications/limitations-This study provides further evidence on the effect of motivational factors on auditors' performance. Understanding the mediating role of some motivational variables is crucial in designing a continuous development program to enhance auditors' performance. The proposed framework of effort as a mediating variable is consistent with Libby and Lipe and Chang et al., who argue that accountability pressure and self-efficacy would cause individuals to increase their effort in order to perform better. Originality/value-The paper contributes to the literature on motivational factors that would explain the variability in audit judgments in coping with complex audit tasks.